Regulatory Recap - October 2016

Recent Key Developments

  • ASIC, APRA, ACCC and the Big Four Bank CEOs appeared before the House of Representatives Standing Committee on Economics
  • The Treasurer announced that the government would strengthen regulation of the BBSW, including the introduction of criminal penalties for manipulation of financial benchmarks

  • Wells Fargo's CEO resigned following court and Senate scrutiny of the bank's cross-selling tactics, which led to the termination of 5,300 staff and the bank receiving USD185 million in fines

Australia

  • Treasurer Morrison announced that the government would strengthen regulation of the Bank Bill Swap Rate, following recommendations from the Council of Financial Regulators, including that the manipulation of any financial benchmark used in Australia be made a criminal and civil offence: > read more

  • Prime Minister Turnbull confirmed that the government would establish a new "low-cost, speedy" banking tribunal for customers, based on advice from Professor Ian Ramsey's review of external dispute resolution schemes in finance: > read more and see all public submissions here

  • FOS and CIO, which are subject to the review, raised concerns about the constitutional legitimacy of such a tribunal: > read more

  • ABA released its new Reference Checking and Information Sharing Protocol, as part of its 6-pillar plan to improve banking standards. All of the major banks and many smaller financial services licensees have adopted the protocol, which aims to improve reference-checking during the recruitment of financial advisers and promote better information sharing about advisers' performance history, include compliance records and advice quality: > read more

  • ABA released its guiding principles for customer advocates, who will be appointed by banks to identify areas where customer outcomes can be improved and assist with dispute resolution and remediation. The guiding principles are intended to help banks appoint their customer advocate and ensure the role is performed effectively: > read more

  • ASIC issued its industry review of life insurance claims, finding that, while life insurers are paying the considerable majority of claims, there are relatively high rates of declined claims for TPD cover (16%) and trauma cover (14%). It recommended public reporting of life insurance claims outcomes, at an industry and individual insurer level and sought higher penalties for misconduct in relation to insurance claims handling: > read more

  • FSC released its Life Insurance Code of Practice, setting out the life insurance industry's key commitments and obligations to customers on standards of practice, disclosure and principles of conduct. It also sets out timeframes for insurers to respond to claims, complaints and requests for information from customers: > read more

  • Minister for Revenue and Financial Services announced the terms of reference for the ASIC Enforcement Review Taskforce, which will examine the adequacy of ASIC's enforcement regime to deter misconduct and foster consumer confidence in the financial system. The appointed taskforce will report to the Government in 2017 with specific recommendations and what reforms should be progressed to best enhance ASIC’s enforcement regime: > read more

  • ABA released its second interim report on the progress of its package of reform initiatives. There have been some delays in the review of product sales commissions and product-based payments, however, “Good progress has been made to date on measures relating to ASIC’s review of client remediation programs and the ABA’s assessment of a mandatory last resort compensation scheme". Measures relating to the industry funding model and breach reporting guidance are likely to be implemented in December 2017, rather than June 2017 as initially proposed: > read more

International

United Kingdom

  • FCA is still receiving over 3,000 complaints per week in relation to payment protection insurance: > read more
  • FCA conducted a review of mortgage lenders' treatment of financially vulnerable customers, including how to identify them, mitigation strategies to assess the impact of interest rate rises and development of strategies for communicating with financially vulnerable customers: > read more 
  • Parliamentary Business, Innovation and Skills Committee commenced an inquiry ​​​​on corporate governance, focusing on executive remuneration, directors’ duties, and the composition of boards, including employee representation in boardrooms and gender balance in executive positions. This follows the Prime Minister's commitment to overhaul corporate governance: > read more 
  • FCA published a Feedback Statement entitled 'Smarter Consumer Communications', encouraging firms to be innovative and tailor the form and delivery of consumer communications to improve consumer choice, decision-making and outcomes: > read more

International

 

  • Wells Fargo's CEO announced his resignation following gruelling questioning by Senator Elizabeth Warren ( view video here ) in the wake of the bank receiving fines of over USD185 million for its illegal practice of secretly opening over 2 million unauthorised deposit and credit card accounts. He and the executive who ran the bank's retail banking division had previously agreed to forfeit remuneration totalling USD60 million: > read more
  • IBM accelerated the importance of "regtech" by purchasing Promontory Financial Group. IBM is hoping to automate the expertise of Promontory's advisers to enhance its Watson system of AI, so that it can be applied to the analysis of complex financial data. This could eventually lead to the automation of compliance functions: > read more
  • Consumer Financial Protection Bureau fined Credit Suisse USD90 million for misrepresenting how it determined a key performance metric of its wealth management business. It found that the chief operating officer of the firm’s private banking division pressured employees to apply a particular classification to high net worth and ultra-high net worth client assets, despite concerns raised by employees most knowledgeable about a particular client’s intent: > read more
  • SEC released its enforcement results for FY2016, stating that it filed 868 enforcement actions exposing misconduct relating to, amongst other things, financial reporting, market manipulation, financial fraud and insider trading schemes. The SEC was also focused on holding gatekeepers accountable. It awarded over USD57 million to 13 whistleblowers in FY2016, more than in all previous years combined. The agency noted that it continued to enhance its use of data to detect illegal conduct and expedite investigations: > read more
Scott Atkins

