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Andrea brings legal capability and insights into regulatory matters, corporate governance, compliance and risk management. She assists her clients to adapt to a rapidly changing regulatory landscape and ensures that they meet the expectations of regulators, clients and shareholders. Andrea distinguishes herself as her expertise extends across legal and consulting fields, including: consumer credit, start-up companies; blockchain and digital currency; and anti-money laundering and counter terrorism finance.

In the past 12 months there have been a number of significant developments in the banking, investment and insurance industries. Key developments include the proposed regulation of cryptocurrency and the Buy Now Pay Later Industry, the Reserve Bank of Australia’s research project into uses cases for introducing a Central Bank Digital Currency (CBDC) and the increasing relevance of climate change risks in the banking and finance industry.

Regulation of Cryptocurrency

On 20 October 2021, the Senate released its Select Committee on Australia as a Technology and Financial Centre Report. Key recommendations included:

A) establishing a financial markets licensing regime for digital currency exchange providers and implementing rules for custody of such digital assets; and

B) undertaking a token mapping exercise to classify the various types of crypto-asset token and other digital assets, which may result in such tokens being characterised as financial products and therefore subject to the Australian financial services licensing regime.

The new Labor government has committed to implementing the recommendations and has announced a token mapping exercise that is intended to be conducted before the end of 2022.

Buy Now Pay Later Regulation

There is a voluntary Buy Now Pay Later Code of Practice in place but currently, there is no mandatory regulation of the sector. However, in June 2022, Minister for Financial Services, Stephen Jones, announced that BNPL products will be regulated under the National Consumer Credit Protection Act 2009 (Cth) (NCCP Act). Regulations are expected to be introduced by mid 2023.

Reserve Bank of Australia’s Central Bank Digital Currency

The Reserve Bank of Australia is actively researching use cases for introducing a CBDC. A CBDC can most easily be understood as a digital form of cash. The unit of account would be the national currency, and it could be exchanged at parity (i.e. one for one) with other forms of money, such as physical currency or electronic deposits with well-regulated financial institutions.

Open Banking

Since 1 July 2020, Australia’s bank customers can give permission to accredited third parties to access their savings and credit card data. Since 1 November 2020, they can also give permission to accredited third parties to access mortgage, personal loan and joint bank account data. This will enable bank customers to search for a better deal on banking products or to keep track of their banking in one place.

Climate Change Risk

The issue of climate change has prompted the banking and financial services industry to explore more proactive approaches to managing and disclosing climate related risks. Discussions around reforms have been engendered by increased concerns over the potential liability of company directors for failing to disclose climate-related risks or declaring green goals while in reality lacking credible plans to actually achieve them.

Drawing on her technical knowledge and experience, Andrea has the ability to assist customers to not only adapt but leverage regulatory reforms and industry developments.

The Australian jurisdiction is attractive for foreign investment. ASIC’s (Australia’s corporate regulatory body) intentions are overall positive, designed with consumer protection in mind. However, it is critical that ASIC strikes an appropriate balance between consumer protections and market development.

One particular area that ASIC continues to express concern about is the issue of Contracts for Difference (CFDs) to retail investors. On 6 April 2022, ASIC extended its product intervention order (PIO) which, among other things, imposes limitations on leverage rations. The PIO will remain in place for at least 5 years to 23 May 2027. In Report 724 (Response to submissions on CP 348: Extension of the CFD product intervention order) ASIC found that the intervention order had been effective in reducing the risk of significant detrimental loss to retail clients resulting from CFDs.

Overseas Institutions and Regulators

Andrea regularly advises foreign overseas clients on the structuring and establishment of financial services and credit businesses in the Australian market. Andrea understands the importance of understanding the unique needs of overseas clients and developing innovative solutions that meet the specific needs of the client.

The Banking Regulation Review (13th edition)

Andrea recently contributed to the 13th edition of the Banking Regulation Review, a book that details the regulatory regime for banks in over 33 countries and territories. The Australia chapter, authored by Andrea Beatty, examined various elements of the banking and finance sector including prudential regulation, conduct of business, funding and control of banks and transfers of banking business.

