17 April 2018

Consultation on regulations to protect client money in the financial sector


The Turnbull Government has today released exposure draft regulations (the Regulations) to support and improve the powers of the Australian Securities and Investments Commission (ASIC) to enforce the new client money regime which commenced on 4 April 2018.

"The Turnbull Government has delivered better protections for client monies held in relation to over-the-counter derivatives products, ensuring that consumers are better protected when licensees become insolvent, and enhancing trust and confidence in the financial sector," said the Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer MP.

The draft regulations released today improve ASIC's powers to enforce the Client Money Reporting Rules 2017 (the Rules).

Non-compliance with the Rules can attract civil penalties of up to $1 million. The Regulations provide ASIC with greater flexibility by providing a wider range of enforcement tools as alternatives to civil penalty proceedings for breaches of the Rules, including the ability to issue infringement notices and accept enforceable undertakings. 

These are well established regulatory tools which ASIC already uses to enforce its market integrity, derivative transaction and trade reporting rules.

"These Regulations complete the Government's client money reform agenda which will increase transparency and better protect the money of retail derivative consumers," Minister O'Dwyer concluded.

The draft Regulations and supporting materials are available on the Treasury website and stakeholders are encouraged to provide their feedback. Consultation will close on 26 April 2018.