I'm unapologetically determined and fearless. I pursue excellence. Always.

Scott Atkins Partner

Scott is the Chair of our Board and an internationally renowned insolvency and restructuring lawyer. He is an inaugural Fellow and a member of the Board of INSOL International. Scott is also Vice President of the Australian Restructuring Insolvency and Turnaround Association (ARITA).

Scott is a trusted adviser to Australia's leading banks and insolvency and restructuring practitioners and has acted on some of the industry's most complex and sensitive banking and insolvency advisory and dispute resolution matters.

Prior to joining HDY, Scott practiced for 7 years as in-house counsel with Commonwealth Bank Group. He is now our Client Relationship Partner for the CBA Group. He is also the co-leader of our cross-border insolvency practice and our regulatory enforcement practice. Scott is recognised by his peers for his leading expertise in cross-border insolvency, acting on both inbound engagements in Australia and advising Australian clients on outbound engagements in the USA, UK, Cayman Islands, Hong Kong and The Netherlands, among other jurisdictions.

Scott was the Australian delegate on the Advisory Committee on Comparative Law established by the American Bankruptcy Institute as part of its Commission to Study the Reform of Chapter 11 of the US Bankruptcy Code. This resulted in a landmark report for the reform of Chapter 11.

He is a published author on insolvency and cross-border insolvency. Most recently, Scott was one of the Australian contributors to the 2015 publication 'International Contributions to the reform of Chapter 11 U.S. bankruptcy code' which is volume 2 of the European and International Insolvency Law Studies series. He also authored the Australian chapter of Avoidance of Antecedent Transactions and Cross-Border Insolvency (INSOL International). Among other publications, he is the co-author, together with Professor Rosalind Mason, of the Australian chapter of Look Chan Ho's leading text: Cross-Border Insolvency: Cases and Materials (Kluwer International).

Scott is a visiting lecturer on cross-border insolvency at the University of Sydney in its undergraduate and postgraduate law programs lead by Professor John Stumbles.

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Nikki Bentley

I understand the financial services industry and thrive on helping our clients in this industry succeed.

Nikki Bentley Partner

Nikki is the Group Leader of Henry Davis York's Corporate Group, which includes the legal teams for Corporate / Mergers & Acquisitions; Investments & Financial Services and Tax.

Nikki is a leading investment funds advisor specialising in financial services and corporate law.  She specialises in business establishment and structuring, fund establishment, funds merger and acquisition, product disclosure and distribution. Nikki leads HDY's corporate group which combines expertise from the Financial Services, M&A and Tax areas.

Nikki provides advice to leading Australian and global fund managers on a full range of corporate, commercial and regulatory issues facing their businesses. She has considerable experience in assisting clients with fund establishment (onshore and offshore), disclosure and distribution. Nikki regularly advises clients on establishing, buying, selling and restructuring their businesses. She also regularly assists clients responding to regulatory enquiries and investigations.

With more than 15 years funds management experience in private practice, government and as an in-house lawyer, Nikki's practice spans the range of funds management products, with particular expertise in hedge funds, property funds and equities.

Nikki is regularly involved in industry and government discussions on regulatory reforms impacting the Australian funds management industry. Nikki is a passionate advocate for the development of a new corporate collective investment vehicle because of the opportunities it could provide to grow the funds management industry. She is the Honorary Legal Counsel and Chair of the Regulatory Committee for the Australian branch of the Alternative Investment Management Association (AIMA) and is a regular participant on the Financial Services Council (FSC) working groups.

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John Martin Partner

John is a leading lawyer in both financial sector dispute resolution (complex and regulatory) and corporate insolvency and restructuring, with a particular specialty in cross-border insolvencies. He is recognised by his clients, peers and legal directories as a leader in his field.
 

Domestically, John advises on large and complex insolvencies and assists in finding solutions for financial institutions with regulatory and other complex issues. His clients include several of Australia's major banks, as well as insolvency practitioners appointed to insolvent entities.

