==================================
FSR Update
==================================

Network Law is providing workshops and advice to clients on applying for AFS licences and FSR compliance plans.

For more information contact your local Network member.

Permalink

==================================
New Code of Banking Practice
==================================
The Australian Bankers' Association has released the new Code of Banking Practice. The Code is the banking industry's code of conduct on best banking practice standards.

It will replace the original Code of Banking Practice which was developed in 1993. The new Code will not become operational until August 2003 because banks need adequate time to change documentation, computer systems, update procedures and ensure staff are properly trained to ensure compliance with the Code.

This will be conducted simultaneously with banks' preparations for compliance with the Financial Services Reform Act which takes full effect on 1 March 2004.

Changes to the Code deal with credit assessment, guarantees and procedures for branch closures. The scope has been extended to cover any small business that employs less than 20 employees, as well as a goods manufacturing business that employs less than 100 employees as well as individuals.

Download the Code

==================================
Credit Code Mandatory Comparison Rate Draft Regulations
==================================
Draft regulations for the Consumer Credit (Queensland) Amendment Act 2002 dealing with mandatory comparison rates have been released for comment.

The Act requires a comparison rate to be included in any advertisement for a fixed term credit product that contains an annual percentage rate. The regulation sets out how that rate is calculated. The calculation will include retained ascertainable credit application and establishment fees but not fees such as redraw fees or fees for early repayment.

While the Act requires credit providers, finance brokers and linked suppliers to display and have available copies of a comparison rates schedule, the draft regulation gives agents such as schools and community centres an exemption if the agent does not possess authority to fully conduct the credit provider's business.

The closing date for comment is 27 September 2002. The target date for commencement of the Act and regulation is 1 July 2003.

Download the Draft Regulations and the Explanatory Notes.

Permalink

===============================
FSR WORKSHOP ADVANCE NOTICE
===============================
We will be conducting an FSR National Workshop in Perth, Adelaide, Melbourne, Sydney and Brisbane between 17 and 23 September.

This half day workshop has been developed in response to the interest expressed by Credit Unions and other financial service providers for further compliance assistance following our successful FSR conference in February. It will focus on Disclosure, Licensing, Training and Conduct issues relevant to Basic Deposit Products, Deposit Products and Third Party Products.

Format
The workshop will run for 3 hours and during that time we will develop the requirements of a fictional Credit Union. This will be a Credit Union with the following products:

· Deposit products: at call products and term deposits (6 months, 12 months, 2 and 3 year terms);
· Non-cash payment products including direct debit, direct credit, cheque, debit card and Bpay facilities.
· Third party insurance products: Motor Vehicle Insurance; Home Building and Contents Insurance; and Consumer Credit Insurance; and
· Referrals to financial planning services.

We will also consider the particular issues affecting financial institutions which provide services through subsidiaries.

Outcomes
After completing the workshop participants will take with them a product matrix to categorise and identify their financial services, and a recommended timetable for obtaining their AFS licence. They will be able to assess their licensing, training and disclosure requirements and will be aware of ongoing compliance issues.

A brochure detailing venues and cost, and a registration form, will be distributed soon.

Permalink

==================================
ASIC Hawking Guide
==================================
ASIC has released "The hawking prohibitions: an ASIC guide", a guidance paper on the hawking prohibitions in the Corporations Act 2001. Under the hawking prohibitions, a financial institution must not offer financial products for issue or sale in the course of, or because of, an unsolicited meeting or telephone call with a retail client. The hawking prohibitions aim to prevent pressure selling of financial products to retail clients (such as badgering and boiler-room practices).

Download the guide

==================================
ADI Director Qualifications
==================================

Amendments to the Banking Act currently before Parliament allow APRA to remove directors and senior managers of ADIs. APRA may disqualify a person if it is satisfied that the person is not a fit and proper person to be or act as a director or senior manager. A disqualified person would be prohibited from acting as a director or senior manager. APRA will also have the power to determine that a person is not a disqualified person.



==================================
More NRMA Cases
==================================

NRMA v Snodgrass, [2002] NSWSC 590

On 20 June 2002 Mr Snodgrass requisitioned a general meeting to remove 8 directors (from one faction). Separately Mr Dupree requisitioned a meeting to remove the other 6 directors (from the other faction). There is dissatisfaction over increases in fees and reduction in services, amongst other things.

NRMA made an application to have both meetings at the same time and that the time for holding the meetings be extended until the 2002 AGM in November 2002 as the cost of holding a separate meeting was $2.6 million, compared to $1.4 million for a meeting on the same day as the AGM.

Section 249D of the Corporations Act requires that the directors must call and arrange a general meeting requisitioned by at least 100 members within 21 days after the request is given and the meeting must be held not later than 2 months after the request is given.

Whilst Judge Windeyer found it extraordinary that a general meeting of a company with over 2 million members can be summoned by requisition of only 100 members, he could not take that into account. He noted that on the evidence it would take at least 2 months for the notice of meeting to be prepared and sent out and was therefore prepared to give some extensions of time.

He decided that it was not suitable for factional removal resolutions to be debated at or on the same date as an AGM in a non-election year. He also rejected a meeting being held on the day before the AGM as it was possible that all directors would be removed, throwing the AGM into disarray.

He ordered that the meeting be called by 10 September to be held by 17 October.

Read the decision

ASIC v Whitlam

On Friday 19 July Mr Justice Gzell of the Supreme Court of New South Wales announced his decision in ASIC's civil penalty action against then NRMA Limited President Mr Nicholas Whitlam.

The Court found that Mr Whitlam had breached his duties as an officer of NRMA Limited under the Corporations Law.

The breaches related to NRMA Limited's 1998 Annual General Meeting, when Mr Whitlam as Chairman failed to vote certain proxy votes against a resolution relating to the remuneration of the company's directors.

Mr Whitlam was found to have breached section 232(2) (duty to act honestly), s. 232(6) (improper use of position) and s. 250(A) (duty as a proxy holder) of the Corporations Law.

The Court also found that Mr Whitlam had failed to exercise due care and diligence (in breach of s. 180(1) of the Corporations Act) when he amended the proposed minutes of the August 2000 Board meeting of NRMA Insurance Group Limited. However, the Court exercised its discretion to relieve Mr Whitlam from any penalty for this breach.

ASIC has claimed banning orders and pecuniary penalties against Mr Whitlam. A penalty hearing will be held on 13 August.

Mr Whitlam subsequently resigned as President of NRMA but remains a director.

==================================
Consumer Credit Code Update
==================================
Download an article on the recent amendments to the Code

==================================
Disclosure of transaction banking fees
==================================
ASIC has released a guide promoting improved disclosure of transaction fees for retail payments and deposit products (transaction accounts) offered by banks, credit unions and building societies.

The guide provides an easy reference for institutions to current disclosure requirements contained in legislation and codes of practice as well as ASIC's views on what constitutes good transaction fee disclosure.

Download the guide

Permalink