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22 April 2015: Workplace Relations Update for Executives On-the-Go

In this edition:

  • tribunal finds morning sickness can be a disability;
  • David v Goliath: employee loses against IBM in court; and
  • ‘conditions akin to slavery’ – employee awarded $186,039 from former employer.

Tribunal finds morning sickness can be a disability

The Victorian Civil and Administrative Tribunal (the VCAT) has recently decided that in some cases, extreme morning sickness from pregnancy can be considered a disability, and must be accommodated by employers. This case should alert employers to their obligations under anti-discrimination legislation.

The facts
Ms B worked as a full time sales consultant for a phone company in a retail store which was owned by the company TBS. Prior to discovering her pregnancy, she had a history of taking sick leave from work which, despite many medical certificates being produced, incited doubt amongst her colleagues about their legitimacy (an apparent Facebook post from the beach on a day she took sick leave was referred to in proceedings). In early September 2013 Ms B discovered she was pregnant which explained her recent ill health as being morning sickness. Throughout September, she was absent often from work. Her symptoms included frequent vomiting, dizziness and feeling faint. She was diagnosed with hyperemesis gravidarum, the most severe form of morning sickness (Kate Middleton had the same condition).

Ms B previously had a miscarriage and, on the advice of her GP, asked TBS to reduce her hours of work from 38 to 28 hours per week. Ms B submitted a medical certificate accompanying this request. On 4 October 2013 TBS refused her request and three days later Ms B resigned and left the store two weeks later.

In his evidence, the TBS Managing Director stated that he told Ms B he could not agree to her request for a reduction in hours because ‘she was employed on a full time basis and that TBS was a small business not able to reduce her hours’. He also told her that he would not be able to employ someone to cover the 10 hours per week she would no longer be working. Ms B said she felt she had no choice but to resign as a result of TBS’s refusal of her request.

Ms B later experienced money problems as her resignation meant that she could not commence Centrelink benefits immediately. She also could not find work before the birth of her son in May 2014. After the birth Ms B scored highly on a post-natal depression test.

VCAT proceedings

Ms B applied to VCAT seeking compensation under the Equal Opportunity Act 2010 (Vic) (the EO Act) for loss of wages and hurt and humiliation. This was sought on the basis that TBS had directly and indirectly discriminated against her because of her pregnancy, which included severe morning sickness, and failed to make reasonable adjustments for her as an employee with a disability (morning sickness and pregnancy).

In considering whether TBS directly discriminated against Ms B the question considered was whether TBS treated her unfairly because of her pregnancy. To answer this question VCAT referred to the following actions by the Managing Director:

  • texts from him to Ms B stating he was ‘$%#king sick of this’ and ‘you better $%#king come in’ – sent in response to Ms B telling him she could not work and he knew she was pregnant; and
  • comments he had made to her expressing his frustration and displeasure about her having to sit while on the shop floor (staff normally stood) and her frequent toilet breaks.

VCAT found that Ms B had been directly discriminated against as those actions had caused Ms B detriment, being hurt, humiliation and anxiety and constituted unfavourable treatment because Ms B was taking sick leave and additional toilet breaks as a result of her pregnancy.

However, VCAT found that allegations including that staff must stand at all times during shifts and only take breaks when customers were absent, did not constitute indirect discrimination.

Indirect discrimination occurs when a policy or procedure which appears to apply equally to all individuals in the relevant group but causes a disproportionate disadvantage or detriment to a person because of their disability.

VCAT also found that the employer did not have to make ‘reasonable adjustments’ for Ms B’s disability. An employer is required to make ‘reasonable adjustments’ to enable the person with a disability to comply with the inherent requirements of the job. If the employer fails to do so, that in itself constitutes unlawful discrimination against a person with a disability.

According to the VCAT Senior Member Ian Proctor, Ms B’s pregnancy was a ‘disability’ because the morning sickness caused the ‘malfunction of her body’, meeting one of the criteria of the definition of ‘disability’ under the EO Act. But even though she had that disability, it did not require the adjustment of her working hours in order to perform ‘the genuine and reasonable requirements of the employment’. This finding was based on the wording in Ms B’s medical certificate, where her GP had said that a reduction in hours was ‘needed’ but not ‘required’ – a strict interpretation of the wording in the EO Act.

Outcomes

This decision is noteworthy for employers as it establishes that, at least in Victoria, while pregnancy itself is not a disability (noting that it can be a separate ground of unlawful discrimination) extreme variations of conditions associated with pregnancy, such as extreme morning sickness can be considered by the courts to constitute a disability. And under the various pieces of State and federal legislation, once the disability has been established, an employer must consider what steps can reasonably be taken to enable the person with a disability to perform the inherent requirements of the job. While other States may not follow the Victorian precedent of deeming extreme morning sickness a disability, employers are reminded that disability discrimination goes beyond direct and indirect discrimination, but also failure to make ‘reasonable adjustments’.

David v Goliath: employee takes IBM to court and loses

In another discrimination case relating to working women, a female employee’s claim of sex discrimination against IBM Australia Limited (IBM) has been dismissed by the Federal Circuit Court (the Court).

The facts

Ms Y began her employment at IBM in 2003. In July 2008 she commenced maternity leave.

Prior to taking leave, Ms Y had been promoted in 2007 from band 6 to band 7 within her project team based in Canberra.

Ms Y returned to work from maternity leave on 23 July 2009. She had previously received approval from her manager, Mr C, to work part-time at 20 hours a week to accommodate the flexibility of caring for her child.

Due to a change in the direction of the project she was working on, Ms H had to skill up. In 2010 Ms Y’s work performance began to suffer.

Ms Y also raised with her local manager that she was working odd hours, which he explained was because she was not to work more than the 20 hours agreed upon.

In 2010 Ms Y’s marriage broke-down and between 2010 and 2011 her work suffered as did her personal life. Ms Y went on different periods of sick leave and was eventually dismissed on 15 March 2014.

Despite IBM having written procedures in place to help employees lodge complaints, Ms Y did not do so as she was ‘overcome by fear’.

No sex discrimination here

In short, Ms Y alleged various acts of discrimination by IBM against her, in contravention of the Sex Discrimination Act 1984 (Cth). She claimed that she was discriminated against in respect of:

  • pay or disparity in pay;
  • the allocation of administrative duties;
  • cancellation of her annual leave; and
  • being ostracised by a friend and co-worker.

All her allegations were dismissed.

