Eligible person” can access to the exemption so long as this person is not Authorised by an AFSL to

provide the financial services in relation to that kind of financial products; An authorized
representative of an AFSL holder for the provision of the financial service in relation to that kind of
financial product; An operator of a financial market or clearing and settlement facility;

A person will not be eligible to rely on the exemption to test a financial services in relation to a
particular type of financial product, if they (or their related body corporations) have previously used
the exemption to provide that before.

Eligible financial service Providing financial product advice in relation to a particular kind of eligible
financial product;Applying for, or acquiring a particular kind of eligible financial product;Issuing,
varying, or disposing of a non-cash payment facility; Previously, issuing is not permitted under
RG257.Arranging for the issuing, varying, or disposing of a particular kind of eligible financial
product; and Providing a crowd-funding services.

Eligible financial products, a person can rely on exemption to provide financial services to retail
clients to deposit taking facility issued by and ADI regulated by APRA, non cash payment facility
issued by ADI regulated by APRA

Promotion innovation and market competition, protect safety and stability of the financial system

NCCPA week 7 ( best interest obligations) case where there is 3 loans

1. Issue: in this case

2. Law and analysis
1. Whether NCC/NCCPA applies ? ( purpose test)
 S.3 of NCC, credit is provided when payment of debt is postponed by borrower to
the credit provider
 S.4 of NCC , Credit contract is a contract under which credit is or may be provided.
 S.5 of NCC , debtor is a natural person, credit is provided or intended to be provided
wholly or predominantly, (i) for personal, domestic or household purposes (ii) to
purchase, renovate or improve residential property for investment purposes (iii) to
refinance credit that’s provided wholly or predominantly to purchase, renovate
property for investment purposes
a charge is or may be made for giving the credit,
credit giver provides credit in course of a business of providing credit carried in
Australia.
 Under s.6 on NCA, NCCPA engages in a credit activity if provide consumer lease , is a
mortgagee under a mortgage , beneficiary of a guarantee, provide debt
management service , provides credit services or is a credit provider under a
regulated credit contract

2. Whether C.3, P.5A applies in the given scenario?

(s.158L-S.158 T) imposes obligations on mortgage brokers and mortgage intermediaries
 Duty to act in the best interests of customers (S.158LA)
 Duty to give priority to customers interests ( S.158LB)
 Ban on accepting or giving conflicted remunerations ( s.158NB-158NF)
 Mortgage brokers must act in best interests of consumers when providing credit
assistance in relation to credit contracts, when there is a conflict of interest,
mortgage brokers must give priority to consumers in providing credit assistance in
 relation to credit contracts, must not accept conflicted remuneration. Employers,
credit providers and mortgage intermediaries Must not give conflicted remuneration
to mortgage brokers or intermediaries.
3. Whether MB has complied with Best Interest Obligations ( S.158LA)
(i) gather information about the consumer and their situation ( RG 273.30-RG273.43) by
finding objectives of consumer, make further inquiries if the customer instructions are
unclear or incomplete and if critical information is not obtained , mortgage brokers refrain
from making a recommendation.
(ii)(RG 273.44-86) utilizes the information to assess the appropriate credit assistance would
be in the customer’s best interests.
(iii)(RG 273.87-RG273.104)according on the assessment, suggest one or more options to the
consumers and provide information about why the recommendations given are in the
customers best interest
4. Whether MB breached the conflicts priority rule ( s.158LB), Licensee must give priority to
consumer’s interests when providing the credit assistance, MB must resolve conflicts of
interests in the consumer’s favor
5. Breached of conflicted remuneration S.158NB,
whether advertisement is materially misleading or amounts to unfair or dishonest conduct
(S.180A)
whether credit provider has complied with NCC provisions of banking code provisions or s.47

