Australian Regulatory Compliance Review

Workplace relations changes transition

The new Commonwealth Government was elected only 1 month ago but there is a great deal of interest in its plans to change workplace laws.

According to a media release from the Deputy Prime Minister and Minister for Employment and Workplace Relations, Julia Gillard, the transition bill, which is currently being drafted, will be introduced into the Parliament as a matter of priority in the first sitting week of 2008.

The transition bill will, among other things:

• prevent the making of new Australian Workplace Agreements;
• create a new form of individual workplace agreement – the Interim Transitional Employment Agreement (ITEA) – to be available only for limited use during the transitional period;
• remove the previous Liberal government’s Workplace Relations Fact Sheet requirements;
• put in place a new no-disadvantage test for new agreements to provide better protection for employees; and
• enable the Australian Industrial Relations Commission (AIRC) to undertake the process of modernising industrial awards.

Further information is contained in a transcript of an interview on 18 December. The key points are:

• after the law is changed there will be no new Australian Workplace Agreements
• existing AWAs stay for the balance of their term
• under the new law, "our options could be to make a collective agreement with all of your staff to govern their terms and conditions, to make individual common law agreements but those common law agreements have to give people better than the safety net that is the significant difference with AWAs which can give you something worse than the safety net. Or for a two year period, there will be a transitional instrument called an Interim Transition Employment Agreement, an ITEA, that’s a statutory individual agreement but once again, unlike an AWA that has got to not disadvantage you compared with the safety net."
• "there would be two pieces of legislation. The first bill, the one ... that ends Australian Workplace Agreements, the ability to make new ones, that’s the transitional bill. It will be followed by a substantial piece of legislation. That substantial piece of legislation will deal with the whole of our new IR system. Now the system will come into full operation...on the first of January 2010. That’s when awards will be modernised, that’s when our new industrial umpire, Fair Work Australia will come into operation. Obviously that bill will deal with a number of matters including unfair dismissals. ... What we want to have is a streamline system that works for everybody, that makes sure if a worker has a genuine complaint about their dismissal that gets heard and fixed but that people aren’t dragged away from their business that the complaint is dealt with quickly."

UPDATE 8 January 2008: Page 136 of The Parliamentary Library Briefing Book (pdf) contains a helpful summary of the proposed changes.

2007 business regulation in review

2007 ended with a "one in 10 year" change of federal government which in retrospect defined 2007 as a  year of policy reviews and proposals mixed in with marginal regulatory improvements and some significant court decisions.

Whilst 2008 is likely to bring substantive regulatory changes in the areas of commonwealth-state relations, business deregulation, climate change, freedom of information, tax reform and workplace relations, 2007 was a year of media releases in preparation for an election.

At the same time, regulators sought to show they were effectively implementing and enforcing their area of supervision.

What happened in 2007?

The Do Not Call Register started.

Anti-money laundering law implementation continued.

In financial services regulation, Basel II starts on 1 January 2008 after a long gestation period.

The Corporations Act was updated with the Simpler Regulatory System changes.

ASIC defended itself against criticisms of its performance of its consumer protection mandate and launched some major actions with mixed results. (Westpoint, Citigroup)

The ACCC had some successful cartel and price-fixing prosecutions (including Visy).

The Access Card proposal sank without a trace.

What are the "sleeper issues"?

Privacy and security of customer data (especially electronically stored information) and business integrity and ethics (eg AWB) are issues that will continue to trouble businesses.

I'll continue this blog in 2008 with my RSS feeds, regular email newsletters and occasional podcasts. Thank you for reading.

NEW YEAR BONUS: 2007 has seen a few new Australian legal blogs...check them out here

Elder financial abuse (or Financial Abuse of the Vulnerable Older Person)

BFSO Bulletin 56 (pdf) contains some excellent resources on elder financial abuse focussing on the role that banks and other financial institutions can play.

The purpose of the Bulletin is to provide information about financial abuse and how to identify it - to assist in raising awareness of the issue and to highlight some warning signs - and to put that information in the context of the interaction between banks and other financial institutions and their older customers.

It draws on the findings of Older People and the Law, a Report of the House of Representatives Standing Committee on Legal and Constitutional Affairs following its Inquiry into Older People and the Law.