Judge Street found that Ms Y had fabricated evidence – undermining her credibility, blamed IBM for her marriage break-up, and that this blame was one of the reasons for bringing the proceedings.

Judge Street was also perplexed by the applicant’s failure to ‘speak up’ in accordance with IBM grievance procedures. He noted that Ms Y is clearly ‘a highly intelligent, articulate and capable individual who is well able to formulate and make written complaints if she chose to do so’.

Costs ordered against Ms Y

Where the circumstances warrant, courts and tribunals in discrimination matters are usually keen to see matters settled reasonably, rather than dragged out in costly litigation. In this case earlier in the proceedings, IBM sent Ms Y a formal letter offering to resolve the proceedings by discontinuing the case, with each party to pay their own costs.

This type of letter – referred to as a ‘Calderbank Letter’ – has the consequence that if unreasonably rejected, Ms Y must pay a higher portion of IBM’s costs. Judge Street found that this offer of compromise was unreasonably rejected, and Ms Y was ordered to pay IBM’s costs of $150,000, in addition to her own costs of $250,000.

This case is an example of how litigating against employers is not always the best method of seeking a resolution to personal and professional misfortune.

‘Conditions akin to slavery’ – employee awarded $186,039 from former employer

In a remarkable case that followed a criminal trial on trafficking charges, an exploited employee has been awarded wages after he was kept in what the Judge called ‘conditions akin to slavery’.

With the assistance of Anti-Slavery Australia, a 457 Visa immigrant, Mr R, brought a case against an Indian restaurant (the Restaurant) and one of its directors (Mr T). In a judgment scathing of not only the perpetrators involved in this case, but also the integrity of the 457 Visa program, Judge Driver determined a claim for unpaid wages against the Restaurant and Mr T.

Before this case, Mr T pleaded guilty to criminal charges of trafficking a person in circumstances where he was reckless as to exploitation. The circumstances of this case provides a history of this matter.

Mr R worked as a cook in India. His English was very basic. He was approached by Mr T, who made arrangements for him to come to Australia on a 457 Visa. Immigration documents stated that he was to be paid a total package of $45,616. Upon arrival in Australia, Mr T took Mr R’s passport and secured it in his home.

Mr R commenced work at the Restaurant. He worked for 12 hours a day, seven days a week over 16 months. He lived in the Restaurant’s storeroom, although Mr T falsely claimed that he lived with him. From the Restaurant, he called Mr T for instructions on food preparation for the day. In this time, Mr R was paid a pittance which was sent to his wife overseas. He received no leave. He was told that be could not leave Australia unless he repaid Mr T $7,000 for the cost of bringing Mr R to Australia.

Mr T supported this arrangement with an array of sham documents which attempted to legitimise Mr R’s stay on his visa, and his employment.

Subsequently, he went to the police and he and his family were granted a witness protection visa allowing him permanent residence in Australia.

Mr R brought a case against the Restaurant and Mr T under the Workplace Relations Act 1996 (Cth) and the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) for underpayment of salary, underpayment of leave and breach of contract. It is unsurprising that the Court determined that Mr R had made good his claim. The task for the Court was to calculate the amount to be paid to Mr R. This was not easy, given that the Court found that Mr T ‘has been prepared to change evidence under oath, as suits his particular case’.

In the end, the Court determined that Mr R was owed a total of $186,039, being underpaid wages plus interest.

Keeping up appearances: ASX revises guidance on trading policies

On 30 January 2015 the ASX released an updated Guidance Note 27: Trading Policies (GN 27).  The release came after some highly publicised events that have called into question certain listed entities’ approach to, and enforcement of, share trading policies.

For example, the allegations of inappropriate share trading by two directors of David Jones in 2014, which led to an ASIC investigation of perceived insider trading activity.  Ultimately, ASIC did not take enforcement action against the directors involved. However, the subsequent resignation of the directors and the damaging publicity the matter caused for David Jones (since de-listed from the ASX), demonstrates the importance of having an effective trading policy in place which is enforced properly.

One size does not fit all

GN 27 emphasises that entities shouldn’t take a ‘cookie-cutter’ approach to drafting their trading policy.   Good governance ‘demands that an entity has in place a fit-for-purpose trading policy, tailored to its particular circumstances, that regulates when and how its directors and senior executives may trade in its securites.  The purpose of such a policy is not only to minimise the risk of insider trading but also to avoid the appearance of insider trading and the significant reputational damage that may cause.’

The two key themes of avoiding ‘risk’ and the ‘appearance’ of insider trading should inform how an entity reviews its trading policy in light of the new guidance in GN 27.

Ultimately however, the market and regulators will have the opportunity to judge the appropriateness of such a policy as, in accordance with Listing Rule 12.8, the trading policy is provided to the ASX for market release.

Key points

In summary, the revised GN 27 addresses the following key topics:

  • Purpose of the policy – as explained above one size doesn’t fit all.
  • Application of policy beyond key management personnel – who, in addition to Key Management Personnel (KMP), may be subject to the policy due to their capacity to access market sensitive information ahead of the market?
    It’s suggested that the policy also apply to persons such as:

    • executive assistants to KMP;
    • finance or strategy staff;
    • the next layer of management below KMP; and/or
    • staff who may have access to KMP email or document folders, such as IT staff.
  • Ad hoc application – entities should reserve the right to impose ad hoc trading restrictions on individuals (eg. those under KMP level working on a particular market sensitive matter) and are ‘strongly encouraged’ to also designate ad hoc trading periods as ‘closed periods’.  The prescription of ad hoc closed periods needs to be treated carefully to avoid market speculation.
  • Scope of affected activities – the ASX urges entities to ‘consider carefully’ formally extending the policy to cover trading in products and activities related to securities such as derivatives, short-term trading, short-selling, hedging transactions and margin lending – rather than limiting the policy’s application to securities.
  • Procedures to clear trading – increased number of governance suggestions are given here relating to when clearances can be given and how an application to trade should be understood within the entity.  For example, a policy should state that:
    • any clearance to trade can be given or refused by an entity in its discretion; and
    • a decision to refuse clearance is final and binding.
  • Primacy of insider trading laws – is emphasised as the ‘prudent’ inclusion of information in a policy reminding KMP and employees about how the possession of insider information can affect their trading activities.

