ASIC outlines 2024 priorities
In a keynote speech at the ASIC annual forum, ASIC chair Joe Longo has outlined the regulator’s key priorities for 2024.
Longo, noting that ASIC’s focus was on looking forward not backwards, highlighted two key objectives: ensuring the safety and integrity of the financial system and capital markets, and achieving positive outcomes for consumers, investors, and businesses.
Regulation and Enforcement
Longo emphasised the necessity of regulation to protect the vulnerable, promote trust in markets, and address misconduct and market failures. Accepting that much regulation had already been introduced (citing the design and distribution obligations, the Financial Accountability Regime and the reportable situations regime), he made it clear that more was to come and picked out the following areas:
- proposed climate disclosure reporting obligations, and
- proposed changes to bring crypto regulation.
He added that regulation is only “half the story” and that enforcement is required to complete the circle, adding: “ASIC will continue to act, and act early, to deter bad behaviour whenever appropriate.”
Areas of focus
Longo then identified three key focus areas for regulatory and enforcement action, where potential harm has been identified.
- Sustainable financial reporting and disclosure: ASIC will be Addressing potential harm from poor sustainable finance governance and misleading disclosure, with a particular emphasis on preventing greenwashing.
- Consumer outcomes and superannuation sector misconduct: ASIC will act against poor marketing, distribution, and advice practices in the superannuation sector to protect consumers’ retirement outcomes.
- Fair and orderly financial markets: ASIC will be ensuring technological and operational resilience, and focusing on the gatekeeper role of market participants in maintaining market integrity.
Long concluded by highlighting the need for effective regulation and strong enforcement to navigate disruption. ASIC’s commitment to adapting to new risks and opportunities, along with a call for community collaboration and dialogue, was emphasised.
Michael Barr testimony on Fed’s approach to supervision and regulation
On November 14, 2023, Michael S. Barr, Vice Chair for Supervision of the Federal Reserve, presented the Fed’s approach to supervision and regulation before the Committee on Banking, Housing, and Urban Affairs of the U.S. Senate.
During his presentation, Barr emphasised the crucial need to maintain a sound and resilient banking system by identifying and addressing vulnerabilities and being vigilant to evolving circumstances. In detail, he discussed the Federal Reserve’s recent proposals for improving bank supervision and regulation.
Barr explained that the Federal Reserve’s approach aims to establish a strong foundation for resilience, regardless of where or how the risk originates. The focus is on addressing material risks presented by the current economic environment and the rapid pace of innovation. The approach includes:
- Conducting targeted reviews of banks with higher interest rate and liquidity risk profiles, as well as providing focused training and outreach on supervisory expectations for these risks.
- Monitoring for potential credit deterioration, especially within the consumer and CRE lending segments.
- Implementing a new bank supervision program to improve oversight of banks engaged in nontraditional financial-technology-related activities.
Barr also mentioned that the Federal Reserve proposed rules to reduce the likelihood of future financial crises by introducing a standardised, risk-based measure of credit risk and improving capital requirements for the credit risk of derivatives activities. He noted the proposed long-term debt rule, which extends long-term debt and resolution planning requirements to additional large banks. The deadline for response to both proposals is November 30, 2023.
Community Reinvestment Act (CRA)
Finally, Barr acknowledged the recently finalised rule that strengthens and modernises the regulations that implement the CRA. The revised rule will better encourage banks to help meet the credit needs of their entire communities, including low- and moderate-income neighbourhoods, and support minority depository institutions and community development financial institutions.
UK reinsurance brokers resolve bribery violations
Tysers Insurance Brokers Limited (Tysers) and HW Wood Limited (HW Wood), UK-based reinsurance brokers, have reached a resolution with the US Justice Department concerning investigations into violations of the Foreign Corrupt Practices Act (FCPA). The investigations stemmed from their involvement in a corrupt scheme to pay bribes to Ecuadorian government officials.
Both Tysers and HW Wood have entered into three-year Deferred Prosecution Agreements (DPAs) with the Justice Department, following a criminal information filed in the Southern District of Florida. The charges against both companies relate to conspiracy to violate the anti-bribery provisions of the FCPA.
Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division said: “Tysers and HW Wood have admitted to engaging in a scheme to bribe multiple Ecuadorian government officials to earn tens of millions of dollars in illicit profits for themselves and their co-conspirators. Today’s resolutions, along with the numerous related individual cases, demonstrate the department’s steadfast commitment to hold both corporate and individual wrongdoers accountable for their crimes.”
The court documents reveal that between 2013 and 2017, Tysers (operating as Integro Insurance Brokers Limited at that time) and HW Wood, through their employees and third-party agents, agreed to pay bribes totaling approximately $2.8 million. The recipients included the then-chairman of two Ecuadorian state-owned insurance companies, Seguros Sucre SA and Seguros Rocafuerte SA, and three other Ecuadorian officials. The bribes were intended to secure improper advantages for the companies to obtain and retain reinsurance business with the state-owned insurance entities.
The transactions were facilitated through various means, including payments to accounts held in Florida and other locations. Emails sent from and meetings held in Florida played a role in executing the illicit activities. As part of the scheme, Tysers paid approximately $20.3 million in commissions, while HW Wood paid approximately $7.9 million in commissions and premium payments to an intermediary company that facilitated the bribes. Tysers retained commissions of approximately $10.5 million, and HW Wood retained commissions of approximately $2.3 million.
This case underscores the critical importance of robust compliance measures within financial services institutions, particularly in the areas of anti-bribery and corruption.
CFPB fines retail lender $12 million
The Consumer Financial Protection Bureau (CFPB) has fined Toyota Motor Credit Corporation $12 million plus $48 million redress for illegally withholding refunds.
The CFPB found that Toyota Motor Credit violated the Consumer Financial Protection Act of 2010 (CFPA) by:
- Unfairly and abusively making it unreasonably difficult for consumers to cancel unwanted add-ons, including when consumers complained that dealers had forced add-ons on consumers without their consent.
- Unfairly failing to ensure consumers received refunds of unearned Guaranteed Asset Protection (GAP) and Credit Life and Accidental Health (CLAH) premiums when they paid off their loans early or ended lease agreements early, making the products no longer of any value to consumers.
- Unfairly failing to provide accurate refunds to consumers who canceled their vehicle service agreements as a result of flawed system logic.
The CFPB also found that Toyota Motor Credit violated the Fair Credit Reporting Act (FCRA) and its implementing Regulation V by:
- Falsely reporting customer accounts as delinquent even though customers had already returned their vehicles.
- Failing to promptly correct the negative information it had sent to consumer reporting agencies.
- Failing to maintain reasonable policies and procedures to ensure payment information it sent to consumer reporting agencies was accurate.
“Toyota’s lending arm illegally withheld refunds, made borrowers run through obstacle courses to cancel unwanted services, and tarnished their credit reports,” said CFPB Director Rohit Chopra. “Given the growing burdens of auto loan payments on Americans, we will continue to pursue large auto lenders that cheat their customers.”
AFCA marks five years of resolving financial disputes for Australian consumers
The Australian Financial Complaints Authority (AFCA) has reached a significant milestone, marking five years of operation. AFCA has handled more than 400,000 disputes from consumers and small businesses, securing a total of $1.2 billion in compensation and refunds during that time.
This achievement comes during a period of immense challenges for financial firms and their customers, including a global pandemic, rising interest rates, a sharp increase in scams activity, and the financial impact of significant natural disasters. Despite these challenges, AFCA has remained steadfast in its commitment to providing fair and accessible dispute resolution services.
Over the past five years, AFCA has made significant contributions to protecting Australian consumers and small businesses. The organization has:
- Worked with over 16,500 victims of scams
- Assisted more than 7,500 people affected by natural disasters (excluding COVID)
- Provided support to over 30,000 people experiencing financial difficulty
- Registered over 17,000 COVID-related complaints, helping to resolve disputes involving financial products such as travel insurance and superannuation
In addition to its casework, AFCA’s systemic issues work has resulted in 4.9 million people receiving more than $340 million. This work focuses on identifying and addressing broader issues within the financial sector that affect multiple consumers.
A selected summary of key developments for regulated financial institutions
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