Mackay Chapman September 2023 ASIC Update

In this month’s ASIC update:

• The Federal Court has dismissed ASIC’s case against Mr Jason Bettles, a registered liquidator and Partner at Worrells Solvency and Accounting;
• Following a review by ASIC, Namoi Cotton and Fluence Corporation have been prompted to improve disclosure of business risks, including sustainability;
• ASIC is seeking industry input on extending the ASIC Corporations (Design and Distribution Obligations Interim Measures) 2021/784 instrument by five more years;
• ASIC checked how insurance companies are dealing with home insurance claims and found issues in five main areas; and
• ASIC and the RBA have issued a joint letter to ASX Clear Pty Limited and ASX Settlement Pty Limited regarding their engagement with the newly established ASX Cash Equities Clearing and Settlement Advisory Group.

‍ASIC – RBA issue joint letter of expectations to ASX

ASIC and the RBA have issued a joint letter to ASX Clear Pty Limited (ASX Clear) and ASX Settlement Pty Limited (ASX Settlement) regarding their engagement with the newly established ASX Cash Equities Clearing and Settlement Advisory Group (Advisory Group). 

The Advisory Group, led by Independent Chair Alan Cameron AO, aims to provide strategic advice to ASX Clear and ASX Settlement on clearing and settlement matters following concerns about the CHESS replacement program. These concerns encompass stakeholder engagement, governance processes, and conflict of interest management.

The regulators' letter mandates that ASX Clear and ASX Settlement collaborate in good faith with the Advisory Group, emphasising public interest. Joe Longo, ASIC Chair, underlines the critical role of the Advisory Group in the CHESS replacement program's success through collaboration with ASX and the industry.

Both entities are expected to acknowledge the joint letter and commit to compliance by August 31, 2023. ASIC and RBA jointly oversee licensed clearing and settlement facilities, with separate but complementary responsibilities.

Read more here. 

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‍Federal Court case against liquidator dismissed

The Australian Securities and Investments Commission (ASIC) has dismissed its case against Jason Bettles, a registered liquidator and Partner at Worrells Solvency and Accounting. Mr Bettles was the liquidator of the Members Alliance Group of companies from 22 July 2016 until his resignation on 13 July 2017.

ASIC alleged that Mr Bettles failed to discharge his obligations as a liquidator, and failed to act independently and with a degree of care and diligence required of a liquidator, leading to the improper transfer of Members Alliance Group assets. However, the Federal Court found that ASIC did not make its case and dismissed the case.

The Court found that there was no evidence that Mr Bettles was involved in the development and implementation of a complex strategy to transfer assets and divert income streams from various members of the Members Alliance Group to the detriment of creditors. The Court also found that there was no evidence that Mr Bettles acted dishonestly or with reckless indifference to the interests of creditors.

The dismissal of this case is a significant victory for Mr Bettles and his legal team and demonstrates the difficulties that ASIC can face in pursuing complex claims against individuals based on accessorial liability, something potential respondents/defendants and their lawyers should keep in mind.

Read our article on the decision here and access ASIC’s media release here.

ASIC review improves risk disclosures for Namoi Cotton and Fluence Corporation, including sustainability-related risks

Following a review by ASIC, Namoi Cotton and Fluence Corporation have been prompted to improve disclosure of business risks, including sustainability. Namoi Cotton shared these at its AGM on July 19, 2023, while Fluence Corporation did so on July 31, 2023.

ASIC aims to ensure governance transparency, with directors providing vital information for informed investments. Recent International Sustainability Standards Board (ISSB) standards and Australia's consultation on climate-related disclosures highlight the evolving regulatory landscape.

Entities should get ready for mandatory reporting changes, considering voluntary reporting aligned with the Task Force of Climate-related Financial Disclosures (TCFD) framework and engaging with ISSB standards.

ASIC suggests stakeholders review ISSB and TCFD materials. The commission will continue scrutinising select annual reports using a risk-based approach to ensure accurate risk disclosure.

Read more here. 

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‍ASIC proposes to extend design and distribution obligations instrument

ASIC is seeking industry input on extending the ASIC Corporations (Design and Distribution Obligations Interim Measures) 2021/784 instrument by five more years. 

This instrument – initially set for two years – brings in measures announced by the Treasury, including relief for distributors who received no complaints from reporting to product issuers. The extension aims to provide industry certainty as reforms progress.

ASIC finds the current instrument effective and necessary, proposing minor changes like extending the expiry date to October 5, 2028, and removing an exemption for cashless welfare arrangements, which is now unnecessary due to new regulations.

Find out more here, including where to send feedback submissions.

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‍ASIC review finds insurers can and should improve claims handling

ASIC wants insurance companies to handle claims better. The regulator checked how companies deal with home insurance claims and found issues in five main areas. These areas include talking to customers, managing projects, helping vulnerable customers, handling complaints, and having enough staff.

The findings looked at data from over 218,000 claims made between January and March 2022 by six insurance companies. These companies cover a big part of the home insurance market in Australia.

Now, ASIC is telling insurance companies to talk clearly with customers, manage projects well, help people who are vulnerable, handle complaints better, and have enough staff for claims.

ASIC will write to the insurance companies about these improvements and will keep an eye on how they do. They're also looking into other things like unfair contract terms and how companies handle complaints. 

Read more here. 

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‍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.