Tough penalties should deter

To ensure that KMP and employees understand the importance of their organisation’s trading policy, and to reinforce its importance, it’s worth reminding them of what’s at stake if a person contravenes the insider trading or ‘market manipulation’ prohibitions of the Corporations Act.  Insider trading and market manipulation offences attract the following penalties for individuals:

  • criminal penalties of 10 years jail and/or a fine equal to the greater of $765,000 or three times the profit gained or loss avoided;
  • a civil penalty of up to $200,000; and
  • automatic disqualification from being a director or managing a company for 5 years.

The possibility of incurring these penalties should encourage all KMP and employees to review the trading policy and ensure that they understand how it operates and applies to them.

The recent sentences of the insider trading pair Lukas Kamay and Christopher Hill to a respective seven and three year jail terms should serve as a practical example of the serious consequences of breaching insider trading laws.

Training and eduction important for awareness

Entities and their company secretaries also need to review their compliance practices to ensure that employees and directors are aware of the policy and understand how to comply with it.  Awareness and compliance can be achieved through regular training and education.  GN 27 reminds entities that failing to have such measures could constitute a failure to comply with Listing Rule 19.2 to honour the ‘spirit, intention and purpose’ of the Listing Rules.

In GN 27 the ASX advises that it’s up to the entity to determine what these measures should be, but in particular, it should have appropriate record keeping procedures to capture details of applications by KMP for clearances to trade under a trading policy and its decisions on such applications.

Other steps include:

  • having contractual obligations that KMPs and employees must comply with the trading policy;
  • including a copy of the trading policy in ‘new starter’ packs; and
  • circulating reminders via email of the start and finish dates for a trading window or black-out period as they are about to occur.

GN 27 also lists measures an entity can take to monitor compliance with the policy such as requiring the KMP to notify it of the details of their holdings, including HINs or SRNs.

The key to effective compliance is a ‘compliance culture’ so in terms of conveying the meaning and importance of the trading policy, all entities should encourage a culture of awareness of the policy.

What’s next?

Although the ASX has not prescribed a deadline for compliance with GN 27, entities should be reviewing their existing trading policies in light of the suggestions made in it.  Changes may be required to update the policy, especially to ensure that the trading policy is ‘fit for purpose’ for that entity.

An updated version of the policy should be given to ASX if material changes have been made.  Even if material changes have not been made, the policy can still be given to ASX for consistency – especially if your organisation publishes  the policy on its public website.

 

Compliance Standards ISO 19600 and AS 3806 – differences explained

We last wrote about ISO 19600:2014 Compliance Management – Guidelines (ISO 19600) in our article ‘A New Global Standard for Compliance: ISO 19600‘. Since that time ISO 19600 has been adopted as the international standard.

ISO 19600 was developed under the auspices of the International Organization for Standardisation (the ISO). Although at the date of publication, ISO 19600 has not officially replaced the existing Australian Standard for Compliance AS 3806:2006 (AS 3806), given that ISO 19600 is largely based on AS 3806 and that it was developed by a committee based in Australia, official recognition is likely to come soon. This has been confirmed in our conversations with Standards Australia, although prior to the adoption of ISO 19600 as the new Australia Standard, it will need to go through the usual public consultation period.

When ISO 19600 is recognised in Australia, it will be important for many organisations to understand the differences between the new standard and AS 3806. This article is designed to assist in this process.

A new approach

Whilst AS 3806 speaks of a compliance ‘program’, ISO 19600 speaks of a compliance ‘management system’. The difference is not just semantic, it demonstrates a different approach to compliance.

ISO 19600 places emphasis on compliance as being ’embedded’ in the culture of the organisation and ‘integrated with the organisation’s financial, risk, quality, environmental and health and safety management processes and its operational requirements and procedures’. It makes it clear that compliance is a responsibility of an organisation’s governing body, and not a mere ‘function’ of the organisation.

Structure of the standards

One of the first differences you will notice between the standards is that they have a fundamentally different structure.

AS 3806 divides 12 principles into four key themes:

  • commitment;
  • implementation;
  • monitoring & measurement; and
  • continual improvement.

ISO 19600 on the other hand, refers to seven key themes each with multiple elements. The seven key themes are:

  • context of the organisation;
  • leadership;
  • planning;
  • support;
  • operation;
  • performance evaluation; and
  • improvement.

The structure of ISO 19600 is designed to place emphasis on the organisational elements that are required to support compliance.

New concepts

Definitions

ISO 19600 uses standard terminology to bring it into line with other ISO standards. This standard terminology is explained by the ISO.

A compliance ‘management system’ is defined as a ‘set of interrelated or interacting elements of an organisation to establish policies and objectives and processes to achieve those objectives’. This contrasts to the previous ‘compliance program’, defined as ‘a series of activities that when combined are intended to achieve compliance’.

Some other notable new definitions include:

  • compliance – meeting all the organisation’s compliance obligations;
  • compliance obligations – requirement or commitments that an organisation has to or chooses to comply with; and
  • compliance risk – effect of uncertainty on compliance objectives.

Whereas many organisations confine themselves to dealing with their ‘legal and regulatory’ obligations, ISO 19600 makes it clear that the concept of compliance is much more expansive and extends to obligations such as those set out in an organisation’s standard operating procedures. This fits in with our thinking at CompliSpace where we often refer to the key compliance areas as being:

  • legal and regulatory;
  • organisational (including obligations arising from policies and procedures as well as risk treatments); and
  • contractual.

Risk management

The internationalisation of this compliance standard also brings with it a blink-and-you’ll-miss-it change. ISO 19600 states that ‘compliance risk assessment constitutes the basis for the implementation of the compliance management system’. This is a significant inclusion as it makes risk management an essential part of a compliance program.

Previously it was possible to say that ‘whilst risk cannot live without compliance, compliance can live without risk’. This is no longer the case.

Notably, this change matches commercial practice where most organisations, consciously or unconsciously, prioritise the treatment of their compliance obligations based on their perceived risk of non-compliance.

Continual improvement

ISO 19600 includes a flowchart which shows how the components of a compliance management system fit within the continual improvement principle, which is part of other ISO standards.

The future of ISO 19600

In an ISO press release Martin Tolar, Chair of the ISO project committee ISO/PC 271 that developed ISO 19600, states that ISO 19600 is ‘expected to serve as a global benchmark for compliance officers, businesses, commentators, academics – and regulators and the courts of course. And thanks to the standard’s customisable guidance, all organisations can benefit.’