Australians lost a record amount of more than $2 billion to scams in 2021(1). The incidence of scams has continued to be exacerbated by the ongoing impacts of COVID-19. According to the Australian Competition and Consumer Commission, in 2021 Scamwatch received 4,283 reports that mentioned COVID-19 and $8.6m in reported losses.(2) It is imperative that companies implement a fraud policy. The policy should address who is responsible for the overall management of fraud and formal procedures that employees must follow if a suspicion of fraud arises.

(1) Australian Competition and Consumer Commission, ‘Targeting scams: Repot of the ACCC on scam activity 2021’

(2) Ibid.

The rise of the digital economy is one of the defining features of 21st century Australia. The Government has noted the rapid expansion in the use of crypto assets in Australia. The Australian Taxation Office has found that more than 800,000 Australian taxpayers have transacted in digital assets in the last three years, up 63% in 2021 from 2020. This increased usage has led to risks to consumers which the existing regulatory framework is not designed to manage.

In March 2022, the Government released a consultation paper which proposes a new regulatory and licensing regime for 'crypto asset secondary service providers' (CASSPrs). This followed a call by Senator Andrew Bragg for crypto reforms to be consolidated into a comprehensive legislative package (including a 'Digital Services Act'), The main regulatory framework tabled could fall outside the existing Australian Financial Services licensing regime and focuses on the ecosystem of those who offer custody, storage, brokering, exchange and dealing services or operate a market in crypto assets for retail clients.

The stated purpose of consulting with the industry and broader public is for the Government to understand whether its proposals will meet its policy aims - to create a predictable and fit-for-purpose legal framework without undue restrictions and to remain technology neutral.

The growth of digital assets presents the challenge of developing a fit-for-purpose regulatory regime that is flexible enough to adapt to the ever evolving nature of digital assets. With this comes the challenge of striking an appropriate balance between the need for consumer protection and encouraging innovation.

An AFSL is required if a person carries our financial services in Australia unless an exemption applies. Under the Corporations Act 2001 (Cth), derivative based activities constitute a financial service and therefore an AFSL is required. Accordingly, Andrea assists entities dealing with derivatives in the process of acquiring an AFSL.

Most entities dealing in derivatives have reporting and other compliance obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth). Andrea advises in relation to AML/CTF laws including drafting AML/CTF Programs and conducting independent audits.

Andrea remains very active in networking events. For instance, Andrea was recently the chair speaker for the 7th Annual Legal Wise Credit Law Conference. This highly anticipated gathering played host to a range of industry experts, legal professionals, politicians and financial services representatives. Andrea will also be chairing day one of the 2022 Informa Credit Law Conference later in the year.

Andrea continues to contribute to global publications. As discussed in question 4, she contributed to the Banking Regulation Review. Furthermore, Andrea authored a chapter in the Consumer Finance Law Review. The Consumer Finance Law Review, published by Law Business Research Ltd, provides an overview of the regulation of consumer financial services in 16 countries, including Australia, the United States and the United Kingdom. It provides an insight into laws governing credit, deposit and payment products and issues of current concern in the consumer financial services space. Andrea authored the chapter about consumer financial services regulation in Australia for the 4th, 5th and 6th edition of the publication. It is useful reading for any overseas consumer financial services business who are looking to enter the Australian market. Andrea has also authored 6 editions of the Annotated National Credit Code (LexisNexis) and is currently preparing the 7th edition.

In addition to those regulatory developments discussed at question two, further reforms to the regulation of consumer credit and unfair contract terms are pending.

At its first sitting on 28 July 2022, the Government announced its intention to introduce a Bill implementing reforms to the unfair contract terms regime. Among other reforms, the Bill will introduce a prohibition against the making of unfair contract terms that, if contravened, will attract a pecuniary penalty.

On 8 September 2022, the Financial Sector Reform Bill 2022 (Bill) was introduced to Parliament. The Bill introduces anti-avoidance provisions that prohibit schemes designed to prevent a contract from being a small amount credit contract or a consumer lease. The provisions also prohibit schemes designed to avoid the application of a product intervention order.

If you have any inquiries regarding the banking and finance sector in Australia, please do not hesitate to contact Andrea.

International Banking & Finance - Australia

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Andrea Beatty

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