Resale price maintenance penalty: Navman

In Australian Competition and Consumer Commission v Navman Australia Pty Ltd [2007] FCA 2061, the Federal Court imposed penalties totalling $1.36 million against Navman Australia Pty Ltd and 2 of its officers as a result of a large number of contraventions of the resale price maintenance prohibition contained in s 48 of the Trade Practices Act 1974 (Cth) .

A penalty of $1.25 million was imposed on Navman and penalties of $80 000 and $30 000 respectively were also imposed on Mr Christopher Baird, a former director of Navman and the former Australasian sales manager of Navman, Mr David King.

Navman engaged in extensive resale price maintenance over a period of more than three years.  Its conduct extended to the supply of both marine equipment and personal and in-car navigation (PCN) products. Its conduct in relation to the supply of marine equipment covered the period from 2001 to 2004.  Its resale price maintenance conduct in the supply of PCN products covered the period from 2003 to 2004.

ASIC relief for foreign-controlled small proprietary companies

ASIC has made Class Order [CO 07/822] varying Class Order [CO 98/98] which provides relief to foreign-controlled small proprietary companies which are not part of a “large group” (as defined in the principal class order) from the requirement under paragraph 292(2)(b) of the Act to prepare and lodge audited financial reports and directors’ reports with ASIC.

The amending class order reduces the administrative burden on companies relying on the relief to lodge forms with ASIC every year. (Explanatory statement)

Debenture advertising: ASIC Regulatory Guide 156

ASIC has released  Regulatory Guide 156: Debenture advertising (pdf).

ASIC will expect advertising by debenture issuers to comply with the guide from late January 2008 onwards.

The Guide sets out the following principles-based standards in relation to the advertising of debentures for issuers of debentures:

1. All advertisements for debentures offered to retail investors should include a prominent statement to the effect that investors risk losing some or all of their principal investment.

2. Advertisements for debentures should only quote an interest rate if it is accompanied by prominent disclosure of either the current credit rating for the debenture and what that means or where to find this information or, where the debenture does not have a rating, what this means.

3. Advertisements should state that the debenture is not a bank deposit. They should also avoid the use of terms such as ‘secure’, ‘secured’ and ‘guaranteed’ and avoid the term ‘no fees’, as these statements may convey a misleading impression as to the risk profile of the debenture.

4. Advertisements for debentures should not state or imply that the investment is suitable for a particular class of investor.

5. Statements in advertisements for debentures should be consistent with the corresponding disclosures in the prospectus.

6. Statements made in response to inquiries are subject to the same regulation regarding misleading and deceptive conduct as the advertisements.

The guide also makes it clear that ASIC expects publishers to have systems and controls to detect and refuse advertisements for debentures that do not comply with these advertising standards.

ACCC to monitor green marketing claims

The ACCC is taking a closer look at a number of the green claims that are being made. All businesses need to ensure they are not misleading their customers with such claims.

Green marketing does not refers solely to the promotion or advertising of products with environmental characteristics. Green marketing claims, in the broader concept are now being applied to consumer goods, industrial goods, services, corporate activities.

The ACCC intends to ramp-up its green compliance activities with a combination of business and consumer educative initiatives and targeted enforcement action.

APRA's approach to the supervisory review process under Basel II

The Australian Prudential Regulation Authority (APRA) has released an information paper on its approach to the supervisory review process under the new Basel II capital adequacy regime, known as the Basel II Framework. This follows the release, on 30 November 2007, of the full suite of prudential standards that will give effect to the implementation of Basel II in Australia.

The supervisory review process, or Pillar 2, is one of three mutually reinforcing pillars on which the Framework is based. The review process is intended to ensure that locally incorporated authorised deposit‑taking institutions (ADIs) have adequate capital to support all the risks in their business and to encourage ADIs to develop and use better risk management techniques in monitoring and managing their risks.

The Basel II Framework will come into force in Australia on 1 January 2008.

AML Rules update

Austrac makes AML/CTF Rules dealing with operational implementation of the AML/CTF Act.

