THE WRAP - MARCH 2015

In the wake of the Final Report of the Financial System Inquiry, the financial services industry is now looking to the future and how that may be shaped in light of the Report’s recommendations.

The stated objective of the Inquiry was to make recommendations which foster an efficient, competitive and flexible financial system, consistent with financial stability, prudence, public confidence and capacity to meet the needs of the user. While the scorecard for the Inquiry in meeting this objective will arguably not be completely marked for some years to come, we are already on the road to seeing some of the recommendations realised. The enhanced register of financial advisers is, as we go to print, nearly upon us. In addition, ASIC is already underway with consultation on how it can adjust policy settings to facilitate innovative and electronic disclosure. As we look forward, what confidence can we draw from the Report’s recommendations that the future financial system will be enhanced and better able to suit our needs?

This special edition of The Wrap considers what lies ahead for the recommendations and their implementation. We explore whether some of the key recommendations can be effectively implemented and also whether there have been some missed opportunities. We also look forward to how other current and future regulatory initiatives may blend in with the recommendations.

In our last edition, we proposed that regulatory change may need to be considered the “new normal” and those businesses best placed to adapt will stand the greatest chances of success. In turning to the future of the financial system a similar story of agility and adaptability comes through. Previous financial system inquiries were the catalysts for major economic reforms in Australia including laying the foundations for the current financial services regulatory framework. The implementation of such reforms were only made possible with the appetite and will being there to support the changes. The Federal Government has undertaken a process of consulting on the Inquiry’s recommendations before making any decisions and called for submissions. In addition, a number of the submissions are recognised as being the responsibility of the financial regulators, ASIC, APRA and the RBA.

Careful consideration will need to be given to how implementing the recommendations may impact the broader system. However, we hope that just as financial services businesses have had to face regulatory change head-on in recent years, so too will those in charge of the policy settings not shy away from positive and possibly significant initiatives to support the future of the financial system.

Among the issues examined, we ask:

  • What changes need to be built into the superannuation system in order to maximise its full potential?
  • How can the industry tackle the ever growing challenge of managing customer data and cyber security?
  • Does the prospect of a design and distribution obligation on product issuers and distributors bring with it potential unintended consequences?
  • Does ASIC really need a product intervention power in light of its current regulatory toolkit?
  • Has the Report missed an opportunity to make fundamental and long-lasting changes to our regulatory architecture?
  • What challenges lie ahead with initiatives regarding enhanced competency of financial advisors and the public register and harmonising them with existing regulatory settings?
  • Are we thinking broadly enough in tackling the underinsurance issue?
Nikki Bentley

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

Nikki Bentley Partner

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 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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Matthew McMillan

I am about delivering excellence and what matters most to our clients. I am not constrained by traditional ways of thinking.

Matthew McMillan Partner

Matthew advises his clients on the myriad of commercial arrangements which make up the dynamic technology industry. This includes large-scale outsourcing transactions, projects involving new delivery platforms such as cloud computing, and mobile and digital initiatives. His clients include leading financial institutions, government agencies and blue chip corporates across a wide range of industries including IT, communications, financial services, gaming and transport and infrastructure.

Matthew's primary focus is on the financial services industry and he has particular interest in how the players in the industry leverage technology and data assets to drive innovation, and customer engagement and loyalty to deliver a competitive advantage. His clients often call upon him to advise them on technology commercialisation initiatives and m-commerce ventures, including in relation to mobile payment systems and delivery channels.

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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 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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