APRA Consultation on Banking Act Section 66 Instruments
The Australian Prudential Regulation Authority (APRA) has released a response to a consultation on minor proposals related to instruments under section 66 of the Banking Act 1959. This section of the Act places restrictions on the use of certain words and expressions, such as “bank,” “banker,” and “banking,” in relation to a financial business. APRA’s proposals focused on exemption and determination instruments that were due to sunset or required updating to reflect current practice. Read more here.
Policies affected: Marketing and Advertising Policies and checklists
Organisations affected: Entities carrying on a “financial business”
Misconduct and Penalties
A major financial institution has admitted to widespread misconduct across its institutional and retail divisions, impacting close to 65,000 customers. The institution has agreed to pay a penalty of $240 million for its repeated failures, which is the largest announced by the regulator against a single entity.
The misconduct, which occurred over several years, included:
- Unconscionable conduct in a government bond deal.
- Failing to properly handle customer hardship notices.
- Making false and misleading statements about savings interest rates.
- Failing to refund fees charged to deceased customers.
AFSL holders, and all financial service providers, should be reminded that a culture of risk and compliance requires urgent attention from a company’s board and executives and that the cost of breaking the law is not an acceptable cost of doing business. Read more here.
Policies affected: Risk and Compliance related
Organisations affected: AFSL holder and financial service providers
Combating Financial Crime and Child Exploitation
AUSTRAC is reminding financial services providers, including AFSL holders, of their critical role in detecting and reporting financial transactions linked to child exploitation. AFSL holders that are reporting entities under the AML/CTF Act should have robust AML/CTF programs and be able to identify and report suspicious activity. This includes recognising financial and behavioral red flags, such as a series of low-value transactions with seemingly innocent descriptions combined with purchases of spyware or travel to high-risk areas. Vigilance from the financial sector is crucial to stopping these heinous crimes and protecting vulnerable children. Read more here.
Policies affected: AML/CTF Programs
Organisations affected: AUSTRAC reporting entities
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