The current rules are:

• Anti-Money Laundering and Counter-Terrorism Financing Rules 2006
  This Instrument contains AML/CTF Rules relating to the Register of Providers of Designated Remittance Services.
• Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007(No. 1)
  This Instrument contains the majority of the registered AML/CTF Rules. The current compilation comprises matters including AML/CTF compliance reports (reporting and lodgment periods), monetary thresholds for certain designated services in tables 1 and 3.
• Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 2)
  This Instrument contains AML/CTF Rules relating to paragraph (e) of the definition of 'correspondent banking relationship' in section 5 of the AML/CTF Act.
• Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2007 (No. 4)
  This Instrument amends Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) and contains AML/CTF Rules relating to ongoing customer due diligence, international funds transfer instruction reportable details, suspicious matter reportable details.
• Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2007 (No. 5)
  This Instrument amends Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) and contains AML/CTF Rules for threshold transaction reportable details.

Draft AML/CTF Rules

• relating to customer identification procedures - takeovers,schemes of arrangement, business disposals and business assignments
• same-person and person-to-person electronic funds transfer instructions

Standards of Ministerial Ethics

The Prime Minister has published the Standards of Ministerial Ethics (pdf) which set out his expectations of his Ministers and Parliamentary Secretaries.

"In several important aspects, the Standards will require Ministers to accept higher levels of conduct than has been the case in the past. In particular:
• Lobbyists will be required to register their details publicly on a Register of Lobbyists to be established by the Department of the Prime Minister and Cabinet before seeking access to Ministers or their offices;
• Ministers will be required to undertake that, when they leave office, they will not seek to have business dealings with members of the Government, the Public Service or the Defence Force on any matters that they dealt with in an official capacity in the preceding 18 months;
• Electoral fundraising at The Lodge and Kirribilli House will be prohibited;
• Ministers will be required to divest themselves of all shareholdings other than through investment vehicles such as broadly diversified superannuation funds or publicly listed managed or trust arrangements."

APRA consults on refinements to the general insurance prudential framework

The Australian Prudential Regulation Authority (APRA) has issued its second consultation package on proposed refinements to the general insurance prudential framework to recognise the differing risk profiles of insurers. The package comprises a response paper and draft prudential standards and prudential practice guides. The proposed refinements have been developed to comply with the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007. The refinements are expected to apply from 1 July 2008.

Insurers affected by these proposals and by changes to the Insurance Act more generally are:
• all existing APRA-authorised insurers;
• DOFIs that intend to become APRA-authorised insurers;
• Australian-owned sole parent captive insurers that are not APRA-authorised; and
• Australian-owned association captive insurers that are not APRA-authorised.

Topics covered include:

• proposals for the categorisation of insurers that are largely aimed at clarifying and simplifying APRA’s requirements of branches and subsidiaries of foreign insurers.
• The proposals to scale back some of the requirements of smaller insurers and captives while maintaining the integrity of APRA’s prudential framework.
• for all insurers, the recognition of ‘kangaroo bonds’, the measurement of capital and certain reinsurance and investment-related measures.
• On reinsurance, the paper contains a proposal aimed at encouraging foreign reinsurers not authorised by APRA to lodge security in Australia, after a grace period, in respect of amounts recoverable by APRA-authorised insurers from these reinsurers. In cases where these reinsurers do not lodge security, APRA-authorised insurers will be required, after the grace period, to hold capital to match the unsecured recoverables.

Is legal professional privilege waived by disclosure in company reports?

In GMCG, LLC v Agenix Ltd [2007] QSC 309 the Supreme Court of Queensland refused to order disclosure of documents over which legal professional privilege had been claimed even though the documents had been referred to in the company's annual report lodged with the ASX.

The companies were involved in a dispute over fees. The defendant disclosed the dispute as a contingent liability and stated "The company has received legal advice that it has no liability whatsoever." The company subsequently changed that statement to read “The company has received legal advice. Based on that advice, the company believes that it has no liability whatsoever.” The plaintiff claimed privilege over the legal advice had been waived and sought disclosure not only of the advice but also of the documents “that reveal the process of reasoning and the factual assumptions and instructions lying behind that legal advice”.

The judge accepted the defendant's finance officer's evidence that "he referred to the legal advice to make it clear that the classification of the claim as a contingent liability was based on the company’s belief, following legal advice, that it had no liability. I also accept that the advice was mentioned in order to explain the reason why the defendant believed that its possible further exposure in these proceedings was properly classified as a contingent liability."

