Anastasia Zafeirakopoulos
Australian Phil Hellenic Lawyers Association admin@alphalaw.com.au
Disclaimer
This material represents the opinion of Anastasia
Zafeirakopoulos and not necessarily that of Australian Phil
Hellenic Lawyers Association and not of her employer. The content covered is for general information only and it is not intended nor should it be relied upon as a substitute for other appropriate professional advice. The author is not liable for any errors or omissions in the content, or for any consequences resulting from any errors or omissions, including any loss resulting from reliance on the content.

• Legislative framework
• Government Regulators
• Licensing regime: Financial
Service providers
• Australian Securities &
Investments Commission
(“ASIC”)
2

- Corporations Act 2001 (Cth) (“CA”)
- Credit Legislation:
- Uniform Consumer Credit Code
- Privacy Act 1988 (Cth)
- Financial Sector (Shareholdings) Act 1998
(Cth)
- Financial Sector (Collection of Data) Act
1998 (Cth)
- Banking Act 1959 (Cth)
- Life Insurance Act 1995 (Cth)
3

(cont’d)
- Proceeds of Crime Act 2002 (Cth)
- Anti- Money Laundering & Counter-Terrorism
Financing Act 2006 (Cth)
- Financial Transaction Reports Act 1988 (Cth)
4

• Role of government regulators
• Primary regulators in the financial markets:
- Australian Prudential Regulation Authority
(“APRA”)
- Reserve Bank of Australia (“RBA”)
- Australian Securities & Investments
Commission (“ASIC”)
• Other general regulatory bodies:
- Australian Competition & Consumer
Commission (“ACCC”)
5

• Preventing market failure.
• Allowing financial markets to perform efficiently.
• Flexible framework.
• Regulatory agencies based on functional lines.
6

• Australian Prudential Regulation
Authority Act 1998
• Regulates bodies in the financial sector:
- Banks, credit unions, building societies;
- general insurance and reinsurance companies;
- life insurance; and
- most members of the superannuation industry.
• www.apra.gov.au
7

• Reserve Bank Act 1959
• Formulates & implements monetary policy contributing to:
– stability of the currency;
– maintenance of full employment;
– Economic prosperity.
• Also role to:
– maintain financial system stability;
– promote the safety & efficiency of the payments system;
• www.rba.gov.au
8

• Australian Securities & Investments
Commission Act 2001 (Cth)
– promote confident & informed participation by investors & consumers in the financial system;
– make information about companies and other bodies to the public;
– improve the performance of the financial system.
• regulates:
– Australian companies;
– financial services businesses;
– company directors & officers;
– financial markets;
• www.asic.gov.au
9

• Australian Financial Services Licence
(“AFSL”)
• General Obligations
• Authorised Representatives
• ASIC
10

• Person who carries on a financial services business in this jurisdiction must hold an AFSL covering the provision of the financial services
(s911A(1));
• Unless the person is exempt from the requirement to hold an AFSL (s911A(2)).
• A person provides a ‘financial service’ if they:
- provide financial product advice (s766B);
- deal in a financial product (s766C);
- make a market for a financial product (s766D);
- operate a registered scheme;
- Provide a custodial or depository service (s766E); or
- conduct prescribed by the regulations for these purposes.(Reg 7.1.06A; Reg. 7.1.29-Reg. 7.1.33H).
11

(cont’d)
• ‘financial product’
– General definition (s763A CA):
• makes a financial investment;
• manages financial risk;
• makes non-cash payments;
– Specific inclusions (s764A CA) such as:
• Securities;
• Futures;
• Registered schemes;
• Debentures stock or bonds;
– Specific exclusions (s765A CA) such as:
• Health insurance & re-insurance;
• Foreign exchange with immediate settlement;
• Credit facilities;
12

• ‘efficiently, honestly and fairly’;
• adequate arrangements to manage conflicts of interest;
• comply with conditions on AFSL;
• comply with financial services law;
• ensure representatives comply with the financial services law;
• adequate resources;
• adequate supervisory arrangements;
• training requirements for licensees;
13

(cont’d)
• Other requirements for licensees providing financial services to retail clients:
– Adequate risk management systems;
– Dispute resolution procedure;
– Compensation arrangements (s912B).
• Regulatory Guides relating to Licensing:
– RG104: Meeting the general obligations
– RG 105: Organisational competence
– RG 146: Training of financial product advisers
– RG 164: Organisational capacities
– RG 165: Internal & external dispute resolution
– RG 166: Financial requirements
– RG 126: Compensation & Insurance arrangements for AFS licensees
14

• Breaches or likely to breach:
– general obligations (s912D(1) CA); and
– Is significant, having regard to:
• Number of frequency of similar previous breaches;
• Impact on licensee’s ability to provide financial services covered by the license;
• Extent that licensee’s arrangements to ensure compliance with general obligations is inadequate;
• Actual or potential loss to clients or licensee;
• Within 5 days of becoming aware licensee must give a written report to ASIC;
• Failure to comply is an offence.
• RG 78: Breach reporting by AFS licensees
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• ASIC’s role in licensing regime:
- granting AFSL;
- monitoring licensee’s obligations;
- maintains for inspection registers of licensees and authorised representatives.
(ss922A and 922B CA).
• ASIC power to make a banning order
(s920A CA):
- By giving written notice to the person if:
- AFSL held by that person is suspended or cancelled by
ASIC; or
- ASIC has reason to believe the person will not comply with their AFSL obligations; or
- person becomes insolvent under administration; or
- person is convicted of fraud;
- person has not compiled with a financial services law; or
- ASIC has reason to believe that the person will not comply with a financial services law.
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(con’t)
• Right to hearing (ss920A(2)-(3) CA)
- opportunity to make submissions to ASIC;
- appear before ASIC takes place in private;
- does not apply to:
- immediate suspension/ cancellation of ASFL holder;
- if person has been convicted of serious fraud.
• Effect of Banning Order (s920B(2) CA):
- Prohibits the person from providing a financial service, permanently or for a specified period.
• Purpose of banning order:
– Not to punish or to impose a penalty;
• Relevant Regulatory Guides:
– RG 8: Hearing practice manual
– RG 98: Licensing: administrative action against financial service providers 17

Anastasia Zafeirakopoulos
Australian Phil Hellenic Lawyers Association admin@alphalaw.com.au
Disclaimer
This material represents the opinion of Anastasia
Zafeirakopoulos and not necessarily that of Australian Phil
Hellenic Lawyers Association and not of her employer. The content covered is for general information only and it is not intended nor should it be relied upon as a substitute for other appropriate professional advice. The author is not liable for any errors or omissions in the content, or for any consequences resulting from any errors or omissions, including any loss resulting from reliance on the content.