ASIC Running at None From Three

It is my view that ASIC has not had a particularly good month in regard to its role regulating the financial services markets. Three decisions stand out, which to me, demonstrate that it is not infallible and is itself subject to errors when considering acts undertaken by certain individuals.

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Qualifications for Financial Advisers

Way back in 1976, the Eagles predicted in their song, “New Kid in Town” that there would be a new kid in town. So how is an American country ballad relevant to contemporary Australia? One word (well, acronym).......FASEA - The Financial Adviser Standards and Ethics Authority.

I am deeply concerned that FASEA is using a Bachelor qualification as a benchmark for anyone who is permitted to be accredited as a Financial Adviser. By all means, invoke a Bachelor requirement for professions such as medicine, nursing, law, engineering, science, dentistry, but I disagree on the need for such a benchmark in this instance.

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Australian Financial Complaints Authority

And so it came to pass that there was no Financial Ombudsman Service (“FOS”), no Credit and Investments Ombudsman (“CIO”) and no Superannuation Complaints Tribunal (“SCT”). And in its place came the Australian Financial Complaints Authority (“AFCA”). And the broking community saw this new AFCA and saw that it was good. And so it was.

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CBA Takes a Hit

What would Harvey Specter have said? To reveal your hand too early is just asking for trouble. Okay, so these aren’t legal negotiations, nor are these fictional characters on Suits, but CBA did not have much of a choice. In announcing its half-year results, it was obligated to disclose full details of its material financial contingencies. The accounting standards require that such disclosure is required if the contingency is probable and can also be reasonably estimated.

How can one reasonably estimate a pecuniary penalty in a time of limited precedent?

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CBA's Woes

One of my early childhood memories that I still vividly recall was my first visit to a restaurant buffet. I was astonished that you pay the same amount to cram as much food onto your plate….and then you could even go back for more. Oh, the joy! My plate was full - so full that I don’t think anything would ever come as close. Well, it has taken a while, but finally, there is a person whose plate is fuller than mine from all those years ago at the Happy Dragon restaurant.

I am of course referring to the incoming CEO of CBA, Matt Comyn.

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Crowd-Sourced Funding - Intermediaries

ASIC has recently established a new regime governing the process and methodology for equity-based Crowd-Sourced Funding (“CSF”). Only eligible companies which satisfy the specific requirements may participate. These companies are required to use intermediaries who host the CSF Offer on an online platform and manage the overall CSF process. These CSF Intermediaries must in turn, hold an Australian Financial Services (“AFS”) Licence with the appropriate authorisations to provide a crowd-funding service, as these activities now constitute a financial product and service.

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Crowd-Sourced Funding

ASIC has recently established a new regime governing the process and methodology for equity-based Crowd-Sourced Funding (“CSF”). Specifically, the new CSF regime aims to facilitate flexible and low-cost access to capital for small to medium institutions, especially in the fintech and startup sector, whilst ensuring adequate protections still exist for retail investors.

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Approach to Fintechs - ASIC and FMA

ASIC and the Financial Markets Authority (“FMA”) of New Zealand signed a Memorandum of Understanding in 2012. Today, ASIC provided details of additional co-operation between it and its trans-Tasman partner - in particular in regard to collaborating and supporting the growing fintech (financial technology) industries.

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