Consumer credit lending

1. Whether NCC/NCCPA applies ? ( purpose test)
 Under s.6 on NCA, NCCPA engages in a credit activity if provide consumer lease , is a
mortgagee under a mortgage , beneficiary of a guarantee, provide debt
management service , provides credit services or is a credit provider under a
regulated credit contract
 S.3 of NCC, credit is provided when payment of debt is postponed by borrower to
the credit provider
 S.4 of NCC , Credit contract is a contract under which credit is or may be provided.
 S.5 of NCC , debtor is a natural person, credit is provided or intended to be provided
wholly or predominantly, (i) for personal, domestic or household purposes (ii) to
purchase, renovate or improve residential property for investment purposes (iii) to
refinance credit that’s provided wholly or predominantly to purchase, renovate
property for investment purposes
a charge is or may be made for giving the credit,
credit giver provides credit in course of a business of providing credit carried in
Australia.
2. Disclosure obligations
 s.16 credit provider must provide borrower with precontractual statement and
information statement before contract is entered into of before borrower makes
offer to enter into contract.
 S.17 provide details of borrowers rights and obligations must provide following
details in precontractual statement ( credit provider’s name , amount of credit,
annual percentage rate, method of calculation of interest charges payable)
 ASIC vs Rent 2 own cars
3. Price regulation
 • S.32 A-small amount credit contract 16 days to 1 year not provided by ADID not continuing
credit maximum establishment fee of 20% of the adjusted credit amount (the first amount
of credit provided) (s.31A)
• monthly fee of 4%.(s.31A)
• No interest can be charged.(s.31A)
• Also, there is a limit on the amount that can be recovered in the event of default (200% of
the adjusted credit amount) (s.39B).
• No direct debit fees (s.31A)

Medium amount credit contract 16 to 2 years $2000 - $5000 not continuing credit not
provided by ADI, annual cost rate for a credit product is capped at 48% under NCC

4. Type of credit
 STC
 STCC
 SACC
 MACC
5. Remedies
S.72 If a debtor considers that he or she is or will be unable to meet his or her obligations
under a credit contract, the debtor may give the credit provider notice (a hardship notice),
orally or in writing, of the debtor’s inability to meet the obligations.
Courts may reopen suspicious transactions (s.76) and may set aside the loan agreement and
mortgages or revise the credit contracts(s.77

Week 9 ( PIO+ BEAR)

i. Issues …..
A product intervention order ( PIO) s.1023A ( ASIC VS Teleloans & FLD, ASIC v Cigno)
S. 1032 D states that to issue a PIO ( have product intervention power) must be a
financial product, retail clients and significant deteriment ( loss)

ii. Laws and applications

1. is there a financial product ( S.1023b)

is it a securities, interests in managed investment schemes, derivatives, insurance products, credit

contract customer leases guarantees and mortgages

2. (S. 761G)is the product made for or targeted towards a retail client?
3. ( S.1023E) Is there a significant detriment?
 Nature and extent of detriment
 Actual or potential financial loss to retail client caused by the product
 Impact that detriment has had, or will likely to have on retail clients.

III.conclusion

in conclusion since there is a financial product under S.1023 B , product is deliberately aimed at retail
clients under section S.761G, and has caused a significant detriment which has been caused by the
product. ASIC can issue a product intervention order ( PIO) , in relation to
WEEK 10
o Degree of attachment: how the chattel is attached to the land?
 If it simply rests on the land on its own weight presumed to be a chattel
(e.g., a free-standing statue) (the party arguing it is a fixture bears the
burden of proof).
 If the item is attached to the land, presumed to be a fixture (e.g., fountain
cemented into the ground) (the party arguing it is a chattel bears the b/p).
 Factors to consider the strength of presumption: e.g., whether removal
would cause damage to land, building or the item itself; the more securely
attached the item is, the stronger the presumption that it is a fixture…
o For what purpose was the item attached to or placed on the land?
 E.g., installing a air-conditioning plant—for the better enjoyment of the use
of land or the plant itself? (if the land, then, fixture).
 How to ascertain intention? Objective person, at the time of attachment,
not actual (subjective) intention.
• Whether the chattel has been fixed with the intention that it shall
remain in position permanently or for indefinite or substantial
period?
• Whether the chattel has been fixed with the intention that it shall
remain in position for some temporary purpose?