Justice Douglas concluded:

In this case...it was important that the defendant be able to disclose why it had adopted a particular accounting treatment of its potential exposure to the plaintiff. It promoted the integrity of the accounts and market transparency by the provision of appropriate information to shareholders, potential shareholders and creditors in circumstances where the disclosure has given it no advantage in the litigation. I do not conclude from those references to the advice the defendant received that it thereby waived the privilege in the advice for the purpose of these proceedings.

Access Card will not proceed

The Australian reports that the new Government will not proceed with the Access Card proposal.

Obligations of auditors of Australian Financial Services licensees

ASIC has issued an updated version of Regulatory Guide 34 Auditor’s obligations: reporting to ASIC (RG 34). RG 34 provides guidance to help auditors comply with their obligations to report certain matters including contraventions and suspected contraventions of the Corporations Act by their audit clients to ASIC. RG 34 has been updated to include guidance for auditors of Australian Financial Services (AFS) licensees.

Council of Australian Governments’ Meeting 20 December 2007 agrees on reform agenda

The first Council of Australian Governments (COAG) under the Rudd Labor Government was held on 20th December in Melbourne.

COAG identified seven areas for its 2008 work agenda:

• health and ageing;
• the productivity agenda – including education, skills, training and early childhood;
• climate change and water;
• infrastructure;
• business regulation and competition;
• housing; and
• Indigenous reform.

COAG agreed to begin changing the nature of Commonwealth-State funding arrangements by agreeing to focus more on outputs and outcomes, underpinned by a commitment from the Commonwealth Government to provide incentive payments to drive reforms.

To drive reforms, COAG agreed that it would meet four times in 2008.

At its March meeting next year, each of the working groups will provide COAG with its Commonwealth-State implementation plans for the major Commonwealth election commitments.

In the area of business regulation, it was agreed that plans identifying a first tranche of new regulatory reform initiatives would be delivered to the March 2008 meeting. Priority areas for further or new action could include OH&S, payroll tax administration, building codes, trade and professional recognition, simplified accounting methods for the hospitality sector and BAS simplification.

ASIC sues 6 former AWB directors and officers

ASIC has commenced civil penalty proceedings in the Supreme Court of Victoria against six former directors and officers of AWB Limited (AWB).

ASIC alleges that the defendants contravened section 180 of the Corporations Act, which requires company officers to act with care and diligence, and section 181, which requires company officers to discharge their duties in good faith and for a proper purpose.

ASIC is asking the Court for declarations that each defendant has breached the law, the imposition of pecuniary penalties (for each breach a maximum of $200,000), and disqualification of each defendant from managing a corporation.

These actions arise out of investigations following the Cole Inquiry.

The contracts covered by ASIC’s proceedings were entered into between 20 December 2001 and 11 December 2002 and involved the payment of AUD$126.3 million in breach of UN sanctions.

The defendants in the ASIC actions are:

• Andrew Lindberg, the former Managing Director of AWB;
• Trevor Flugge, the former Chairman of AWB;
• Peter Geary, the former Group General Manager Trading of AWB;
• Paul Ingleby, the former Chief Financial Officer of AWB;
• Michael Long, the former General Manager of International Sales and Marketing for AWB (2000-2001); and
• Charles Stott, the former General Manager of International Sales and Marketing for AWB (2001-2006).

ASIC alleges that these officers breached their duties under the Corporations Act in connection with AWB’s contracts with the IGB under the United Nations (UN) Oil-for-Food Program, which contained payments for purported inland transportation fees (ITF). The ITF payments were made to Alia, a Jordanian company partly owned by the Iraqi Ministry of Transport.

ASIC alleges that Messrs Long, Geary and Stott were officers of AWB who:

• knew of and implemented various AWB contracts that included the purported inland transportation fees;
• were aware or ought to have been aware that the fees were not genuine; and
• knew or ought to have known that the fees were, or were likely to be, contraventions of the UN sanctions upon trade with Iraq.

ASIC alleges that Messrs Lindberg, Flugge and Ingleby:

• knew, or ought to have known, about the AWB contracts that included the purported inland transportation fees;
• had obligations to make reasonable inquiries to ensure that AWB complied with obligations under UN sanctions upon trade with Iraq;
• were aware, or ought to have been aware, that the fees were not genuine; and
• knew, or ought to have known, that the fees were, or were likely to be, contraventions of the UN sanctions.

The regulator further alleges that all defendants caused harm to AWB through their conduct.

