Financial services monthly wrap-up: October 2024

This article was co-author with Michele Beck, Tom Clark, Masooma Saberi, and Vivian Truong.

In October 2024, the Australian Securities and Investments Commission (ASIC) was successful in its action against a life insurer in relation to misleading statements. ASIC issued or proposed updates in relation to licensing and professional registration activities, OTC derivative transaction reporting, applications for relief, and no-action letters. ASIC also released its Annual Report for 2023-24.

The Australian Prudential Regulation Authority (APRA) also published its Annual Report for 2023-24, as well as the latest data on the superannuation and insurance industries. APRA released a material service provider register template, a letter to registrable superannuation entity (RSE) licensees regarding intensified supervision, and an updated version of Prudential Standard SPS 114 Operational Risk Financial Requirement (SPS 114).

Meanwhile, AUSTRAC outlined upcoming changes to enrolment and registration forms on AUSTRAC Online (which are now in force), and customer identification obligations for online gambling service providers. AUSTRAC also undertook enforcement activities and raised community awareness in relation to money laundering, terrorism financing, cybercrime, and national risk assessments.

• 01 ASIC issues 2023-24 update on licensing and professional registration activities
• 02 Changes to OTC derivative transaction reporting are now in effect
• 03 ASIC proposes updates to RG 51 Applications for relief and RG 108 No-action letters
• 04 ASIC releases Annual Report for 2023-24

01 ASIC issues 2023-24 update on licensing and professional registration activities

On 11 October 2024, ASIC published Report 797 Licensing and professional registration activities: 2024 update (REP 797), detailing recent and proposed changes to AFS licensing processes, as well as information about registration and licence applications from the 2023-24 financial year.

REP 797 discusses current and emerging AFS licensing issues including:

• Regulation of digital (crypto) assets.
• Transitional arrangements for Buy Now Pay Later services.
• Reforms to payments systems.
• Modification of the reportable situations regime.
• Extension of the Financial Accountability Regime to the insurance and superannuation industries.
• Launch of the new Professional Registers Search.
• Licensing obligations of carbon market participants.
• New requirements for financial advisers to be registered.
• New regime for foreign financial services providers.

REP 797 also revealed that, between July 2023 and June 2024, ASIC:

• Received 1,531 licensing and registration applications.
• Finalised 1,246 applications for new and varied AFS and credit licences.
• Granted 280 new AFS licences and 143 new credit licences.
• Approved 495 AFS and credit licence variation applications from existing licensees.
• Registered 113 company auditors, 45 SMSF auditors and 17 liquidators.
• Cancelled or suspended 239 AFS licences and 204 credit licences.

ASIC's media release can be accessed here. REP 797 can be accessed here.

02 Changes to OTC derivative transaction reporting are now in effect

The ASIC Derivative Transaction Rules (Reporting) 2024 (2024 Reporting Rules) commenced on 21 October 2024, replacing the ASIC Derivative Transaction Rules (Reporting) 2022.

The 2024 Reporting Rules were finalised following extensive industry engagement across four rounds of public consultation in November 2020, May 2022, November 2023 and February 2024.

The 2024 Reporting Rules introduce changes to:

• Align with international reporting standards;
• Consolidate transitional provisions and exemptions; and
• Ensure reporting requirements are fit for purpose.

ASIC's media release can be accessed here. The 2024 Reporting Rules can be accessed here.

03 ASIC proposes updates to RG 51 Applications for relief and RG 108 No-action letters

ASIC proposes to update Regulatory Guide 51 Applications for relief (RG 51) and Regulatory Guide 108 No-action letters (RG 108). Industry participants have been invited to provide feedback on whether the guidance is sufficiently clear to meet the needs of users.

RG 51 provides guidance for applicants and advisers who are applying to ASIC for relief, including the types of applications, the submission process, ASIC's general approach, and the types of relief available.

RG 108 provides guidance for applicants and advisers who are applying to ASIC for a no-action letter, including the application process and the factors ASIC considers when dealing with requests.

ASIC's proposed changes to RG 51 and RG 108 are intended to reflect current regulatory approaches to applications for relief and no-action letters, to incorporate additional guidance, and to amend outdated references.

ASIC's media release can be accessed here. More information on consultation CS 11 Proposed updates to RG 51 and RG 108 can be accessed here.

04 ASIC releases Annual Report for 2023-24

On 22 October 2024, ASIC released its Annual Report for 2023-24 (Report). The Report highlights ASIC's regulatory and enforcement outcomes in relation to protecting customers, reducing costs for businesses, and strengthening capabilities.

According to the Report, in 2023-24, ASIC:

• Completed 690 surveillances and commenced 168 formal investigations.
• Took down over 7,300 investment scams and phishing websites.
• Prosecuted 186 individuals for strict liability offences, resulting in $1.1 million in fines.
• Contributed to the Commonwealth Director of Public Prosecutions prosecuting 23 individuals on criminal charges.
• Commenced 32 civil proceedings, resulting in $90.8 million in civil penalties imposed by the courts.
• Issued 26 infringement notices, totalling $7.2 million in infringement penalties.
• Removed or restricted 64 individuals and companies from providing financial services.

ASIC considers that it has delivered strong outcomes for its key strategy projects: scams, sustainable finance practices, crypto assets, design and distribution obligations, cyber and operational resilience, and digital tech and data.

ASIC's media release can be accessed here. ASIC's Annual Report 2023-24 can be accessed here.