The Monthly Wrap Up – April 2017

ASIC updates FAQs on fees and costs disclosure

On 27 April 2017 ASIC updated its FAQs on fees and costs disclosure. The updates are to questions 9 to 13, which concern disclosure of performance fees and costs incurred through interposed vehicles, including special purpose vehicles. In particular, ASIC has clarified its guidance on the ability to disclose 'clawback' of performance fees and whether all benefits received by a service provider or interposed vehicle are a cost that needs to be disclosed by a responsible entity or superannuation trustee.

If you would like further information on any of the particular updates, please contact a member of our team.

The updated FAQs can be found here

AUSTRAC releases Anti-Money Laundering/Counter-Terrorism Financing Rules draft amendments for consultation

On 24 April 2017 AUSTRAC released for consultation draft amendments to a number of aspects of the AML/CTF rules.

The amendments cover a range of matters which will have a practical impact for all AUSTRAC reporting entities, including superannuation funds. The amendments include recommendations:

  • to simplify verification procedures under the AML/CTF rules into a single customer due diligence procedure;
  • for reporting entities to incorporate information provided by AUSTRAC on high ML/TF risks into their risk assessments; and
  • on the expansion of the circumstances in which a reporting entity is related to its customer in Chapter 36 of the AML/CTF Rules.

More information can be found here

Client money reforms for derivative retail client money pass both houses of Parliament

On 13 April 2017 the Corporations Amendment (Client Money) Regulations 2017 were registered. The Regulations provide greater protection for derivative retail client money held by Australian financial services licensees.
The Regulations, which accompany the Treasury Laws Amendment (2016 Measures No.1) Act 2017 (Client Money Act) passed on 27 March 2017, limit the ways in which AFS licensees can use derivative retail client money. Specifically, the reforms prevent an AFS licensee from using derivative retail client money as the licensee's capital, or for the purpose of meeting obligations incurred by the AFS licensee other than on behalf of the client, or for the purpose of entering into transactions to hedge, counteract or offset the risk to the AFS licensee associated with a transaction between the licensee and the client.

More information can be found here

Minister delegates certain financial market regulatory powers to ASIC

On 12 April 2017 the Minister for Revenue and Financial Services announced the delegation of certain powers to ASIC to partially or fully exempt a particular financial market or class of financial market from ASIC supervision and compensation arrangements. The Minister also released Guidelines for the exercise of powers delegated to ASIC under Chapter 7 Of The Corporations Act 2001. A copy of the guidelines can be found here.

The matters set out in the guidelines include the:

  • matters the delegate should or must consider when exercising the delegated powers;
  • requirement to provide a quarterly report on upcoming regulatory matters and regulatory matters for which the delegate has exercised the delegated powers over the previous quarter; and
  • procedure for allowing the Minister to request regulatory matters for which the Minister deems that it is appropriate to exercise powers instead of the delegate.

More information can be found here

Consultation on refinements to breach reporting

On 11 April 2017 the ASIC Enforcement Taskforce released a Position and Consultation Paper: Self-reporting of contraventions by financial services and credit licensees.
Currently AFS licensees are required to report to ASIC within 10 days of becoming aware of a contravention, or likely contravention, of one or more of its obligations under the Corporations Act if the contravention or likely contravention is significant.
Following a review of the self-reporting framework, the Taskforce has put forward 12 preliminary positions on a set of reforms aimed at enhancing the current regime and making it more effective. It is now seeking feedback on these preliminary positions, which include clarifications to the significance test so that it is determined by reference to an objective standard and the introduction of a self-reporting regime for credit licensees.
Submissions are due by 12 May 2017.

More infromation can be found here

ASIC consults on establishing a Financial Services Panel

On 11 April 2017 ASIC released Consultation Paper 281: Financial Services Panel (CP 281) in relation to the proposal to establish a Financial Services Committee, which would be a peer review panel responsible for determining whether ASIC will make a banning order against an individual for misconduct in the course of providing financial services and/or engaging in credit activities.

ASIC is consulting on:

  • how the Panel could enhance the impact of ASIC's administrative decisions;
  • the types of matters that would be referred to the Panel; and
  • the optimal composition of the Panel.

Submissions are due by 23 May 2017.Submissions are due by 23 May 2017.

More information can be found here

ASIC cancels Australian Financial Services Licences for failing to lodge annual statements

ASIC has recently taken action to cancel the Australian financial services licence of a number of licensees for failure to comply with their legal obligations and licence conditions, in particular, failure to lodge annual financial statements and auditor's reports for consecutive financial years.
This includes cancellation on 6 April 2017 of a licence that had initially been suspended by ASIC for six months for failure to meet obligations to lodge annual financial statements and auditor's reports during. The failure to lodge these documents during the period of suspension resulted in the licence cancellation.

Submissions are due by 12 May 2017.

More information can be found here

ASIC extends relief from complying with profit and loss statements requirements for AFS licensees who are natural persons

On 6 April 2017 ASIC extended the relief provided by Class Order [CO 03/748] beyond its sunset date of 1 October 2017 in substantially the same form.
The ASIC Corporations (Financial Reporting: Natural Person Licensees) Instrument 2017/307 gives relief to AFS licensees who are natural persons from having to include personal and unrelated revenue and expenses in profit and loss statements as required by s 989B(1) of the Corporations Act. The Instrument relates only to profit and loss statements, and AFS licensees must still prepare a balance sheet, which discloses all of their assets and liabilities, including personal assets and liabilities.

