Governance and conduct obligations in financial services

Description

Full Title Copyright Foreword Preface Table of Cases Table of Statutes Table of Contents Part A Outline Chapter 1 Introduction Overview Interpreting and applying values-based laws Structure of this book Conclusion Part B Duties Based on the Status of the Financial Services Participant Chapter 2 Fiduciary and Equitable Duties at General Law Introduction Fiduciary and other equitable duties Peculiarly fiduciary duties The content of the duty Conflict rule No profit rule Informed consent Non-fiduciary obligation imposed by equity Duty to act in best interests Duty of care and skill Duty to act in good faith Duty to act for a proper purpose Remedies Conclusion Chapter 3 Duties of Directors and Officers Introduction Duty to act with care and diligence The duty at general law Standard of care The duty under s 180 Courts’ reluctance to review business judgments Statutory business judgment rule Duty to act in good faith Duty to not improperly use position Duty to not improperly use information Reliance on others and non-delegable duties Disclosures by whistleblowers Liability and remedies Ratification Duty to act with care and diligence: s 180 Duty to act in good faith: s 181 Duty to not improperly use position: s 182 Duty to not improperly use information: s 183 Relief under s 1317S and s 1318 of the Corporations Act Conclusion Chapter 4 Duties of a Responsible Entity Introduction Duty to act honestly Duty of care and diligence Best interests duty Best interests duty Priority rule Treat members equally and fairly Duty to not use information to gain improper advantage Duties of officers of a responsible entity Reporting of breaches Liability and remedies Conclusion Chapter 5 Duties of Registrable Superannuation Entities Introduction Duty to act honestly Duty to exercise care, skill and diligence Duty to act in the best interests of beneficiaries Duty to give priority where there is a conflict Duty to act fairly in dealings between and within classes of beneficiaries Directors’ duties Liability and remedies Prudential standards Liability and remedies Duties concerning whistleblowers The whistleblower regime under the SIS Act No civil or criminal liability No victimisation Compensation Confidentiality obligations Conclusion Chapter 6 Duties of Trustees of Self-managed Superannuation Funds Introduction Duty to act honestly Duty to exercise care, skill and diligence Duty to act in the best interests of beneficiaries Covenant imposed on directors Liability and remedies Conclusion Chapter 7 Duties of Insurance Entities Introduction Duty of utmost good faith Statutory form of the duty of utmost good faith The content of the duty of utmost good faith Liability and remedies Duty of priority Priority over whom? The meaning of ‘give priority’ Identifying the interests of policy owners Interests of policy owners as a whole APRA guidelines Directors’ duty of priority Defences, liability and remedies Duties of directors of life company concerning risk management The content of the duty Liability and remedies Duties concerning whistleblowers The whistleblower regime under the Life Insurance Act No civil or criminal liability No victimisation Compensation Confidentiality obligations Conclusion Chapter 8 Duties of Authorised Deposit-taking Institutions Introduction Responsible lending duties Disclosure obligations Evaluating whether a credit contract is unsuitable Preliminary assessments of unsuitability Inquiries and verification under s 117 Preliminary assessment under s 116(1) Final assessments of unsuitability Substantial hardship ASIC guidance re assessing substantial hardship Remedies Case law regarding responsible lending obligations Implied duties under the ASIC Act Duties under prudential standards Content of the duty Liability and remedies Duties in respect to whistleblowers The whistleblower regime under the Banking Act Conclusion Chapter 9 Duties of Entities that Provide Advice Introduction Financial product advice Case law Regulatory guidance Financial products Who provides financial product advice? Exemptions Duties concerning the giving of general advice General advice obligations Duties concerning the giving of personal advice Duty to act in the best interests of a client Duty to provide the client with appropriate advice Duty to warn the client if the advice is based on incomplete or inaccurate information Duty of priority Liability and remedies Case analysis Fiduciary duties of advisers Other duties of advice providers Conclusion Chapter 10 Duties of Australian Financial Services Licensees Introduction Duty to act provided efficiently, honestly and fairly Compendious duty Do all things necessary to ensure Objective test Assess conduct by reference to business as a whole Morally wrong or unethical conduct Morally wrong business practices One size fits all advice Failure to have a reasonable basis for advice Failure to act diligently and efficiently Management of conflicts of interest Chinese walls Liability and remedies Conclusion Part C General Conduct Obligations Imposed on Any Entity that Provides Financial Services Chapter 11 Obligation of Good Faith Introduction The obligation of good faith The emergence of good faith Implied term v implied duty Inconsistency with the contract The content of the good faith duty Remedies for breach of the duty of good faith Conclusion Chapter 12 Misleading or Deceptive Conduct Introduction Misleading or deceptive conduct The statutory provisions Peculiar elements regarding the scope of s 1041H — the meaning of ‘in relation to’ Peculiar elements regarding the scope of s 12DA The ‘trade and commerce’ limit on the scope of s 12DA, ASIC Act and s 18, ACL Misleading or deceptive conduct — interpretation and application Meaning of ‘deceptive’ conduct Meaning of ‘likely to’ Objective test for assessing misleading or deceptive conduct Statements that are literally true State of mind Transitory effect and disclaimers Careless conduct Class of persons to whom conduct is directed Failure to disclose Opinions Statements about future matters Advertising Social/digital media cases Financial services cases Contravention Conclusion Chapter 13 Unconscionable Conduct Introduction Unconscionable conduct Equity and unconscionable conduct or dealing First principles Defences Remedies The statutory provisions prohibiting unconscionable conduct Prohibition under ASIC Act s 12CA Prohibition under ASIC Act s 12CB Remedies for breach of ASIC Act s 12CB Prohibition in Corporations Act s 991A Remedies for breach of Corporations Act s 991A Contracts Review Act 1980 (NSW) Remedies Conclusion Chapter 14 Unfair Contract Terms Introduction Unfair contract terms Unfair contract terms in consumer and small business contracts Determining whether a contract term is unfair The Bank Fees case Other cases dealing with unfair terms under cognate legislation Determining whether a contract term is transparent Conclusion Chapter 15 Anti-Competitive Conduct Introduction Anti-competitive conduct Price fixing and other cartel conduct Making or giving effect to a contract, arrangement or understanding Purpose/effect condition Purpose condition By parties which are, or would otherwise be, in competition with each other Exceptions Penalties Price signalling laws Private disclosure prohibition General prohibition Penalties Anti-competitive contracts, arrangements and understandings Contract, arrangement and understanding Exclusionary provisions Purpose, or has or is likely to have the effect, of substantially lessening competition Severance Exception Penalties Misuse of market power Substantial degree of power Market Taking advantage of market power Legal rights Exclusive dealing conduct Exceptions Penalties Exclusive dealing conduct Supply or acquisition subject to a condition Substantially lessening competition Per se breaches Overlap with s 47 Exceptions Penalties Resale price maintenance Specified price Exceptions Penalties Conclusion Part D Obligations Relating to the Use and Protection of Customer Information Chapter 16 Collection, Use and Disclosure of Personal Information Introduction Collection, use and disclosure of personal information Who does the Privacy Act apply to? Australian Privacy Principles — APPs What is ‘personal information’? Information governance Collection of personal information Use and disclosure of personal information Direct marketing Cross-border disclosure Government identifiers Quality and security of personal information Access to and correction of personal information Midata initiative (UK) Privacy and credit information — the obligations of credit providers Who is a credit provider? Additional obligations Information governance Dealing with credit information Dealing with credit eligibility information Integrity of credit eligibility information Use or disclosure of false or misleading information Quality and security of information Access to and correction of information Credit Reporting Code Enforcement Civil penalties Complaints and investigations Other powers of the Commissioner Conclusion Chapter 17 Cyber Security Obligations Introduction The threat environment within which organisations operate Cyber security and the law Privacy law Security provisions The ‘reasonable steps’ test Consequence of a breach Directors’ duties Consequence of a breach Data breach notification laws The evolution of data breach laws Australian developments Other laws requiring notification of data breaches Contract law Expressing the obligations Cloud agreements Law of negligence Consumer protection laws Class actions Damages under Privacy Act Damages under other laws arising out of a data breach Copyright and cyber security Active defence ePayments Code Insurance Evidence Conclusion Part E Contemporary Developments in Managing Conduct Risk and Remediation Chapter 18 The Role of Behavioural Insights and Statistics in a Regulatory Context Introduction Behavioural economics The approach in the United Kingdom The approach in Australia Potential issues with behavioural economics Use of statistics in a regulatory context Expert evidence Common law test for admitting expert evidence Statutory test Case law Conclusion Chapter 19 ASIC Guidance Relating to Remediation Programs Introduction Requirements of RG 256 Initiation of review and remediation program Systemic issues Factors to consider when initiating, designing and implementing review and remediation programs Operating efficiently, honestly and fairly Adequate resources Determining scope of review The length of a review period for a program Testing the scope Revising the scope Inviting clients to participate Design and implementation of the program Review of advice Compensation Communicating with clients Governance Record keeping Public reporting Conclusion Chapter 20 Recommendations of Financial System Inquiry Introduction Proposed targeted and principles-based product design and distribution obligation Content of the proposed obligation Product design Product distribution process After sales of a product Scalability Penalty Exceptions Product markets and behavioural biases Proposed product intervention power Content of the proposed power Engagement and consultation Duration Pricing Behavioural biases Review Conclusion Bibliography Index