We have contacted Standards Australia to enquire as to whether or not it is intended that ISO 19600 will replace AS 3806. Standards Australia confirmed that ISO 19600 will be adopted as an AS/NZS standard and a version will be released for public comment by June this year as part of the normal standard development process. Subject to public comment, the content of ISO 19600 is intended to be adopted in a new AS/NZS standard. At that time it will replace AS 3806.

In the meantime, AS 3806 will continue to be the relevant Australian Standard and organisations can decide whether to sit back and wait, or to upgrade their existing compliance programs to the new ISO 19600 standard in anticipation of its adoption.

Two new ‘10002’ complaints handling standards – now that’s confusing

When the new ISO 10002:2014 standard was released in July 2014, a quick comparison with the old International ISO 10002:2004 and Australian AS/ISO 10002:2006 standards (which are essentially the same document) revealed only minor technical amendments. Hardly worth writing about.

So when the Council of Standards Australia released AS/NZS 10002:2014 in October 2014, we nearly didn’t bother downloading it. After all, one could well be excused for presuming that the new Australian standard was simply another adoption of the international standard. Luckily, we did bother, because a simple comparison of the weight and thickness of the two documents immediately gave rise to a suspicion that something was amiss.

Yes, you guessed it – the new International Standard ISO 10002:2014 and the new Australian Standard AS/NZ 10002:2014 are in fact very different documents. Even reading this article you may have missed the fact that even though the numbering convention ‘10002’ is consistent, the new Australian Standard has dropped the ‘ISO’ that preceded the old 2006 standard.

For clarity, ISO refers to the International Organisation for Standardisation, the international standards governing body, whilst AS refers to Standards Australia – the Australian standards governing body.

So what is going on? What are the implications for Australian businesses and regulators that reference these standards?

As to ‘what’s going on’ – we are not sure. The reasons why there is now an Australia standard, as well as an ISO standard, have not been made explicitly clear.

As to the ‘implications for Australian businesses and regulators’ we are also not sure. Whilst many regulators refer to the AS/ISO 10002:2006 standard as providing useful guidance, at least one, the Australian Securities and Investments Commission (ASIC) is required to take AS/ISO 10002:2006 into account when making or approving standards or requirements for Internal Dispute Resolution procedures (Refer to ASIC Regulatory Guide 165 – Internal and External Dispute Resolution). So which standard now applies? Your guess is as good as ours.

Benefits of complaints handling standards

Before you give up and do your own thing, let us say that in general we are great supporters of standards.

Standards Australia produces standards for Australian industries, which are often adopted and mandated by regulators. Standards Australia has a policy of adopting International Standards wherever possible, hence why the international standard was adopted in AS/ISO 10002:2006.

The benefits of using standards to conduct business are explained by the ISO, which states that ‘International Standards are strategic tools and guidelines to help companies tackle some of the most demanding challenges of modern business. They ensure that business operations are as efficient as possible, increase productivity and help companies access new markets’. The same benefits apply to the application of standards produced by Standards Australia.

As noted above in some industries, such as financial services, it is a legal requirement to develop policies and procedures which comply with prescribed standards. For other organisations, compliance with standards may be recommended as part of good governance practices.

If you’ve read any of our previous blogs on complaints handling you will be aware of our support for organisations encouraging complaints from their clients. This is because complaints can identify issues in your business which provide opportunities for you to fix and improve your products and services. An effective complaints handling process is not just a customer service tool – it is a governance tool.

So, what are the differences between the new standards?

Both ISO 10002:2014 and AS/NZS 10002:2014 are revisions of ISO/AS 10002:2006. Both use the same numbering (10002:2014).

In the case of ISO/AS 10002:2006 and AS/NZS 10002:2014, both use:

  • (almost) the same title – ISO/AS10002:2006 ‘Customer satisfaction – Guidelines for complaint handling’ and AS/NZS 10002:2014 ‘Quality management – customer satisfaction – Guidelines for complaints handling';
  • a similar structure; and
  • share similar headings.

In simple terms, the difference between the standards is that ISO 10002:2014 focuses on customer satisfaction, whilst AS/NZS 10002:2014 focuses on the complaints handling process.

In ISO 10002:2014, customer satisfaction is key

ISO 10002:2014 focuses on how an organisation handles the complaints it receives about its products and services. This is in line with the predecessor to this standard, AS/ISO 10002:2006. The intention of ISO 10002:2014 is to ‘benefit an organisation and its customers, complainants and other interested parties’. The standard begins with the introductory statement that the implementation of the process described in the standards can:
  • ‘enhance the ability of the organisation to resolve complaints in a consistent, systematic, and responsive manner, to the satisfaction of the complainant and the organisation; and
  • help an organisation create a customer-focused approach to resolving complaints, and encourage personnel to improve their skills in working with customers’ (our emphasis).

Throughout the standards, references are made to ‘enhancing customer satisfaction’ and creating a ‘customer-focused environment’.

Tellingly, the references to ‘customer satisfaction’ and ‘customer-focused’ approach are absent from AS/NZS 10002:2014. Although the headings and structure of the two standards appear to be the same, AS/NZS 10002:2014 in fact treads a different path.

In AS/NZS 10002:2014, process is key

The focus of AS/NZS 10002:2014 on the quality of a complaint management system, as opposed to the satisfaction of the complainant, is a significant change in the approach to complaints handling. ‘Customer’ is no longer a defined term in the new standard – the less personal ‘complainant’ is instead the preferred term.

AS/NZS 10002:2014 provides greater guidance to an organisation on how to make their complaint management system accessible, efficient and effective.

Other differences from ISO 10002:2014 include:

  • more detailed guiding principles, such as:
    • ensuring no detriment to the complainant;
    • equity;
    • communication; and
    • prevention of ongoing disputes;
  • greater emphasis on the organisation’s management being actively responsible for ensuring good complaints handling and greater details of the role and responsibilities of staff managing complaints;
  • new points in the complaints review process, including ensuring that and organisations communication, public relations and media activities are informed by its complaint management policy, processes and outcomes;
  • greater emphasis on the management of complaints (rather than handling) including:
    • the new definition of ‘a complaints management system’ as one that ‘encompasses all aspects of policies, procedures, practices, staff, hardware and software used by an organisation for the management of a complaint'; and
    • new elements to the operation of the complaint management system such as providing support in the making of a complaint, early resolution, addressing the complaint and monitoring implementation of recommendations/remedies.

In comparison to the 8 annexures included in AS 10002:2006 and ISO 10002:2014, there are now 15 annexures in AS/NZS 10002:2014 (including 4 revised annexures and 10 new annexures). Some of the new annexures are:

  • guidance on accessibility;
  • unreasonable conduct by complainants;
  • dispute prevention and management; and
  • a three level model of complaint handling.