Personal property
Chattels personal is divided into:
choses in possession – moveable or physical objects  tangible;
choses in action – a right to something  intangible e.g., bank account, trademarks,
patents.
Types of security interests
Mortgage – a contract in which a lender obtains a security interest in the real property of
the borrower
Mortgages under Old system/Deeds system
conveyance of land with a contractual promise that the lender would convey
land back to borrower on repayment of loan.
Mortgages under Torrens system
Does not involve a transfer of title but takes effect as a security.
The National Credit Code applies to any ‘mortgage’ which secures an obligation under a
credit contract or a related guarantee -- the mortgagor must be a natural person or a strata
corporation: s 8(1) NCC.
Mortgage must be in writing and signed and may not secure an amount that
exceeds the sum of the liabilities of the debtor under the credit contract.

Hypothecation occurs when a personal property is given as collateral to secure a loan,

without giving up title, possession, or ownership rights, such as income generated by the
property.

Legal issue
S.34 - MULTIPLE TYPES OF COMPETING INTEREST IN A COMPANY , REGISTERES INTERST GETS
PRIORITY OVER UNREGISTERED

S.43 - SIMILAR REGISTERED INTEREST THE FIRST LOAN RECEIVES PRIORITY

Week 11
Money laundering- is the name given to the process of separating money from its criminal
roots and bringing it back to the criminal as legitimate money.”
Methods
• the use of accounts in false names;
• operating accounts on behalf of undisclosed principals;
• International transfers in false names;
• using bank cheques or drafts to send money abroad
taking out loans and using the proceeds of crime to repay them or as security for the loan

Objectives of AML/CTF
• Commitments to FATF
• Deter, detect and disrupt money laundering and the financing of terrorism.
• To provide disincentives to crimes
• Protect the integrity of the financial system
• Avoid economic and competitive distortions

Reporting obligations

Week 11 ( AML/CTF)

1. Introduction

Money laundering is the name given to the process of separating money from its criminal roots and
bringing it back to the criminal as legitimate money

2. Issue

The fundamental legal issue is to ascertain if ….. bank has complied with statutory obligations under
AML/CTF , and to see what actions can be taken to improve compliance.

3. LAW and Applications

1. required to see if bank has taken measures to identify and verify customers properly CIO
( Customer identification obligation)

(S.32) reporting entity must not provide designated services to a customer without carrying out
applicable customer identification procedures

(S.35) Reporting entity must carry out a procedure to verify a customer before providing a
designated service to customers

(s.36) Reporting entity carry out ongoing customer due diligence

2. it is required to see if banks has complied with Reporting obligations under s.41…
 1. (s.41 ) Suspicious matters report, RE must give Austrac CEO a SMR within 24hpurs ,if
suspicions related to financing of terrorism ,3 business date if suspicion relates to any
other matters

(s.43) Any cash transaction at over the threshold limit of $10,000 must be reported to AUSTRAC CEO,
Reporting entity must within 10 days after the day on which the transaction takes place, give the
AUSTRAC CEO a report of the transaction

(S.45) international fund transfer instructions out of Australia and transmitted into Australia must
be reported , within 10 business days after the day on which the international fund transfer
instruction was sent or received by the person, give the Austrac CEO a report about the instruction

(S.47) Compliance report must be completed between 1 january and 31 march of each year for the
previous calendar year

3. Required to see if banks has complied with AML/CTF compliance program

S.81 (1): A reporting entity must not commence to provide a designated service to a customer if the
reporting entity has not adopted and does not maintain an AML/CTF program

