In August this year, ASIC released Regulatory Guide 201, setting out its view as to the circumstances in which debit and credit cards may be renewed, replaced or substituted under that section. The Regulatory Guide indicated that ASIC did not regard the replacement of a debit card using a single payment system with a card using an additional payment system as permitted under the section.
We have been of the opinion that ASIC's interpretation of a "card of the same kind" under section 12DL is wrong - that the proper construction is to look at whether the card is a debit card or a credit card (or a hybrid) and, if the card is being replaced with a card that is of that same kind, there is no breach of the section. ASIC's view was that in judging whether a card is of the same kind, other characteristics should be considered such as the payment systems the card uses, the likelihood of fraud and the manner and places in which the card can be used.
We assisted Westpac in seeking a declaration that in fact, the substitution of its Handycard with a Debit MasterCard was not a breach of the ASIC Act as the cards were cards of the same kind. It was argued that it did not matter that the card could be used in more places or that it used the MasterCard network as these were irrelevant to the analysis. Justice Rares of the Federal Court granted Westpac its declaration.
Importantly Rares J:
Rares J stated:
"The Parliament sought to guard against them [consumers] being sent a credit card or a debit [sic] that they had never sought. But, it was not the intention of the Act to constrain the relationship between an issuer of a card and its customer by preventing the issuer updating the particular kind of card (i.e. a credit or debit card) with the latest version of that kind of card. The more is this likely given the context in which s 12DL has taken its present form of a period of rapid technological growth and the continuing evolution of financial systems."
Link here if you are interested in reading the decision.
We would be happy to discuss how this decision may affect your business and how it is likely to be interpreted.
The Panel charged with conducting the Super System Review has released its first Preliminary Report. The Report responds to the issues raised by the Panel in its Phase 1 Issues Paper on Governance. Like the Issues Paper, the Preliminary Report is internally focussed, primarily examining the superannuation fund, the trustee and the members. Read more
2009 has been tumultuous for the financial sector globally, with Government support in the form of guarantees, equity injections or nationalisations. In Europe especially, Government support has been extensive and the ramifications of receiving ‘state aid’ have started to become public, with European Commission restructuring divestments required of Royal Bank of Scotland plc and Lloyds TSB plc. Read more
The headline recommendation of the Parliamentary Inquiry into financial products and services (the “Ripoll Inquiry”) is that: “The Corporations Act be amended to explicitly include a fiduciary duty for financial advisers operating under an AFSL, requiring them to place their clients’ interests ahead of their own” (Recommendation 1). Much has been written about what it means to be a fiduciary. However, not a lot of attention has been given to how a fiduciary duty will affect what a financial adviser does. Read more
Our alert dealing with the Parliamentary report on financial products and services in Australia (see here), commented that “the recommendation that payments from product manufacturers cease … has far reaching implications for the way in which financial products are distributed and financial services businesses are structured. We see the PJC’s report as another step on the path to a new paradigm for the financial services industry where fees paid for a product are transparently distinct from the fees paid for advice. This will dramatically alter the financial services industry over the long term ”. Read more
The Personal Property Securities Act 2009 (Cwlth) is now law.
The Personal Property Securities (PPS) legislation will establish a national system for the registration of security interests in personal property. It sets out new rules for the creation, priority and enforcement of security interests in personal property. This will affect the way security is taken over almost every form of property other than land. It will also affect transactions that are currently not regarded as “securities”, and transactions that are currently not registrable. The new system is expected to be in place by May 2011 (Start Date), with a two year transitional period. Read more
The spate of proposals, consultations and discussion papers linked to reform of bank capital requirements has continued to gather momentum across the globe. This is not a surprising development in the wake of the GFC. A bank’s ability to access liquidity to meet claims as they fall due in times of crisis is fundamental to its survival. Read more