So the result is that, AS/NZS 10002:2014 is quite a different document to ISO 10002:2014.

AS/NZS 10002:2014 – the influence of public sector agencies

Despite AS/NZS 10002:2014 stating that ‘this Standard is intended to provide guidance to organisations of all sizes and in all sectors’, its philosophy appears to be directed more towards agencies in the public sector than private organisations. Notably the new Australia standard appears to have been developed primarily by representatives from government agencies including:

  • Australian Communications Consumer Action Network;
  • Australian Competition and Consumer Commission;
  • Australian Taxation Office;
  • Consumers Federation of Australia;
  • Electricity and Gas Complaints Commissioner;
  • Financial Ombudsman Service;
  • Monash University;
  • NSW Ombudsman;
  • Public Transport Ombudsman, Victoria; and
  • Society of Consumer Affairs Professionals.

The focus on adhering to a more detailed complaints management system, rather than achieving customer satisfaction, may reflect the lack of flexibility public organisations have to achieve client satisfaction. Many public sector agencies are bound by prescriptive rule-based decision making, and therefore may not in all cases be able to achieve customer satisfaction. This is in comparison to private sector counterparts who, in accordance with their own policies, can offer solutions and even compensation to address a customer complaint and try and achieve their satisfaction and, ultimately, retain their business.

The emphasis in AS/NZS 10002:2014 on effective management of complaints starts from the premise that an organisation may not be able to ‘fix’ the cause of the complaint. It recognises that a complaint can be resolved by assuring a complainant that their complaint was dealt with properly, in accordance with a stipulated process.

These complaints handling procedures, which focus on procedural fairness and objective decision making, can also be a part of a public sector organisation’s legal obligations.

So, which standard should you follow? ISO 10002:2014 or AS/NZS 10002:2014?

There is no simple, definitive answer to this question – each organisation will need to look at its needs (and legal obligations), and examine its structure and objectives, to make a decision about which standard should be followed. Generally however, if your organisation has an international scope, ISO 10002:2014 may help to achieve consistency across your organisation, whilst meeting many of the requirements under AS 10002:2014.

Clearly, the client focussed objectives of ISO 10002:2014 and the process-driven objectives of AS/NZS 10002:2014 mean that they are not directly compatible.

Although adopting AS/NZS 10002:2014 and attempting to combine elements of ISO 10002:2014 may be an option, consideration should be given to potentially conflicting objectives of the individual standards.

The benefits and disadvantages of either approach will need to be considered and evaluated. External advice may also prove useful.

Where to from here?

Although the new complaints handling standards have been released and adopted by the various standards agencies, businesses with complaints handling obligations should not let this cause them alarm.

The requirement to have complaints handling policies – which arise, for example, under financial services law, have not been updated.

For example, ASIC RG165 Licensing: Internal and external dispute resolution and the Corporations Regulations 2001 (Cth) (regs 7.6.01(1) and 7.9.77(1)) still references the old AS/ISO 10002:2006. The decision that policymakers make with respect to adopting either ISO 10002:2014 or AS/NZS 10002:2014 will provide guidance to organisations about which standards they should adopt. The ACCC, in their guidelines for debt collectors, also references AS/ISO 10002:2006. 

If you have followed AS/ISO 10002:2006 in the past and are wondering whether to update your existing complaints handling policies and proceduresmaybe the most sensible approach is to sit back and ‘wait for a little water to go under the bridge’. Then take time to review the various commentaries that are likely to be published by industry regulators and subject matter specialists before making a decision.

If you don’t have a complaints handling system in place we recommend that you read our previous blogs on complaints handling and take steps to put a system into place as soon as possible, as you are missing one of the most critical weapons available in an organisation’s governance arsenal.

17 March 2015: Workplace Relations Update for Executives On-the-Go

In this edition:

  • a lesson on how to enforce a zero-tolerance drugs policy;
  • International Women’s Day and your workplace; and
  • risk assessments can ensure safety and protect your job.

Failed drug test justified employer’s treatment of employee

Mr Hayes (we’ve used pseudonyms) was employed at the Company, which operated a power station facility. Mr Hayes was involved in the operation of a coal train unloading system and held other responsibilities as a Rail Safety Worker. The Company randomly tested its employees for drug and alcohol consumption, consistent with its policies and procedures in relation to drug and alcohol consumption. The Company had a policy of zero-tolerance for drugs and alcohol. On 22 August 2014 Mr Hayes was tested, along with 11 other employees. He returned two ‘non-negative’ drug test results and was stood down pending a disciplinary hearing. Mr Hayes subsequently admitted he had taken amphetamines around 36 hours before being tested.

Two other employees had returned non-negative drug tests from the same testing date and one employee was not dismissed as a result of his expressed remorse and previous employment history.

At a meeting on 3 September 2014 between Mr Hayes, members of his union (the CFMEU), and Company representatives, Mr Hayes resigned. Mr Hayes then launched proceedings under the Fair Work Act 2009 (Cth) arguing that he had only resigned because he believed that the Company was going to dismiss him and he believed that he had ‘no choice’ other than to resign in order to keep any long service leave or notice entitlement payments.

Application of policies and procedures

As part of his argument that the termination of his employment was unfair, Mr Hayes asserted that he had not received proper training on the operation of the Company Drug and Alcohol Policy. Mr Hayes believed that a breach of that policy would result in warnings with termination only occurring after ‘repeated’ breaches. Other bases for Mr Hayes’s argument included that:

  • he knew that drug taking could result in termination of his employment but he gave evidence that he would not have attended work if he believed he was still under the influence of drugs;
  • he referred to other incidents where other employees had not been dismissed following positive drug or alcohol test outcomes; and
  • he had been given a ‘final warning’ in the 12 months before the drug test outcome but this warning ‘related to an entirely different set of circumstances to those that led to the termination of his employment’ (it was not related to drugs or drug testing).

The Company’s position

The Company gave evidence about their Code of Conduct and Cardinal Safety Rules and provided records showing that Mr Hayes had participated in training associated with those requirements on ‘numerous occasions throughout his employment’.

