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‘Tsunami of regulation’ to affect banking and finance sectors, warns NRF
Norton Rose Fulbright believes that the banking and finance sectors are set to face a “tsunami of regulation”.
Natasha Taylor
Global law firm Norton Rose Fulbright has stated that the Australian banking sector is facing a bounty of legislative changes in the coming months, while many smaller organisations are at risk of non-compliance.
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NRF partner Claudine Salameh (pictured) stated that the full implications of four separate but interconnected regulatory and legislative changes coming into effect at the same time were only now emerging.
“The sector has done an admirable job of managing the COVID-19 crisis in its customers’ interests but, having navigated that, the full scale of what’s in front of it is beginning to dawn for some,” she said.
“It’s the perfect regulatory reform storm, largely coming out of the Hayne Royal Commission recommendations of over two years ago.”
According to the firm’s statement, in early October changes to customer remediation, complaints management, breach reporting and new design and distribution obligations will all be enacted. The new regulations carry significant reputational financial and legal risks for banks and finance companies that will take time to properly manage.
Ms Salameh described the regulatory changes as interconnected, so a breach in one area of an organisation could have significant flow-on effects on others and have much wider impacts.
“Boards and directors will also need to consider making more financial provisions for potential fines under the new regimes and this will impact an institution’s market disclosure obligations,” said Ms Salameh.
“The transparency of some of the regulatory changes also risks an upsurge in class actions in the finance sector as plaintiff law firms get access to more detailed public information on breaches and complaints.”
Further, Ms Salameh explained that some smaller financial organisations and recent entrants to the Australian market that didn’t exist when the royal commission into the sector was underway, may struggle to be ready with just five months to go.
“It is highly unlikely the government will be willing to delay implementation despite the uncertainty the sector has had to manage throughout the pandemic,” she said.
“Any financial organisation, executive team or board that hasn’t got their head around the changes and implications are rapidly running out of time.”