UK Financial Services Authority fines Norwich Union Life £1.26m for privacy breach and anti-fraud failure

The UK Financial Services Authority (FSA) has fined Norwich Union Life £1.26 million (AUD 2.95M) for not having effective systems and controls in place to protect customers' confidential information and manage its financial crime risks. These failings resulted in a number of actual and attempted frauds against Norwich Union Life's customers.

The weaknesses in Norwich Union Life's systems and controls allowed fraudsters to use publicly available information including names and dates of birth to impersonate customers and obtain sensitive customer details from its call centres. They were also, in some cases able to ask for confidential customer records such as addresses and bank account details to be altered. The fraudsters then used the information to request the surrender of 74 customers' policies totalling £3.3 million in 2006.

During its investigation, the FSA found that Norwich Union Life had failed to properly assess the risks posed to its business by financial crime, including fraudsters seeking to obtain customers' confidential information. As a result, its customers were more likely to fall victim to financial crimes such as identity theft.

Norwich Union Life also failed to address the issues, highlighted by the frauds, in an appropriate and timely manner even after they were identified by its own compliance department.

BBC News

Parliamentary sittings 2008

Parliamentary sittings will resume on 12 February 2008.

ACCC report into unleaded petrol prices

The Australian Competition and Consumer Commission's (ACCC) has released its report into unleaded petrol prices which has concluded "that the unleaded petrol industry in Australia is fundamentally competitive. There is no obvious evidence of price fixing or collusion between the major participants in the industry".

The Minister for Competition Policy and Consumer Affairs, Chris Bowen, has outlined three measures as part of the government's preliminary response to the report. They include:

• Writing to the ACCC giving it formal monitoring powers over petrol prices;
• Making the ACCC report to the government every year on its monitoring;
• Beginning the search process for a Petrol Commissioner and writing to all of the State and Territory leaders seeking their input on possible candidates for the role.

The inquiry found that there was 'no obvious evidence of price fixing or collusion between the major participants in the industry' and 'fundamental pricing of petrol is dictated by international factors'.

However, it also found that:

• The major refiners have established 'a comfortable oligopoly', with the Australian industry being relatively concentrated.
• There are 'significant impediments to the large-scale importing of petrol by parties other than refiner-marketers, resulting in very little independent importing'.
• The 'well-defined price cycles in Australia's retail unleaded petrol markets are an enigma' and the ACCC was not given a satisfactory explanation of divergences in prices between Australia and price decreases in Singapore.

Privacy case notes 25-27, 2007

The Privacy Commissioner has released three new case notes:

• In W v Telecommunications Company [2007] PrivCmrA 25, it was found that the customer's residential address had been improperly disclosed by the telecommunications provider even though a fee had been paid to suppress it.

  The Commissioner also found that the complainant had attempted to resolve the matter with the telecommunications company a number of times, but the company did not take timely action to correct the error once they were informed of it.

  The complainant subsequently agreed to a settlement proposed by the telecommunications company.
• In X v Transport Company [2007] PrivCmrA 26, the Office investigated whether there was an improper disclosure of personal information relating to a medical assessment. It was found that the transport company advised the employees that someone had failed the medical assessment.  However, the company did not disclose who had failed the assessment, or for what reasons. In this case, the Commissioner was not satisfied that the information disclosed by the transport company was sufficient to make it likely that the workers could identify the complainant as the individual who had not passed the medical assessment. However, the Commissioner also advised the transport company to adopt additional security measures to minimise the possibility that any such incidents may occur in the future.
• In Y v Ticketing Company [2007] PrivCmrA 27, the issue of the security of personal information including credit card information was considered.The ticketing company stated that the information was for purposes of identification and to minimise the incidence of fraud. It held that this is a common practice across a number of industries.

  The ticketing company also informed the Commissioner that it used a merchant EFTPOS facility provided by a banking institution and it was this facility that printed full credit card details on the receipt.

  The Commissioner reached the view that the ticketing company had not interfered with the privacy of the individual as it appeared that the company was fulfilling its obligations under National Privacy Principle 4.1 by providing customer credit receipts directly to the credit card holder only, and that steps were taken to secure the merchant copy of the receipt held by the ticketing company.