The Commission’s findings

The Fair Work Commission found in favour of the Company on various counts. These included:

  • Mr Hayes’s previous warning, even though it was not related to the drug policy, clearly placed him ‘on notice’ about his requirement to comply with the Company Code of Conduct (the warning stated that it was a condition of his employment that he comply with the Code and any further breaches of it would result in disciplinary action);
  • the nature of the Company’s business and the equipment used and functions undertaken by its employees justified a zero-tolerance approach to drug and alcohol use in the workplace, and termination of employment where the presence of drugs was detected could be expected; and
  • the Company took appropriate steps to implement the drug and alcohol testing regime.

In terms of Mr Hayes’ argument that he had ‘no choice’ but to resign, Senior Deputy President O’Callaghan concluded that the Company had not actually advised Mr Hayes that he was going to be dismissed before he decided to resign. The Company had provided advice to the CFMEU representative involved in the matter about the likely outcome in the course of the normal investigative processes (termination of employment) but it had been clearly conveyed that Mr Hayes’s dismissal was not a foregone conclusion and he had been offered a legitimate opportunity to provide further information at the meeting on 3 September. Providing the opportunity for the employee to give their response in these circumstances is a necessary component of ensuring that the procedures were ‘fair’.

What does this mean for other employers?

This case once again shows the importance of good policy management and procedures in relation to disciplinary procedures. There are two elements at play in this case. First, Mr Hayes’ admissions, his previous warning, and the evidence of training, meant that the termination of his employment was justified. Second, although Mr Hayes’ termination action was justified, he was still accorded procedural fairness by being given the opportunity to respond before a final decision was made by the Company. Both elements need to be addressed in developing and implementing company procedures. This will significantly reduce the risk of the Fair Work Commission finding that a termination has been ‘harsh, unjust or unreasonable’.

International Women’s Day and your workplace

Saturday 8 March 2015 was International Women’s Day, an initiative that has been endorsed by the UN. This year’s theme was ‘Empowering Women, Empowering Humanity: Picture it!’.

In Australia, International Women’s Day was marked by both the Prime Minister Tony Abbott and the Opposition Leader Bill Shorten endorsing the #HeForShe movement which ‘asks men to pledge to take active steps in promoting gender equality and women’s empowerment’. Many eyes are on the federal government which recently increased the number of women in federal Cabinet, from one to two. There are now 2 women and 18 men (not counting the Prime Minister).

We’ve collated a few facts for you to think about and maybe to provoke discussion in your workforce.

In February, the Workplace Gender Equality Agency (the WGEA) published Gender Workplace Statistics which reveal that there is still much room for improvement.

The Statistics are based on data obtained from companies with 100 or more employees (who are required to report to the WGEA) and include the following facts:

  • full-time earnings for women in the private sector are, on average, 19.9% less than for men;
  • one-third (33.5%) of reporting organisations have no key management personnel who are women, and 31.3% of organisations have no other executives/general managers who are women;
  • at Board level, women hold 12.0% of chair positions, 23.7% of directorships, and 17.0% of ASX 200 companies do not have a woman on their board.

Unsurprisingly, women are significantly better represented in NFPs than they are in publicly listed companies.

If you are an ASX-Listed Entity, under the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (CGPRs) then you are required to have a diversity policy and to ‘set measurable objectives for achieving gender diversity’. The CGPRs state that ‘research has shown that increased gender diversity on boards is associated with better financial performance’. The CGPRs also require an ASX-Listed Entity to disclose its progress towards meeting its diversity objectives and, if an entity does not have a diversity policy, explain why not under the ‘if not, why not’ rule for not following a recommendation.

For more statistics on the proportion of women on ASX-Listed Entity Boards refer to the ‘Board Diversity‘ section of the Australian Institute of Company Directors website.

You may not realise that if your company employs more than 100 employees, you are required to make reports under the Workplace Gender Equality Act 2012 (Cth) (see further information about WGEA reporting obligations). The WGEA is ‘charged with promoting and improving gender equality in Australian workplaces’. It also has further information about the current national gender pay gap, which is at a ‘record high’.

Conducting a risk assessment can ensure your safety and protect your job

A decision by the Fair Work Commission to reject an unfair dismissal claim on the basis that important safety procedures were breached demonstrates that it is important that all employees understand the importance and application of policies and procedures at work.

The facts

Mr Tusk was employed as an electrical services technician at a security company, Secure Co (pseudonyms have been used). Mr Tusk was working at a University in NSW (the University) when he was subject to a random, unannounced safety audit on 19 September 2014.

During the audit four safety breaches were detected:

  • failure to complete the required risk assessment before commencing the task;
  • failure to comply with the University’s safety requirements;
  • incorrect Personal Protective Equipment (PPE) (his shirt sleeves were rolled up); and
  • incorrect hand tools being used.

As a result of the audit, Mr Tusk was stood down while an investigation was undertaken by Secure Co.

Following a meeting between Mr Tusk and Secure Co, Mr Tusk’s employment was terminated but the termination letter only referred to two of the alleged breaches above, being the failure to correct the risk assessment and the incorrect PPE.

History of non-compliance

Prior to the audit on 19 September, Mr Tusk had been warned about other safety breaches. Two months earlier he had received a warning letter regarding a failure to follow safety procedures including a failure to complete the appropriate risk assessment before commencing the task, and failing to comply with two of the company’s specific safety procedures.

In addition to receiving this written warning, Mr Tusk was told he would be subject to further training and unannounced audits.

Mr Tusk participated in safety training a few days later, which involved conducting a risk management assessment using a hand-held device before starting a task.

Was the dismissal unfair?

While he acknowledged the earlier breaches and the ensuing warning letter, Mr Tusk argued that his dismissal was unfair as he was not at fault for the breaches detected in the September audit.

Although Mr Tusk managed to defend two of the four alleged breaches, he was unable to persuade the Commission that he had not been trained in performing risk assessments. The company had provided training and had given him a ‘Take-5 notebook’ (a risk assessment tool).

Commissioner Bull also referred to the fact that Mr Tusk had not taken any constructive steps to improve his understanding of safety procedures. He did not request further training nor did he make a comment to his supervisors that he was insufficiently trained to conduct risk assessments.

The Commissioner found that the dismissal for failure to conduct the risk assessment was valid, but that the dismissal for the reason that Mr Tusk wore the shirt sleeves up was not a ‘safety issue of such significance that termination of employment should result’.

In this case, a failure to conduct the required risk assessment posed a significant safety risk that could not be overlooked.

 

What do your not-for-profit directors want?

The results of the 2014 NFP Governance and Performance Study (the Study) by the Australian Institute of Company Directors have revealed some interesting insights into the priorities and concerns of not-for-profit (NFP) boards.

