Mackay Chapman March 2024 ASIC Update

In this month’s ASIC update:

• ASIC shuts down nearly 3,500 scam websites, steps up surveillance in push to protect consumers;
• ASIC calls on industry to improve oversight of Choice Super performance and address issues;
• New Moneysmart data reveals young women more stressed than young men about finances, cost of living;
• ASIC approves prescribed form for life insurance memorandums of transfer; and
• ASIC consults on changes to OTC derivative transaction rules.

‍
ASIC Shuts Down Nearly 3,500 Scam Websites, Steps Up Surveillance in Push to Protect Consumers

ASIC has recently unveiled that its efforts to combat fraudulent investment schemes have resulted in the removal of nearly 3,500 scam websites since the launch of its scam website takedown initiative in July 2023. This initiative underscores ASIC's commitment to shielding Australians from digital scams, especially in the realm of investments. The latest update from ASIC also emphasises the regulatory body's broader agenda, which includes not only disrupting investment scams but bolstering market integrity through vigilant surveillance activities.

ASIC Chair Joe Longo underscored the pressing need to protect consumers amidst rising cost-of-living concerns, which have driven more Australians to explore alternative avenues for financial stability. Longo emphasised ASIC's proactive approach to nip investment scams in the bud by targeting their online promotion channels, thereby preventing unsuspecting individuals from falling victim to these schemes. 

He also hinted at ongoing regulatory scrutiny and enforcement actions, including investigations into lenders' compliance with hardship obligations, banks' support for First Nations consumers, and superannuation trustees' handling of member services such as death benefits claims.

Read more here.

ASIC Calls on Industry to Improve Oversight of Choice Super Performance and Address Issues

ASIC's recent review into Choice super products highlights concerns about the risk to Australians' retirement outcomes from persistent underperformance of superannuation options, particularly in Choice products, which collectively hold over $1.1 trillion in savings. 

ASIC Commissioner Simone Constant emphasised the need for trustees, financial advisers, and advice licensees to prioritise investment performance and ensure transparency for members. The review found shortcomings in communication about underperforming options and insufficient due diligence by trustees and advisers. 

ASIC expects stakeholders to prioritise performance, monitor investment options rigorously, and communicate effectively with members. The regulator is considering regulatory responses to address advice deficiencies identified during the review and intends to collaborate with APRA to improve investment governance practices in the superannuation industry.

Find out more about the review here.

New Moneysmart Data Reveals Young Women More Stressed Than Young Men About Finances, Cost of Living

New research from ASIC's Moneysmart has uncovered some eye-opening insights into the financial concerns of Gen Z women.

According to Moneysmart's findings, Gen Z women are feeling the pinch more than their male counterparts.  Gen Z women are:

• more likely than Gen Z men to be severely stressed about the cost of living (87% to 77%);
• more likely than Gen Z men to feel overwhelmed by finances (57% compared to 41%);
• less likely than Gen Z men to research ways to grow their wealth (14% compared to 21%);
• more likely than Gen Z men to have no personal savings (11% compared to 4%); and
• more likely than Gen Z men to use buy-now-pay-later services (32% compared to 25%).

ASIC Acting Senior Executive Leader, Amanda Zeller, highlights that this gender gap in personal finance isn't just an Aussie issue – it's a global trend. Ms Zeller observes that women, especially younger women, tend to feel less confident and knowledgeable about money matters compared to men, and it doesn't help that societal stereotypes often reinforce these insecurities.  “It's an issue we need to tackle, because the emerging picture is bleak: The financial decisions young women make today will compound across their lifetimes.”

A compounding factor identified by ASIC is "girl-math" – one of the biggest trends on social media last year. It involves justifying spending through creative calculations, like convincing yourself a designer bag is a steal because you'll use it every day and amortising its upfront cost on a ‘per use’ basis. While the thinking can have a foundation in economic analysis, these creative rationalisations don’t improve financial security.

So, what's the solution? Ms Zeller identifies empowerment and education. Moneysmart is leading the charge with tools and resources aimed at helping young women take control of their finances. From budgeting tips to investment strategies, they're arming young women with the knowledge they need to secure their financial futures.

And it's not just about numbers – it's about mindset. Tracking spending, automating savings, and making every dollar count are key steps in overcoming the barriers of “girl-math”. By breaking free from stereotypes and embracing financial literacy, you can chart your own path to financial independence.

ASIC Approves Prescribed Form for Life Insurance Memorandums of Transfer

ASIC has been granted the authority to officially endorse the format of life insurance memorandums of transfer. In line with this authority, ASIC has sanctioned the current edition of ‘Form 2 – Memorandum of transfer for assigning rights under a life policy’ (referred to as the Form), as outlined in Schedule 4 of the Life Insurance Regulations 1995 (LI Regulations), as the designated format for such memorandums of transfer as specified under incoming subsection 200(2B) of the Life Insurance Act 1995 (LI Act).

Effective from March 1, 2024, the Form has been approved for ongoing utilisation.

Find out more here.

ASIC Consults on Changes to OTC Derivative Transaction Rules

ASIC is seeking feedback on proposed changes to the ASIC Derivative Transaction Rules (Reporting) 2024 and minor changes to the ASIC Derivative Transaction Rules (Clearing). 

These changes aim to simplify reporting requirements and align with international standards. The proposals include simplifying exclusion criteria, clarifying reporting scope, and adding allowable values for data elements. 

Proposed changes would commence on October 21, 2024, with some exceptions. Feedback is welcomed until March 28, 2024. These proposals follow consultations in 2020 and 2022 and aim to ensure reporting requirements are fit for purpose.

ASIC encourages stakeholders to provide input via email to otcd@asic.gov.au.

More information is available here.

‍

The contents of this article do not constitute legal advice and it is not intended to be a substitute for legal advice and should not be relied upon as such.  It is designed and intended as general information in summary form, current at the time of publication, for general informational purposes only.  You should seek legal advice or other professional advice in relation to any particular legal matters you or your organisation may have.

‍