More information on the instrument can be found here

Federal Court finds financial advice firm breached the best interest obligations under the Future of Financial Advice (FOFA) reforms

On 4 April 2017 the Federal Court found Melbourne-based financial advice firm NSG Services Pty Ltd (NSG) breached its best interests obligations under the Corporations Act, which were introduced as part of the FOFA reforms.
The decision represented the first finding of liability against a licensee for breach of the FOFA reforms. ASIC alleged that the licensee's clients were sold insurance and/or advised to rollover superannuation accounts that committed them to costly, unsuitable and unnecessary financial arrangements. The Court made declarations based on, amongst other things:

  • NSG's insufficient training on legal and regulatory obligations to ensure clients received advice which was in their best interests;
  • insufficient client advice process to ensure all necessary information was given to the client; and
  • a commission only remuneration model which meant representatives would only be compensated by way of commission for sales of life insurance products and superannuation rollovers.

ASIC has also banned two former NSG advisers from providing financial services for a period of five years.

More information on the decision can be found here


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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Jon Ireland

I constantly strive for technical excellence and commercial outcomes that add real value for my clients.

Jon Ireland Partner

Jon has extensive experience in corporate and financial services law, specialising in complex transactions, funds management and investment distribution. Jon also advises on regulatory issues relating to the use of technology in financial services.

Jon provides advice to leading Australian and international financial services clients on the full range of corporate, commercial and regulatory issues facing these businesses. He has considerable experience advising them on establishing, buying into, selling and restructuring their businesses.

Jon regularly advises on funds management issues including fund structuring, disclosure, investment management and outsourcing arrangements. He has particular expertise in the area of investment distribution and has advised on key projects for platform operators and advice providers.

Recently, Jon has advised on the establishment of a fully digital investment platform, the negotiation of a material outsourcing arrangement for a global investment bank and a scheme modernisation project for a leading Australian fund manager. Jon has also recently advised on the establishment of the Australian operations of a global diversified financial services business, including regulatory and corporate issues related to its expansion.

Jon's clients value his advice on recent law reforms, including around product disclosure statements and the digital provision of financial services. Jon is consulting to the Committee for Sydney and is a regular participant on Financial Services Council working groups.

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Vinod Kumar

I aim to exceed expectations with commercial, innovative and engaging legal advice.

Vinod Kumar Senior Associate

Vinod advises fund managers and other financial institutions on corporate, commercial and regulatory issues facing their businesses. He specialises in funds management and general corporate law.

Vinod specialises in regulated and unregulated corporate transactions, funds management and financial services regulation. Vinod also provides general corporate advice on matters such as Corporations Act, ASX and regulatory compliance, corporate governance and disclosure.

Vinod's experience includes:

  • advising on a range of listed and unlisted funds, inbound and outbound investment and complex investment products including expertise in superannuation funds
  • foreign financial institutions establishing businesses in Australia
  • assisting clients to establish wholesale and retail funds (managed investment schemes and trusts). Assisting clients to apply for, vary, and administer Australian Financial Services Licences and Australian Credit Licences
  • advising trustees and responsible entities on governance, financial and operational requirements. Developing, implementing and reviewing compliance and risk management policies and procedures
  • advising on trust restructures and schemes, mergers and acquisitions of funds, fund investments and divestments
  • advising on financial services regulations including the Corporations Act 2001 (Cth), Superannuation Industry (Supervision) Act 1993 (Cth) and related regulations
  • launching new financial products including preparing information memoranda, product disclosure statements and advising on disclosure obligations generally, including under the ASX Listing Rules.


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Matthew Farnsworth

It's rewarding to partner with clients to find solutions that add value and help them succeed.

Matthew Farnsworth Special Counsel

Matthew has extensive experience in funds management and financial services law. He advises leading Australian and international financial services clients across a wide range of transactional and regulatory matters.

Matthew advises leading Australian and international financial services clients on transactional and regulatory matters.

Clients look to Matthew to assist them to establish, offer and operate retail and wholesale investment funds. He advises on Australian financial services licensing, fund governance, offer documents and fund restructures, including managed investment schemes and other collective investment vehicles (CIVs).

He also advises on outsourcing arrangements, compliance issues and on ongoing regulatory developments in the financial services sector.

Matthew is experienced in the full range of asset classes and has particular experience in the property funds sector, including fund establishment, capital raising and restructures.

He is also experienced in a wide range of transactions in the financial services sector, joint ventures and funds M&A.

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Sue Everingham

I champion the delivery of first rate thinking in all aspects of my profession.

Sue Everingham Consultant

Sue is an expert in all aspects of superannuation from constituent documents, insurance and investment arrangements through to benefit design and member communication. Her special interest is in corporate and prudential governance from the Board room through to the Prudential Policies and from Risk Management through to compliance.

Sue has over 25 years experience in the Financial Services industry practising in Australia and for a short period in the US. She has private practice experience as well as leading in-house legal teams at Mercer and at CBA. Sue specialises in superannuation and has a Masters of Taxation and is CPA qualified, and completed a Diploma with the AICD in 2004.

Sue's goal is to help clients identify their need for legal advice and provide the advice that meets their needs.  Good communication skills help Sue understand a client's requirements, business acumen helps her position client needs within the relevant context. The extent of Sue's experience helps her deliver legal advice in a commercial and practical format.

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