Importantly, NFP directors are pushing for greater reporting of non-financial information, including on whether they have achieved their NFP’s mission.

Key findings

Some key findings of the Study are that:

  • non-executive directors spend 13% of their time on risk oversight and 12% on compliance;
  • 40% of directors want more non-financial information, specifically on risk;
  • 50% of directors believe board performance is not measured effectively;
  • 17% of boards are seeking to change their legal structure. 60% of NFPs are currently incorporated associations, 12% unincorporated associations and 14% are companies limited by guarantee;
  • mergers are being discussed by 30% of boards;
  • nearly three-quarters of non-executive directors (NEDs) reported that their boards had undertaken one or more forms of formal professional development (PD) in the last year;
  • more than 60% of NEDs believe the relationship between their board and their CEO is ‘very good or excellent'; and
  • an NFP director spends an average of 20 hours a month working for a single NFP.

We elaborate on some of these key findings below.

Director contribution is significant

The amount of time a director spends working for an NFP varies between size and sector. Directors in the philanthropy and volunteering sector spend the most time working for their NFP organisation, working an average of 23.6 hours a month. The least amount of hours was spent by directors working in economic development and housing, averaging 17.9 hours per month.

51% of directors involved in the Study work for free; that is, they don’t receive any fees and they pay any expenses they incur in relation to their directorship.

Where directors are paid, their payment is correlated with NFP income. The Study found that nearly 30% of directors of NFPs with income over $20 million per annum are paid, compared with 12% of directors at NFPs with income of less than $10 million.

The health sector is the sector with the highest number of paid directors, with 31% being paid, compared to 2% of directors being paid in the culture and recreation sector, and none being paid in the religious sector.

In terms of the amount of payment (for those directors being paid), the numbers ranged from $1,200 to $185,000 (for the last financial year).

Directors want more non-financial information

The Study found that approximately 60% of directors want more measures of achievement of their organisation’s mission and half want more non-financial performance measures in general.

About 40% specifically want more information about risk, data on the sector and information on achievement of financial benchmarks.

Investing in resources and research to measure if an NFP is actually achieving its mission is clearly now recognised by board members as a beneficial investment. The increased transparency that this data can bring to an organisation’s opertaions, can also add important credibility to NFPs. This is especially the case at a time when large numbers of organisations in the sector are having their registrations revoked by the Australian Charities and Not-for-Profits Commission (ACNC), including for not having operations that were ‘solely charitable‘.

Some of the other key issues below directly reflect this increased emphasis on the importance of non-financial information and they also demonstrate some of the restrictions NFPs face when trying to achieve their goals.

Changing legal structure

The Study showed the continuously ‘evolving’ state of NFP governance structures. According to the Study ‘approximately one third of boards are planning revisions to their organisation’s constitution (or equivalent document such as statement of purpose, rules, articles of association) in the next 12 months’. Changing constitutions may be especially relevant where the organisation’s size and membership has increased so that the content of its governance documents are restrictive and outdated.

Some of the reasons for changing the constitution given in responses to the Study were:

  • for a general refresh;
  • to reduce directors’ terms on the board; and
  • to change the definition of membership.

The drive to make these changes was prompted by ‘a need to revise outdated procedures; improve organisational agility; or change mission or purpose in response to changing client needs; or in response to changing legal obligations.’

As a consequence of changing governance structures, organisations will also be reviewing their board structures including their composition.

      Professional development not always a priority

Professional development for Board members is often the missing link in ensuring appropriate Board expertise and Board performance. Of the NEDs that reported on their board’s PD training, the following details were provided:

  • 35% reported that their board undertook an internal assessment;
  • 25% said they had in-house training; and
  • 15% had external whole-of-board training.

Unsurprisingly, the Study found a clear correlation between organisational income and the extent of PD made available to directors. Directors explained that ‘small organisations have little or no budget for PD, but also less need for advanced governance skills.’

However, directors in medium and large organisations (between $1-$20 million income) also apparently ‘struggle to meet their ongoing needs for enhancing performance’. Reasons for this struggle include an unsupportive culture that regards the time and cost of PD as unjustified, and not being in accordance with funder and donor expectations.

Benefits of collaborating and merging

According to the Study, merger discussions were most common in the larger NFPs, particularly those with incomes above $10 million or operating in the social services, development or housing sectors. The survey results revealed that the main reasons to consider a merger were:

  • to improve existing services;
  • for efficiency; or
  • to broaden the range of services to existing users.

25% of respondents stated they had considered a merger in order to be ‘more attractive’ to funders and 18% in response to ‘encouragement by government’.

Undertaking a merger is not an easy process and a good alternative to embarking on merger negotiations (which aren’t guaranteed to succeed) is sharing or collaborating with other NFPs to deliver services across an industry. Interestingly, 25% of directors reported that their NFP organisation shares resources such as buildings and equipment and 18% share back-office costs with other NFPs. Collaboration was highest among NFPs operating in the education, health and social services sectors.

Greater government certainty is needed

Government uncertainty was found to be one of the key challenges confronting NFP boards, not least of which was the continuing struggle over the future of the ACNC.

Earlier this year Fairfax Media reported that the Minister for Social Services, Scott Morrison, had backed away from plans to abolish the ACNC, saying that the abolition of the ACNC was not a high priority.

This news would be welcome to many directors who took part in the Study as a ‘significant’ number of them wanted the ACNC to remain.

Uncertainty about legislative reform and changes and reductions in government funding also meant that NFPs are left ‘struggling to determine the impact’ of changes, especially where legislation implementing new government policies is left stagnating in Parliament, without a final decision.

36% of respondents considered that creating stability in government policy was a top priority , as this would lead to ‘better, longer term decision-making and investment’.

It remains to be seen if 2015 will provide any greater certainty for NFPs.

 

Financial Services Update: How can AFSL audit prompt an ASIC surveillance visit?

In this edition:

  • How can an AFSL audit prompt an ASIC surveillance visit?;
  • Enhanced risk management – back to the drawing board?; and
  • Financial Advisers Register to come in March 2015.

How can an AFSL audit prompt an ASIC surveillance visit?

Although regulators and industry members will always continue to beat the compliance drum, recent regulatory changes may increase the risk of an ASIC visit.

Australian Financial Services Licence (AFSL) holders will be aware that each financial year their AFSL auditor is required to provide ASIC with a limited compliance audit relating to the Licensee’s compliance with their financial obligations. A broader compliance audit is not required under the law, unless ASIC is prompted to initiate a wider audit by, say, an AFSL audit report.

