Phone and Internet Consumer Contracts Code
The new code of practice is intended to provide assurance that contracts offered by telecommunications service providers will be simpler, fairer and more transparent.
eMarketing Code, m-commerce and Spam Act
The code sets industry-wide rules and guidelines for the sending of commercial electronic messages in accordance with the Spam Act 2003.
Registration means that the ACA can enforce compliance with the code rules on all members of the e-marketing industry, as defined by the Telecommunications Act 1997, and not just signatories to the code.
“The code provides a framework of practical advice and guidance for the e-marketing industry to use e-marketing responsibly, to handle any complaints about practices that might be spamming and to monitor industry compliance,” ACA Acting Chairman Dr Bob Horton said.
“The code also provides consumers with a clear understanding of e-marketing industry processes and benchmarks for sending commercial electronic messag
Under the Telecommunications Act 1997 e-marketers are defined as those who use e-mail or mobile telephones as their main marketing tool, or who market in this way by contract or arrangement on behalf of a third party. However, businesses other than e-marketers are likely to follow the code to ensure best practice and compliance with the Spam Act.
Under the Telecommunications Act, the ACA has the power to direct any e-marketer who has contravened the code to comply with it. If an e-marketer fails to comply with a direction, the ACA can then take the matter to the Federal Court which can impose penalties of up to $250,000 for each contravention.
The ACA also recently released an m-commerce guide.
Queensland BAD Tax to endAs announced last year Queensland debits tax will end on 1 July 2005. Debits tax will continue to apply until 30 June 2005. Any debit tax liabilities accruing up to and including 30 June 2005 will remain payable.
Disclosure of related party transactions
ASIC has announced the results of its recent review of "related party" compliance.
The campaign targeted eight areas of disclosure where the quality of information in related party documents sent to shareholders continues to be defective. These areas of disclosure include:
- the valuation of the financial benefit;
- the disclosure of the total remuneration package of the related party;
- the description of the related party;
- the details of the financial benefit including reasons for giving the type and quantity of the benefit;
- the disclosure of the related party's existing interests in the company;
- the disclosure of the dilution effect of the transaction on existing members' interests;
- the disclosure of the trading history of the relevant equity, including highest, lowest and most recent closing price; and
- the disclosure of each director's recommendation and interest in the outcome of related party transactions.
During the three-month period September 2004 to November 2004, ASIC reviewed a total of 223 notices of meeting and accompanying documents, including re-lodged notices of meeting. 58 notices of meeting were found to have common defects. As a result:
- 50 notices were withdrawn and subsequently re-lodged once the common defects had been rectified;
- five notices were withdrawn and not re-lodged;
- three required further regulatory action;
- one comment letter was issued; and
- in one case where the company had already sent the related party documents to shareholders prior to the lapse of the statutory 14-day period, ASIC obtained an undertaking from the company that it would withdraw the relevant resolution from shareholder consideration.
ACCC gets high fine for price-fixing
The ACCC has continued its push for high penalties (including jail terms) for people found guilty of anti-competitive conduct following the recent decision on petrol price fixing in the Ballarat area.
Pecuniary penalties totalling $23.305 million were ordered by the Federal Court for price-fixing conduct in the Ballarat petrol market.The ACCC instituted proceedings against 16 respondents.
However there is concern that some of the respondents are insolvent.
New Communications Regulator
Managed investment unit pricing
ASIC has accepted an enforceable undertaking from The Colonial Mutual Life Assurance Society Limited (CMLA), Colonial Mutual Superannuation Pty Limited (CMS) and Commonwealth Custodial Services Limited (CCSL).
The undertaking follows the identification by CMLA, CMS and CCSL of some irregularities with unit-linked investment options offered by CMLA, CMS or CCSL, and managed by CMLA.
CMLA, CMS and CCSL advised ASIC that some unit prices in the unit-linked investment options managed by CMLA were wrong due to the incorrect allocation of imputation tax credits, the incorrect treatment of tax allowances, other tax related problems, and processing irregularities. Investors in some superannuation funds, deposit funds, master funds and master trusts were provided with incorrect information concerning their investments including incorrect account balances and incorrect withdrawal amounts by CMLA or CCSL. CMS and CCSL are approved trustees of the relevant funds and trust.
ASIC's Executive Director of Enforcement, Ms Jan Redfern said ASIC and CMLA, CMS and CCSL agreed to enter into an enforceable undertaking to ensure that investors who had been affected by the unit pricing error were returned to the same position they would have been had the errors not occurred.
CMLA has already rectified unit prices and made restitution to investors in connection with a number of the issues.
As part of the enforceable undertaking, CMLA has undertaken to engage an external compliance consultant, to be approved by ASIC, to review the systems, procedures and processes established by CMLA to ensure that similar issues do not happen again. CMLA has undertaken to report on these requirements to ASIC
CMS and CCSL have also agreed to compensate and notify investors affected by those unit pricing issues, which have not yet been addressed, and to report on this requirement to ASIC.
In December 2004, ASIC and APRA issued a consultation paper seeking industry comment on proposed guidance for good practice in unit pricing.
Third Party Signatory requirements
Austrac has issued an information circular clarifying which account signatories must be identified by cash dealers under the Financial Transaction Reports Act.
A key quote:
Any individual who has the ability to authorise a debit transaction for an account is considered to be a signatory to that account and therefore must be identified by the cash dealer offering the account. This applies regardless of the signatory being a third party acting as a professional for their client, an authorised staff member of an entity, the formal holder of the account, or a subsidiary card-holder of the account (if applicable).
The circular also deals with an individual who has ‘authorising officer’ access to a software-based product used to transmit electronic payment instructions to a cash dealer in relation to an account.
Fee disclosure for super funds and managed investments
Regulations that set out a standardised template for superannuation and managed investment products to disclose fees and costs have been gazetted.
The Corporations Amendment Regulations 2005 (No. 1) include an ASIC Fee Template, single-figure disclosure model and a consumer advisory warning box.
The new Rules commence on 1 July 2005.
International Financial Reporting and Capital Framework
APRA has issued information on 2 areas affecting the financial services industry:
1. Basle II Capital Framework: an article in the latest APRA Insight discusses the implementation of the new capital standards.
2. IFRS: APRA has released a paper dealing with the prudential implications of a number of specific IFRS‑related changes to Australian accounting standards. It is intended that the proposals will take effect from 1 January 2006.