Journal of Law and Financial Management - Volume 3 (2) November 2004
Volume 3 (2) November 2004
The Australian Competition and Consumer Commission's Proposed Industry Codes of Conduct - A Compliance Solution?
By Len Gainsford
Recently the Australian Competition and Consumer Commission (ACCC) has promoted the endorsement of voluntary industry codes of conduct. The ACCC's 14 October 2003 draft guidelines suggest the endorsement of 'industry best practice' codes separately, but related to, individual trade practices compliance programs. In public submissions, industry groups have identified problems with the ACCC's proposals. In this article, it is argued that endorsement of voluntary industry codes should not be separated from a commitment to individual trade practices compliance. Codes in themselves are not a compliance solution.
In 1994, the Australian Law Reform Commission found that codes of conduct are a form of co-regulation. It also found that there needs to be a level of mutual commitment to a code from the regulator and its regulated entities. That commitment may be lacking if businesses find that the ACCC's code endorsement process is less rewarding than their own compliance processes. Recent research data suggests that Australian businesses prefer trade practices compliance programs derived from their own compliance culture. Simple obedience by a business to an ACCC endorsed industry code is not consistent with this trend.
What Financial Institutions Are Not Disclosing About Term Annuity Products
By Roger Gay and Paul Latimer
Immediate annuities (fixed term, life expectancy) are notionally the simplest of retirement income products and the simplest to price. For intending purchasers, the issuing institution's Product Disclosure Statement (PDS) is one of the first ports of call.
An examination of a selection of immediate annuity PDSs indicates that they fall far short of the Australian Securities and Investments Commission's requirement that a product issuer, seller, financial adviser etc. provide a retail client with 'clear, concise and effective' information to make an informed choice between similar products.
For this product, a precise cost could be provided, so we ask why is the cost absent from the PDS?
Given some expertise (which most retirees won't have), the impact of any given fee structure can be assessed, but only if a current investment reference rate is supplied. As none of the PDSs we surveyed provided such a rate (or its equivalent - the effective after-fees investment rate earned by the annuity purchase price over the term of the annuity), we query whether there is misleading or deceptive conduct under Corporations Act s 1041H, Australian Securities and Investments Commission Act s 12DA, 12DB and whether the PDSs comply with the new PDS requirements fully in force from March 2004.
Good Faith - Time to Put the Genie Back in the Bottle
By Tyrone M Carlin and Louise Chau
In this paper, we examine the doctrine of good faith contractual performance in the context of the Australian law of contract. We argue that the doctrine as presently developed has taken on chimerical qualities and in particular, represents an undesirable threat to commercial certainty. In justifying our position, we use the recent decision of the NSW Court of Appeal in Vodafone v Mobile Innovations as a case study of the dangers associated with invoking good faith as a means of interfering with the essence of a bargain struck between commercial parties.