For any AFSL holder who has ever breached their licence obligations, the Corporations Act 2001 (Cth) (the Act) gives licensees the discretion to report to ASIC only those breaches which are considered ‘significant’ or ‘material’, having regard to the criteria in the Act and ASIC Regulatory Guide 78.

Unfortunately, the Act gives AFSL auditors no such discretion to report only those breaches which they consider significant or material. Under s 990K they have to report to ASIC with 7 days any matter they become aware of in carrying out their duties, that:

  • has adversely affected, is adversely affecting or may adversely affect the Licensee’s ability to meet its AFSL obligations;
  • contravenes a condition of the AFSL; or
  • contravenes the licence obligations relating to keeping financial records, producing financial statements and dealing with client monies and client property.

So why is this important?

Let’s say your AFSL auditor reported to ASIC in their annual audit report (form FS71) that you had not complied with one of the financial requirements under your AFSL, such as the new requirements for fund managers with custodial authorisations which came into operation on 1 July 2014, relating to the preparation and board approval of your 12 months’ cash flow projections. Our Blog of 9 July 2014 outlined these financial requirements for wholesale fund managers.Similar requirements came into force for responsible entities at the same time.

Let’s also say that ASIC has received a few similar qualified audit reports and is therefore concerned that a broader group of fund managers may not be meeting their new financial requirements. Prompted by these concerns, ASIC then decides to pay a surveillance visit to some of the fund managers identified by their auditors. This is where the problem arises because you may not have reported a significant or material breach to ASIC or worse still, you may not have even detected the breach. And once ASIC is through the door, there is a high probability their surveillance visit will have a wider compliance scope than just the immediate issue.

As a fund manager what action should I take?

This hypothetical case is a warning that fund managers should not procrastinate. Fund managers with custodial authorisations (and that means all retail and most wholesale fund managers) need to ensure, before the end of the financial year, that they are complying with all of their financial obligations. This includes the new obligations, which commenced on 1 July 2014.

CompliSpace fund manager clients have been provided with updated policies and procedures to deal with these new financial requirements but for any other fund managers, please contact us for assistance.

Enhanced risk management – back to the drawing board?

Responsible entities (REs) are already required to have adequate risk management systems in place, and to ensure that they are meeting this obligation on an ongoing basis, as part of meeting their core obligations under the Act and RG 104. However, those readers who have followed our financial services blogs over the last few years will be familiar with the progress of various ASIC Class Orders and associated Regulatory Guide (Risk Management Systems for Responsible Entities) which have been sitting in ‘final draft’ since around August 2013.

ASIC has now announced that it is making enquiries of a number of REs of registered managed investment schemes regarding their risk management practices which are ‘a proactive response to the increased market volatility in global and domestic markets [and] aims to examine the adequacy of risk management and disclosure practices in the current environment’. ASIC will direct its focus to fixed income funds, exchange-traded funds and other funds that may experience liquidity issues during periods of market volatility.

In the meantime we are left guessing as to the reasons for the possible delay in the release of this Regulatory Guide. This may be related to updated requirements contained within various RGs, including those within RG 166 and RG 133, which have been released over the last few years. These changes have required REs to adopt additional risk control strategies with a particular focus on enhancing financial and custodial controls – areas highlighted by ASIC as posing higher risks to REs during its original consultation on these proposed changes.

It does seem strange that a draft RG can come so close to release and then be delayed for so long. Perhaps industry has spoken and it is a case of ‘back to the drawing board’ with these proposed changes. Either way, we are back into another round of industry consultation but REs should be aware of their existing risk management obligations, including those contained within the Corporations Act.

Financial Advisers Register to come in March 2015

ASIC has announced that a new register of financial advisers will be released on its MoneySmart website on 31 March 2015.

The Federal Government announced details of the register’s content back in October 2014.

Legislative background

An Exposure Draft of the Corporations Amendment (Register of Relevant Providers) Regulation 2014 was released in December 2014 which proposed amendments to the Corporations Regulations 2001 to allow ASIC to establish and maintain the register and for AFSLs to collect and provide information to ASIC concerning financial advisers which operate under their licence. Consultation on the Exposure Draft closed on 17 December 2014.

According to the Treasury Department, the enhanced register will:

  • enable consumers to verify that their adviser is appropriately authorised to provide advice;
  • find out more information about their adviser before receiving financial advice; and
  • give employers greater ability to assess new financial advisers and improve ASIC’s ability to identify and monitor all financial advisers, which will help to remove disreputable participants from the industry over time.

ASIC’s press release states that the formal regulations will be introduced shortly.

Will it work?

The Senate Economics Committee’s Inquiry into ASIC’s performance revealed serious deficiencies in how the regulator responded to and dealt with, information about misconduct inside the financial planning arm of the Commonwealth Bank. Creating a more substantive public register of financial planners is an initiative designed to increase confidence in the industry by requiring AFSLs to disclose more information about themselves and their authorised representatives and representatives, to investors and the public.

However, as noted by an article by the Sydney Morning Herald (SMH), the register will operate on an ‘honesty system with zero oversight.’ That is, there is no independent entity verifying the information which AFSLs are contributing to the register. This creates a risk of inaccurate or false information being recorded and relied upon by those who access it.

So how can consumers rely on the credibility of the planner they are investigating on the register?

According to Financial Planning Association Chief Executive Mark Rantall they certainly can’t assume that the information published on the register is actually true.

The SMH quotes Mr Rantall as saying that ‘consumers must take responsibility for not only checking their planner is on the register but interrogating about the details provided’.

ASIC has since confirmed (according to another SMH article) that it will be able to issue fines for individuals who fail to register or provide false or misleading statements on the register, using section 1308 of the Corporations Act which prohibits such statements.

The maximum fine for individual advisers will be $8500 with a maximum penalty of $42,500 for corporate entities.

The problems with using fines as a deterrence are that

1. their enforcement requires the illegal conduct to be detected in the first place; and

2: in the financial services industry they have, historically, failed to deter.

Realistically, as pointed out by Mr Rantall, by requiring consumers to do their own due diligence on the information included in the register, which may require more time, effort and skill than most people have available, it seems that consumers are back to square one in terms of being the weaker party in the balance of power between the financial services industry and its retail clients. And if the veracity of the information on the register can’t be trusted, how can consumers trust those who are listed on it?

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