Takeovers Panel jurisdiction restored

The decision of the High Court of Australia in Attorney-General (Commonwealth) vs. Alinta  Ltd (pdf) upheld the validity of s 657A(2)(b) of the Corporations Act 2001 and the powers of the Takeovers Panel.The reasons for the decision will be delivered later. (see previous post)

Keeping up to date: the ASIC Gazette

It is important for businesses to keep up to date with information about their customers and suppliers. A useful free source of company information is the ASIC Gazette.

Consumer Credit Contract disclosure: Australian Finance Direct Limited v Director of Consumer Affairs Victoria

In Australian Finance Direct Limited v Director of Consumer Affairs Victoria [2007] HCA 57 the High Court upheld a decision of the Court of Appeal of the Supreme Court of Victoria that a form of credit contract used by Australian Finance Direct Limited (AFD) in certain transactions contravened the disclosure requirements in s 15(B)(a)(ii)  of the Consumer Credit Code.

AFD made loans to people who wished to attend property investment seminars conducted by a third party but who did not wish (or were unable) to pay the fees for the seminars in cash.  The purpose of the credit was to enable them to defer payment.

But the loan contracts did not disclose "holdbacks" retained by AFD which amounted to between 10% and 40% of the loan amount depending on its assessment of the risk of the borrower.

The High Court decided that the credit contracts of AFD did not comply with the requirements of s 15(B)(a)(ii). Because of the non-disclosure of the holdbacks, they did not identify the persons (including the credit provider) to whom the amount of credit was to be paid, or the amounts payable to each of them.

Prime Minister's speech on climate change

Kevin Rudd's speech at the High Level Segment of the 13th Conference of the Parties of the United nations Framework Convention on Climate Change Bali, Indonesia emphasised Australia's historical role in the United Nations and the need for a shared global emissions goal.

"We expect all developed countries to embrace a further set of binding emissions targets – and we need this meeting at Bali to map out the process and timeline in which this will happen.

And we need developing countries to play their part – with specific commitments to action.

And we need all developed nations, all developed nations – those within the framework of the Kyoto Protocol, and those outside the framework – to embrace comparable efforts in order to bring about the global outcomes the people of the world now expect of us.

The approach we take must be comprehensive and must incorporate critical challenges, including deforestation."

Good Governance and Ethical Practice Guide for Charities

The Panel on the Nonprofit Sector (USA) has released Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundations.

The Guide (pdf) outlines 33 practices designed to support board members and staff leaders of charitable organisations.

Austrac AML draft rules and guidance notes release schedule

Austrac has announced that the following draft rules and guidance notes will be released for comment by January/February 2008:

1. Draft guidance note – suspicious matter reporting obligations
2. Draft guidance note – gambling sector
3. Draft guidance note – record-keeping obligations
4. Draft AML/CTF Rules – definition of ‘loans’ in section 5 of the AML/CTF Act
5. Draft AML/CTF Rules resulting from approved applications for exemptions from specified provisions of the AML/CTF Act or the Act

Productivity Commission draft report: Review of Australia's Consumer Policy Framework

The Productivity Commission has released its Draft Report of the  Review of Australia's Consumer Policy Framework.

A key point of the draft report is the need for national consumer regulation with a sole national regulator (possibly the ACCC).

The first step in creating a nationally coherent consumer policy framework should be the introduction of a single generic consumer law applying across Australia. This should be based primarily on the consumer provisions in the Trade Practices Act.

• The ACCC should be solely responsible for enforcing the product safety provisions nationally.
• The case for making it the sole national regulator for all of the new generic law should be actively explored.
• In the meantime, individual States and Territories should be given the option of referring their enforcement powers for all of the new law to the ACCC.

There should also be a CoAG oversighted review and reform program (akin to the National Competition Policy legislation review process) to:

• identify and repeal unnecessary industry-specific consumer regulation, with a particular focus on removing regulations that apply in only one or two jurisdictions;
• dentify other areas of specific consumer regulation applying in most or all jurisdictions where divergent requirements and/or lack of policy responsiveness are particularly costly; and
• determine how these costs should be reduced, with explicit consideration of the case for transferring policy responsibility to the national level.

However, in two areas of current State and Territory responsibility - consumer credit provision (including finance broking), and the consumer protection aspects of energy services - the case for a national approach is well established. Hence, the transfer of responsibility to the national level should occur without further review.