S.82 non compliance with AML/CTF program

S.84 (1): provides that an acceptable AML/CTF program must consist

Part A ( general) and part B ( customer identification

4. Required to see if bank Record keeping obligations

s.104 if a customer of a reporting entity gives reporting entity a document relating to the provision
of a designated service, the reporting entity must retain the document for 7 years following records:

(S.107) Transaction records

(S.108) Customer provided transactions documents

(s.109) transferred ADI accounts

(s.110) closed ADI accounts

(s.113) Records of identification procedures

(S.115) records about electronic FTIs

(s.116) Records about AML/CTF programs

(S.117) records of correspondent banking relationships

5. Required to see if bank has complied Correspondent banking-( Provision of banking services by
one financial institution to another )

(s.97) Carry out due diligence on the correspondent bank

(s.98) perform ongoing due diligence on the correspondent bank

(s.99) obtain senior officer approval

(s.99) responsibilities of correspondent bank and the financial institution must be documented
In Conclusion,breach/not
previous case Austrac vs Westpac

(CBA/WESTPAC)

WEEK 12 ( ePC)

ePC objectives

1. Quality consumer protection regime for payment facilities

2. A framework to promote consumer confidence in electronic banking and payment systems
3. Effective disclosure of information , to enable customers to make informed decisions about
facilities
4. Clear and fair rules for allocating liability for unauthorized tramsaction
5. Effective procedures for resolving complaints
6. A regime that is flexible and accommodates providers of new payment facilities

Cl 2.4 ePC applies the code to payment, funds transfer and cash withdrawal transactions that are (1)
initiated through electronic equipment and not intended to be authenticated by comparing a
manual signature with a specimen signature

Cl 2.5 ePC applies to the following transactions provided by a subscriber

electronic card transactions - ATM, EFTPOS, credit card and debit card transactions that are not
intended to be authenticated by comparing a manual signature with a specimen signature,

telephone banking and bill payment transactions,

internet banking transactions, including‘Pay Anyone,

online transactions performed using a card number and expiry date,

online bill payments (including BPAY),

transactions using facilities with contactless features and prepaid cards, not intended to be
authenticated by comparing a manual signature with a specimen signature,

direct debits,

transactions using electronic toll devices,

transactions using mobile devices,

transactions using electronic public transport ticketing facilities. eg Myki,

mail order transactions not intended to be authenticated by comparing a manual signature with a
specimen signature.

Disclosures under ePC

Subscribers must provide following information to users

• a copy of the terms and conditions

• Fees or charges

• Restrictions on using the facilities

 • Description of the types of transactions

• Description of how to report theft/loss

• Description of how to make a complaint

• Information on expiry dates

• Notice of changes to terms and conditions

• Receipts and statements

Clause 9.1 in chapter of the ePC only applies to unauthorized transactions

According to clause 10.1 ePC a holder is not liable for losses arising from an unauthorised transaction
if the cause of the loss:

fraud or negligence by a subscriber‘s employee or agent, a third party involved in networking

arrangements, or a merchant or their employee or agent,

a device, identifier or pass code which is forged, faulty, expired or cancelled,

a transaction requiring the use of a device and/or pass code that occurred before the user received
the device and/or pass code (includes reissued device and/or pass code),

a transaction being incorrectly debited more than once to the same facility, and

an unauthorised transaction performed after the subscriber has been informed that a device has
been misused, lost or stolen, or the security of a pass code has been breached.

Clause 11. Holder liability

 User contributed to loss through fraud or breaching pass code security: cl 11.2 ePC

 More than one pass code required and holder breaches pass code security (if breach
responsible for more than 50% losses): cl 11.3 ePC

 Holder liable for unauthorised transactions resulting from leaving card in ATM (subscriber
must have reasonable security measures): cl 11.4 ePC

 Holder unreasonably delays reporting of misuse, loss or theft of device and breach of pass
codes: cl 11.5 ePC