Financial Services Snapshots

Financial Markets

ASIC proposes remake of relief for offers of CHESS Depository Interests

On 24 January 2025, ASIC opened feedback for the proposed remake of Class Order [CO 14/827] Offers of Chess Depository Interests, which is due to expire on 1 April 2025. ASIC intends to substantially remake the relief for a further five years, with small expression changes to the definition of 'depository interests' and to the wording of the AFSL exemption.

The Class Order modifies the Corporations Act 2001 to provide disclosure relief in respect of CHESS Depository Interests (CDIs). CDIs are generally used by foreign companies to issue interests in their securities, which can be transferred via CHESS. This is to overcome problems where those issuers are incorporated in countries that do not recognise electronic registration of foreign securities as legal title to those securities.

Feedback can be submitted to ASIC by 5 pm on 28 February 2025.

See: Media Release

Banking

Government announces further investment into climate investment bank

On 23 January 2025, the Government announced an additional $2 billion in funding to the Clean Energy Finance Corporation (CEFC), the nation's 'green bank.' The bank's key priorities are to make investments that will make the shift to green energy cheaper, clean and reliable.

The CEFC has played a significant role in helping meet Australia's emissions reduction targets, and in backing clean-energy projects.

See: Media Release

BCCC releases progress report on supporting vulnerable and diverse customers

On 23 January 2025, the Banking Code Compliance Committee (BCCC) released a follow-up report on inclusive and accessible banking services, following the findings of an inquiry in 2021 that found systemic failures across BCCC member banks.

The BCCC identified 'meaningful improvements' in bank policies and procedures to better meet the needs of customers who require additional care or support. Banks have taken a protective approach to meeting their inclusive and accessible banking obligations under the Banking Code of Practice.

The removal of barriers for the appointment of third-party representatives was highlighted as a key improvement, allowing customers to get support from financial counsellors and lawyers while accessing banking services. However, the BCCC noted that improvements were still needed when providing accessible information to customers with limited English, and in considering customer vulnerability during the product design stage.

See: Media Release

Superannuation

ASIC and APRA discuss climate priorities at Superannuation CEO Roundtables

In January 2025, APRA and ASIC released their notes on the Superannuation CEO Roundtables held on Monday 25 November and Thursday 5 December (Roundtables). These Roundtables were hosted by the regulators, and attended by 14 superannuation trustee CEOs.

These Roundtables were focused on climate and nature risks, which are a key focus area for ASIC and APRA who noted the potential impact of climate change on financial stability. APRA's Prudential Practice Guide CPG 229 on Climate Change Financial Risks and ASIC's draft Regulatory Guide on sustainability reporting were drafted in response to legislation mandating climate-related financial disclosures, and the introduction of the Australian Sustainability Reporting Standards.

Discussion was had about the complexity and cost of mandatory reporting for trustees, noting the importance of clear and practical guidance from the regulators.

The importance of consistent climate risk disclosure and reporting standards and metrics was also discussed, especially considering alignment of Australian standards with international best practices.

See: Media Release

Consumer Credit

ASIC warns buy now pay later providers to apply for a credit licence

On 17 January 2025, ASIC announced that it alerted buy now pay later (BNPL) providers to apply for a credit licence, after reforms extended the National Credit Code to cover BNPL contracts.

From 10 June 2025, BNPL products will be treated as a 'low cost credit contract, a new category of credit contract with specific responsible lending obligations.

ASIC stated that providers who do not have an application for a credit licence accepted for lodgement by ASIC by 10 June 2025 may be engaging in unlawful conduct if they continue to operate without a license.

See: Media Release

Other

ASIC announces key issues outlook

On 24 January 2025, ASIC published what it has identified as the most significant issues threatening the "safety, integrity and trust" of Australia's financial system in its remit for 2025. These include:

• changing dynamics between public and private markets
• superannuation members being let down by their fund and trustee, including unsuitable advice
• consumer losses from fraud and scams, driven by increasing sophistication and technology
• cyber-attacks, data breaches and internal system failures undermining market confidence and causing financial loss
• poor household outcomes after natural disasters due to deficient claims by general insurers
• impact of ASX's CHESS replacement on Australian markets
• poor quality climate-related financial disclosures leading to misinformed investment decisions
• poor audit quality resulting in declining market confidence and misinformed investment decisions, and
• banks and lenders exacerbating consumer financial hardship.

ASIC has also noted increasing market volatility, geopolitical changes, rising global debt and advances in artificial intelligence as key trends impacting its regulatory responsibilities in responding to these key issues they have identified.

See: Media Release

ASIC opens feedback on the proposed remake of employee incentive scheme class orders

On 20 January 2025, ASIC opened feedback on Class Orders CO [14/1000] Employee incentive schemes: Listed bodies and [CO 14/1001] Employee incentive schemes: Listed bodies, which are both due to expire on 1 April 2025.

These orders include exemptions for the continued issue of financial products as part of employee incentive schemes. Entities have been unable to offer financial products to eligible employees under the orders since 1 March 2023. However, the exemptions may apply for the issue of financial products created under the incentive scheme class orders, for example, where a participant is entitled to shares after an option has been exercised or an incentive right has been vested.

ASIC proposes to combine the two class orders into one legislative instrument, and to largely remake the exemptions for a period of five years.
Submissions are due by 5 pm on 22 February 2025.

See: Media Release; CO 14/1000; CO 14/1001

Treasury opens consultation on reforming national financial reporting regime

On 23 January 2025, Treasury opened consultation on a proposed plan to create a body that combines the Australian Accounting Standards Board, Auditing and Assurance Standards Board and Financial Reporting Council.

The purpose of this consultation is to refine and settle the proposed structure of a single reporting body. Flexibility will be a key aspect of this new body, to ensure that the body will be more responsive to shifts, global trends and potentially increased regulatory responsibilities. This includes a responsibility to receive sustainability and climate related reports.

It will inherit the other bodies' responsibilities of formulating, issuing and providing advice and reports to the government relating to accounting, auditing and assurance and sustainability standards. It is expected that the body's work will be distributed between three committees: an accounting standards committee, a sustainability reporting standards committee and an auditing and assurance standards committee.

Consultation on the reform is open until 21 February 2025. Expressions of interest are also open for attendance at roundtable discussions on the proposed reforms, which are due to FRSReform@treasury.com by 5 February.

See: Media Release