To complement this broad reform program for specific consumer regulation, improvements should be made to some of the particular regulatory requirements applying to consumer credit, utility services and home building.

The Commission is seeking comment from interested parties on its draft report through written submissions and/or attendance at public hearings to be held early in 2008. The closing date for written submissions is Wednesday 6 February 2008.

Released with the draft report is a consultancy report, Comparison of Generic Consumer Protection Legislation, by Professor Stephen Corones and Professor Sharon Christensen, Faculty of Law, Queensland University of Technology.

Australia's Climate Change Speech to the Finance Ministers' meeting in Bali

Australia's Treasurer Wayne Swan has given a speech at the Finance Ministers meeting at the United Nations Climate Change Conference in Bali .

He outlined Australia's commitments including:

• reduce Australian emissions by 60 per cent by 2050.

• the introduction of a broad-based emissions trading system by 2010.

• introduce a 20 per cent Renewable Energy Target for Australia to reach by 2020.

• encourage the research and development of new clean energy technologies, through a number of important domestic initiatives including:

• A $500 million Renewable Energy Fund — to further develop, commercialise and deploy renewable energy in Australia; and
• A $500 million Clean Coal Fund to fund the deployment of clean coal technologies.

• establish a Clean Business Fund to assist Australian firms in improving the energy efficiency of their operations and to promote the development of technologies that will save energy and water.

The goal of the conference is to agree on a roadmap for a future international agreement on enhanced global action to fight climate change in the period after 2012, the year the first commitment period of the Kyoto Protocol expires.

AML stage 2 starts: case studies and privacy issues

To coincide with AML stage 2 which starts on 12 December, Austrac has released its Typologies and Case Studies Report 2007 which identifies some key money-laundering methodologies and gives 51 case studies, highlighting:

• what crime or civil proceeding was involved
• the type of customer involved in perpetration of the offence
• the industry category through which transactional activity was conducted
• the specific method through which the offenders perpetrated transactional activity
• the location through which the transactional activity was facilitated
• the specific designated service
• the red flag activity contained within each case example.

The Privacy Commissioner, Karen Curtis, has reminded businesses to carefully consider their privacy obligations when collecting personal information for AML/CTF purposes.(More)

Rudd arranges first COAG meeting

The Prime Minister, in his capacity as Chairman of the Council of Australian Governments (COAG), announced on 10 December 2007 that he would be meeting with the Premiers and Chief Ministers for a COAG meeting on 20 December 2007 in Melbourne.

The Age reports that the review of federal-state relations will be dominated by health, hospital funding and education issues.

AUSTRAC AML/CTF Regulatory Guide

AUSTRAC has issued the AUSTRAC Regulatory Guide (the Guide) to provide non-binding advice to industry (primarily reporting entities and cash dealers) to help it understand and comply with the:

• Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act)
• Anti-Money Laundering and Counter-Terrorism Financing Rules (AML/CTF Rules).

The Guide also provides non-binding advice in relation to the:

• Financial Transaction Reports Act 1988 (FTR Act)
• Financial Transaction Reports Regulations 1990 (FTR Regulations)

Health profession and trade practices: price-fixing by orthodontists

In ACCC v Knight penalties were imposed for anti-competitive conduct by surgeons.

Now, in Australian Competition & Consumer Commission v Ranu Pty Ltd [2007] FCA 1777, the Federal Court of Australia found that three orthodontic businesses, each operating in northern Tasmania, had contravened section 45 of the Trade Practices Act 1974 by engaging in price fixing and market sharing.

Justice Peter Heerey, found that the respondent orthodontists, in various combinations, entered into a series of illegal anti-competitive arrangements to:

• fix the price of the orthodontic services they each provided to consumers in northern Tasmania
• restrict their respective supply of orthodontic services to new patients when an orthodontist had more customers than the others
• restrict the ability of the orthodontists to supply their respective services from separate premises or work with other orthodontists within 20 kilometres of the existing practices in Launceston, Devonport and Burnie, and
• stop another orthodontist from setting-up a competing practice in northern Tasmania.

The orthodontists provided their services from shared premises in the cities of Launceston, Devonport and Burnie, and the majority of the illegal arrangements were written into the shared premises co-location agreement.

