(Re)Insurance and Regulation Focus - fortnight commencing 17 March
18 March 2025
Key developments over the last fortnight
BREAKING: $10.5 million penalty for Active Super in ASIC’s third greenwashing action
The Federal Court has today imposed a penalty of $10.5 million against Active Super for greenwashing misconduct. Despite claims in Active Super’s marketing materials that it eliminated investments that created a risk to the environment and the community, including gambling, coal mining, oil tar sands and Russian investments, the Federal Court found that Active Super held both direct and indirect investments in all these categories. ASIC Deputy Chair Sarah Court commented that the significant penalty “sends a strong message to companies making sustainable investment claims that those claims need to reflect the true position”.
ASIC taking action on cybersecurity failures
ASIC have instituted proceedings against FIIG Securities Limited (an AFS licensee) for failures stemming from cybersecurity breaches that resulted in the theft of customers’ personal information and subsequent publishing on the dark web. The stolen data included customer names, addresses, dates of birth, driver’s licences, passports, bank account details and tax file numbers. ASIC alleges that FIIG failed to have adequate cybersecurity measures in place for more than four years, waited nearly one week to investigate and respond to the incident from the date it was notified of the incident, and failed to provide mandatory training to staff on cybersecurity awareness. ASIC have alleged that FIIG Securities breached the general obligations of an AFS licensee under s 912A of the Corporations Act, specifically the obligations to do all things necessary to ensure that financial services are provided efficiently, honestly and fairly, to have available adequate financial, technological and human resources, and to have adequate risk management systems. ASIC Chair Joe Longo has said that “this matter should serve as a wake-up call to all companies on the dangers of neglecting your cybersecurity systems”.
25-035MR ASIC sues FIIG Securities for systemic and prolonged cybersecurity failures | ASIC
Increasing regulatory complexity and responsibility of Boards does not change obligations of directors
ASIC Chair Joe Longo used his speech at the Australian Institute of Company Directors Governance Summit to address key governance issues facing corporate Australia. Addressing the composition of boards, the ASIC Chair called out an imbalance that exists in the skill sets represented on boards between overrepresented legal and financial expertise and the minority of technology and data governance expertise. Further with the evolving regulatory requirements, including complex overlapping regulatory regimes, the fundamental obligations on directors remain unchanged and directors should remember their directors’ duties in the discharge of their responsibilities. The ASIC Chair also highlighted the regulatory actions taken against directors in the final quarter of 2024 including four disqualifications and 58 prosecutions. Despite all the doom and gloom, the ASIC Chair also noted that ASIC has formed a Simplification Consultation Group comprised of business, consumer and industry representative groups with a view to release a discussion paper later in 2025 to address the significant and complex regulatory burdens.
The times they are a-changin’– but directors’ duties aren’t | ASIC
Dutton doubles down on divesture digs
Last month we brought you the news that Opposition Leader Peter Dutton has flagged using divestiture powers on large insurers with a view to combat premium increases. Following some public back and forth with members of his own party stating that the divestment policy was confined to supermarkets and hardware, Dutton has stated that the Coalition’s policy is that if there is advice that a concentration of power exists in the big insurance companies that leads to “people paying astronomical prices for their premiums and therefore market failure, my government will act and we will divest if that’s what’s required to get competition into the marketplace”. These comments followed additional comments from the Opposition Leader stating that there was a serious problem with insurance in Australia and promising to act quickly in the face of market concentration and policyholder exclusions. Following the impacts of Cyclone Alfred and with increasing flood risks, this issue is likely to continue to be on the political agenda.
APRA come out with first significant update to its governance standards in more than a decade
APRA has released a proposal for eight key reforms with a view to strengthen governance, risk management, and compliance processes for banks, insurers, and superannuation trustees. The reforms include stricter requirements for board skills, fitness and propriety, conflicts management, independence, performance reviews, role clarity, board committees, and director tenure. APRA have stated that the “proposals will ensure that APRA’s governance standards reflect contemporary best practice and establish clear benchmarks for regulated entities”. Finalised standards and updated guidance are expected in 2026 with the updated framework to be published in 2027 and proposed implementation in 2028. These proposals will require regulated entities to carefully consider their governance arrangements and compliance processes in order to align with the new expectations.
APRA proposes changes to strengthen and streamline governance and fit and proper requirements | APRA
Key dates on the horizon
- 15 March 2025 – FAR IS LIVE!!! Congratulations everyone on getting to this point (it has been a long time coming)
- 14 April 2025 – Just a reminder that this date is the last date for submission of accountability maps for FAR Enhanced Reporting Entities.
- 30 April 2025 – APRA to provide their quarterly update on insurance industry performance and statistics.
- *1 July 2025 – APRA prudential Standard CPS 230 commences.*
In case you missed it
The Sparke Helmore team have launched the Sparke Helmore FAR Office (SFO) to assist our clients with all their ongoing FAR needs.
