Court proceedings against QBE misled – October 23, 2024
Court proceedings have commenced against QBE Insurance (Australia) Limited for allegedly misleading customers about the value of discounts on certain general insurance products.
Allegedly, the company made statements and sent renewal notices promising discounts on premiums for a range of general insurance products between July 2017 and September 2022 – which the customers never received.
“ASIC alleges QBE’s pricing model potentially eroded the discounts received by over half a million customers, in some cases to nil.”
Sarah Court, Deputy Chair, ASIC
With the proceedings, ASIC seeks civil penalties, declarations and adverse publicity orders.
Cancelled and suspended licenses
Next Generation Advice – October 24, 2024
The AFS licence of Next Generation Advice Pty Ltd (in Liquidation) has been cancelled due to the company being ordered to be wound up.
Its membership with the Australian Financial Complaints Authority must continue until October 17, 2025.
Ultiqa Lifestyle Promotions Limited – October 22, 2024
Both the AFS and the Australian credit licence of Ultiqa Lifestyle Promotions Limited (in liquidation) have been cancelled due to a payment of compensation by the Compensation Scheme of Last Resort (CSLR).
In June, a determination was made against Ultiqa by the Australian Financial Complaints Authority – which it failed to pay. Therefore, CSLR paid out A$19,429.60 ($12,980) to a person and notified ASIC.
ASIC had earlier taken additional actions against Ultiqa, and in May 2022, the Court found that financial advisers had been not been acting in the customers’ best interests when giving advice to invest in the timeshare scheme Ultiqa Lifestyle Scheme.
Emmanuel Katsoulis and Peter Wormington – October 21, 2024
The Australian credit license of Emmanuel Katsoulis has been cancelled due to failing to lodge annual compliance certificates, plus failing to pay industry funding levies to ASIC.
For Peter Wormington, the credit license has been suspended for four months, and he has also been expelled from the Australian Financial Complaints Authority due to not paying fees and failing to pay industry funding levies to ASIC.
Court updates
Receivers appointed to director of ALAMMC Developments – October 25, 2024
Helen Newman and Andrew Fielding of BDO have been appointed as receivers and managers of the property of David McWilliams and his wife Laura Fullarton, and will conduct investigations around the investor funds that the couple received.
The action follows urgent action where ASIC obtained asset preservation orders over McWilliams, Fullarton and a number of companies that McWilliams operated. Travel restraint orders were also served on McWilliams, and many of the companies are under asset preservation orders.
Ex CEO of crypto exchange charged with fraud – October 22, 2024
Grant Colthup, ex-CEO of ACCE Australia Pty Ltd, has appeared in the Magistrates Court at Ipswich after charges of one count of fraud – contrary to section 408C of the Criminal Code 1899 (QLD) – relating to an investigation of a A$2.2m ($1.5m) crypto transaction.
Between May 2019 and September 2022, ACCE operated Mine Digital’- a digital asset exchange platform, where, allegedly, a customer paid A$2.2m ($1.5m) in July 2022 to ACCE for bitcoin but never received any cryptocurrency in exchange.
ASIC believes that Colthup used the funds to pay liabilities of ACCE and/or crypto purchases for others.
The matter has been adjourned to December 16.
ACCE entered administration in September 2022.
ASIC news week 43
OTC derivative transaction reporting changes now live
Starting last week, ASIC Derivative Transaction Rules (Reporting) 2022 was replaced by the ASIC Derivative Transaction Rules (Reporting) 2024, and will include changes to:
- align with international reporting standards;
- consolidate transitional provisions and exemptions; and
- make sure reporting requirements are fit for purpose.
Guidance materials for the 2024 Reporting Rules were published earlier in September, and ASIC also said that the regulator will “take a measured approach to compliance until March 2025 for reporting entities that make reasonable efforts to comply with the 2024 Reporting Rules.”
Speeches
At the House of Representatives Standing Committee on Economics, an Opening Statement on October 25 by ASIC Chair Joe Longo covered ASIC’s transformation journey and its results and “important regulatory firsts” arising from the changes. He addressed the greenwashing win against Mercer Superannuation (Australia) Limited – where the company was ordered to pay a landmark A$11.3m ($7.5m) penalty, and the first infringement notice of A$1,050,000 ($692,994) – which was issued to the market operator the ASX for failing to comply with Market Integrity Rules.
“A transformation of this scale has seen some short-term impacts. But as a result of the efforts of our people over the past three years, and Commission and Executive renewal, we are well-placed for the next phase,” Longo said. He added that it will include a continuing focus on strengthening its culture and investing in data, systems and technology.
In a keynote at the 34th Annual Credit Law Conference on October 24, Commissioner Kate O’Rourke gave an update on ASIC’s work and its strategic priorities.
“ASIC continues to place the highest priority on protecting consumers from poor conduct and harm from products in the credit and banking sectors,” O’Rourke said. With the ongoing cost-of-living pressures, she added that the Commission has “a significant range of work” to take on issues in the area.
Other points of focused that were addressed were the continued attention on advancing digital and data safety, including technology enabled misconduct such as scams (see below), and monitoring the use of AI.
Warning of scams
The Commission is alerting small business to be extra aware of rising scams, which can cause “significant financial losses” for companies, especially in time of elevated inflation, surging operating costs, and more company insolvencies.
ASIC is urging businesses to be aware and look out for scams such as:
- false billing scams;
- investment scams;
- remote access scams;
- payment redirection scams (or fake invoice scams);
- phishing scams;
- business impersonation scams; and
- scammers impersonating ASIC.
According to the Australian Competition and Consumer Commission, scam reports increased almost 28% last year, with 4,933 scam reports in total, and a total of A$29.5m ($19.7m) in losses for businesses. The type of scam that caused the most harm was false billing, which accounted for A$11.8m ($7.9m), followed by investment scams A$6.2m ($4.1m), and remote access scams A$4.9m ($3.3m).
Proposed updates to RG 51 and RG 108
The Commission is proposing updates to Regulatory Guide 51 Applications for relief and Regulatory Guide 108 No-action letters, and is now seeking feedback on the proposals.
ASIC says that the updates will reflect its current regulatory approaches to applications for relief and no-action letters, additional guidance and amendment of outdated references.
See all proposed changes here. Feedback can be submitted until November 18.
Updated guidance for auditors
The Regulatory Guide 26 Resignation, removal and replacement of auditors has been updated following an extension to financial reporting and audit obligations.
The updates reflect expanded obligations for registrable superannuation entities (RSE) and retail corporate collective investment vehicles (CCIV).
Some of the changes include:
- how ASIC may exercise powers to give consent to the resignation or removal of an auditor of an RSE or retail CCIV:
- information required for resignation and removal applications; and
- relevant effective dates.