Because the orthodontists relied on faulty legal advice that the Trade Practices Act did not apply to them and because the respondents cooperated with the investigation, the ACCC took the unusual step of not seeking a monetary penalty. The court decided that in all the circumstances it was sufficient to deal with the matter by way of a series of injunctions restraining the orthodontists from again engaging in the anti-competitive conduct.

The court also ordered the respondent orthodontists to attend an annual trade practices law seminar of at least 4 hours duration for the next 3 years and to make available to staff a trade practice compliance manual at the co-located premises.

Reserve Bank Board announcements

The Reserve Bank Board has announced the following changes to its communication policy:

First, the Board will release a short statement each month explaining its decision, whether or not the cash rate is to be changed.

Second, the Board’s decision will be announced shortly after the conclusion of the meeting instead of the earlier custom of waiting nearly 24 hours to announce the decision. Accordingly, commencing at the February 2008 meeting, the decision will be announced at 2.30 pm on the day of the meeting, with any change in the cash rate to take effect from the following day.

Third, the Board will release the minutes of its monetary policy meeting each month, two weeks after the meeting.

Changes to Commonwealth Ministerial and department responsibilities

As new Ministers get up to speed, pending website updates, information about administrative arrangements and portfolio responsibilities is being obtained from media articles and the few official documents such as the Ministry List (pdf) the Administrative Arrangements Order (pdf). (thanks to Open and Shut for the link)

Page 33 of the AAO records that the Department of the Prime Minister and Cabinet is taking responsibility for the Freedom of Information Act and the Privacy Act.

Privacy update

The Office of the Privacy Commissioner has published recent speeches by its officers.

Of particular interest are:

• Privacy Law reform
• Biometric technology and privacy
• Law enforcement agencies and privacy

International trade mark registration

The Madrid System provides the means to file a single application, in one office, in one language, with a single fee, and secure trade mark protection in multiple countries.

The advantages and disadvantages for Australian trade mark owners are discussed in this article by Nick Weston.

Basel II and securitisation: the new APRA APS 120

Heidi Richards, General Manager Australian Prudential Regulation Authority (APRA), recent speech to the Australian Securitisation Conference explained that APRA expects the ADI to be independent of its securitisation vehicles and vice versa.

This independence principle has certainly been put to the test in recent months. Some securitisation structures around the world have not met this test very successfully. While APRA has been monitoring the market situation and its impact on ADIs very closely, we remain of the view that our regulated institutions are well positioned to weather the current turbulence. As has been stated here often in the last day or so, credit quality in Australia remains strong.

In respect of APS 120, she explained that:
ADIs will have until mid-2008 to assess their programs and facilities against the standard’s new operational requirements, and if necessary, apply to APRA for transition relief for up two years. Note that the new securitisation capital calculations for standardised and IRB banks will apply as of 1 January along with the other Basel II requirements; the transition relief applies only to changes to operational aspects of the standard, such as clean sale provisions and facility criteria, and only to pre-existing programs and facilities, that is, those issued before 1 January...

APRA supervisors are likely to pay more explicit attention to contingent liquidity commitments, such as ABCP liquidity lines, in assessing the adequacy of ADI’s liquidity risk management going forward. We are also less likely to accept that the ability to securitise assets is an automatic source of liquidity.

Workplace Ombudsman Warning to Employers on AWA’s

The Workplace Ombudsman has warned employers against applying undue pressure on workers to sign Australian Workplace Agreements (AWA’s) following reports that some businesses may seek to move their employees to AWA’s to pre-empt proposed transitional legislation by the Rudd Government to phase out AWA’s and stop new ones being signed.

APRA releases final Basel II prudential standards

The Australian Prudential Regulation Authority (APRA) has released the final suite of prudential standards that will give effect to the implementation of the new Basel II capital adequacy regime, known as the Basel II Framework, in Australia.

The Basel II prudential standards will come into force on 1 January 2008.

Performance Benchmarking of Australian Business Regulation: Stage 2

The Productivity Commission has released an information paper, Business Regulation Benchmarking Stage 2.

In summary, the Commission has been asked to proceed with an initial three-year program to benchmark across jurisdictions various areas of regulation which impose compliance costs on business. The study will examine the regulatory compliance costs associated with becoming and being a business, the delays and uncertainties of gaining approvals in doing business, and the regulatory duplications and inconsistencies in doing business interstate.