Internationally, John has advised in connection with insolvencies in England, Fiji, Bermuda, Cambodia, Cayman Islands, Brunei, and Norfolk Island. His cross-border experience includes acting for the liquidators of an insolvent bank, and various liquidators of insurance and reinsurance companies.

John is a recognised authority on insolvency issues, with articles published in media outlets such as The Australian Financial Review and the Insolvency Law Journal. He has presented at numerous domestic conferences as well as internationally in the US, England, South Africa, Singapore, Canada, New Zealand, and the Netherlands.

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Kathy Merrick

Having the trust of my clients means we work together to achieve the best outcome.

Kathy Merrick Partner

Kathy specialises in corporate insolvency, general commercial litigation and dispute resolution and has advised on many of Australia's biggest corporate disputes, collapses and investigations.

Kathy has been called upon to advise on many of Australia's major corporate disputes, collapses and investigations. Her clients include major corporations and financial institutions, directors, officers, accounting and professional services firms, administrators, liquidators, other corporate entities and individuals.

Kathy has extensive experience in the areas of insolvency, directors and officers duties, professional negligence claims, and regulatory and other investigations, representing parties whether as plaintiffs, defendants, investigators or the subject of investigation.

Kathy is a strong advocate for pro bono work and has played a lead role in developing our community and pro bono program.

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Anna Simmons

I deeply understand my client's business so I can offer insight and innovative solutions to achieve outcomes that count.

Anna Simmons Senior Associate

Anna is a restructuring and insolvency lawyer specialising in insolvency advice, dispute resolution and financial regulation.

Anna's clients include banks and insolvency practitioners. She advises these clients on dispute resolution, regulatory compliance, enforcement strategies, receiverships, and liquidations.

Anna has extensive experience in advising on various aspects of debt recovery, insolvency and bankruptcy, creditors' remedies, general banking litigation, fraud disputes, misleading and deceptive conduct claims (including valuer negligence) and other forms of dispute resolution. She has worked on a large-scale remediation program, with a focus on regulator engagement.

Anna also presents and writes on insolvency, litigation and recovery matters.

As part of HDY's Pro Bono program, Anna volunteers at Redfern Legal Centre and MOSAIC, a specialist legal service that provides free legal advice to asylum seekers, refugees and newly arrived migrants. Anna is a member of HDYPride, the firm's LGBTIQ support network.

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Claudine Salameh Partner

Claudine has over 15 years' experience dealing with legal issues in the financial services sector.

She is a banking and insolvency litigator and regulatory expert. She acts for the major Australian financial institutions in matters involving customer disputes and litigation, fraud, regulatory and compliance issues, regulatory investigations, inquiries and enforcement matters, security enforcement and insolvency litigation. She also acts for insolvency practitioners in formal receiverships, voluntary administrations and liquidations.

Claudine is well known for her ability to manage risks posed by litigation and regulatory inquiries and investigations. She is particularly attuned to reputational and business risks. She is highly strategic and creative and is recognised by her clients for being able to achieve the perfect balance between legal arguments and commercial and practical outcomes.

Claudine has been instrumental in working with clients to provide insights into the field of behavioural economics, which over the past few years, has been of interest to policy makers and regulators as a tool to engage in 'choice architecture'. On a practical level, Claudine has worked closely with clients to design approaches to customer engagement that make use of behavioural insights.   

Claudine is an expert in the conduct of review and remediation programs and provided assistance to the regulator, by way of submissions and her involvement in an industry working group, on ASIC's regulatory guide on review and remediation programs.

Claudine is very familiar with ASIC's powers to obtain documents and information from financial institutions and is called upon by financial institutions to provide assistance in these matters. She has a style that is conducive to having a fruitful dialogue with both the regulator and the various stakeholders within a financial institution.

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Victoria Taylor Senior Associate

Victoria specialises in complex corporate insolvency and banking dispute resolution for a range of clients including Australia's major banks and other leading financial institutions.

Victoria acts for the major banks as well as insolvency practitioners, distressed companies, creditors and professional trustees in relation to all aspects of corporate insolvency, general banking litigation and financial regulation.

Since joining HDY, Victoria has advised on high profile banking litigation and complex cross border recoveries.

She previously worked in London, where she spent a number of years specialising in commercial and insolvency related litigation and restructuring.

Victoria was recently an Australian contributor for the published text: International Contributions to the Reform of Chapter 11 U.S. Bankruptcy Code (Eleven Publishing).

Victoria is currently working as Senior Counsel on a large-scale remediation program for one of Australia's leading banks.

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