Senate

Revised Explanatory Memorandum

(Circulated by authority of the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP)

Chapter 8: Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2023

Schedule 1 - Modernising Business Communications

Overview

8.1 Schedule 1 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

8.2 Schedule 1 to the Bill amends the Corporations Act and other Commonwealth Acts to modernise communication methods available to consumers, businesses and regulators when interacting with each other by:

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extending the global communications regime, allowing members of certain entities to elect to receive documents in either hard copy or electronic form, and providing relief to entities that are unable to contact members under the Corporations Act (Part 1);

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ensuring that regulatory bodies in the Treasury portfolio can hold hearings and examinations using technology (Part 2);

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updating payment provisions in Treasury laws to allow electronic payments to be used (Part 3); and

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replacing requirements in Treasury laws to publish notices in newspapers with a requirement that notices be published in an accessible and reasonably prominent manner (Part 4).

Human rights implications

8.3 The amendments in Parts 1, 3 and 4 of Schedule 1 to the Bill relate to the activities of a company, responsible entity of a registered scheme, CCIV, disclosing entity or notified foreign passport fund under the Corporations Act. These amendments do not engage any of the applicable human rights or freedoms.

8.4 The amendments in Part 2 of Schedule 1 to the Bill may engage the following human rights contained in the ICCPR:

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the right to a fair hearing under article 14(1);

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the prohibition on interference with privacy under article 17.

Right to a fair hearing

8.5 Article 14(1) of the ICCPR protects the right to a fair and public criminal trial, and public hearing in civil proceedings. It provides that all persons shall be equal before the courts and tribunals, and, in the determination of criminal changes, or any suit at law, the right to a fair and public hearing before a competent, independent and impartial court or tribunal established by law.

8.6 Part 2 of Schedule 1 to the Bill would promote and protect the right to a fair hearing by ensuring that statutory hearings and examinations can be conducted in an efficient and expeditious manner best suited to the circumstances. The amendments do this by removing unnecessary barriers to the use of technology at hearings and examinations.

8.7 Part 2 provides regulators with the discretion to select the most appropriate method for holding the hearing or examination (physical, hybrid or virtual) on a case-by-case basis. For instance, a virtual or hybrid hearing or examination may be more appropriate if a person is unable to physically attend a hearing or examination. The benefits of the amendments, therefore, include reduced delay, increased participation and greater access to justice.

8.8 The amendments ensure that a person's right to procedural fairness, to the extent that it is already provided under statute or common law, is not affected whether the person physically attends the hearing or examination or uses virtual enquiry technology.

8.9 If the regulator decides to hold a virtual or hybrid hearing or examination, the amendments place an additional obligation on the regulator to ensure that the use of the virtual enquiry technology is reasonable.

8.10 For hearings and examinations that are held in public, the amendments promote and protect the right to a public hearing by requiring the regulator to provide members of the public with a reasonable opportunity to observe the hearing. The regulator must also ensure that information sufficient to allow the public to observe the hearing using the technology is made publicly available in a reasonable way.

Right to privacy

8.11 Article 17 of the ICCPR prohibits unlawful or arbitrary interference with a person's privacy, family, home and correspondence, and prohibits unlawful attacks on a person's reputation. The United Nations Human Rights Committee has interpreted the right to privacy as comprising freedom from unwarranted and unreasonable intrusions into activities that society recognises as falling within the sphere of individual autonomy.

8.12 Part 2 of Schedule 1 to the Bill amends Acts that provide for hearings and examinations to be held in private. The amendments do not affect those provisions and the existing rights to privacy of the participants at those hearings and examinations continue to be maintained.

Conclusion

8.13 To the extent that Schedule 1 to the Bill engages rights under articles 14(1) and 17 of the ICCPR, it is compatible with the applicable human rights and freedoms.

Schedule 2 - Law Improvement Program

Overview

8.14 Schedule 2 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

8.15 The purpose of Schedule 2 to the Bill is to enact recommendations and other suggested improvements identified by the ALRC in Interim Report A to simplify and improve the navigability of Australia's financial services laws. This includes removing erroneous references and redundant definitions and using consistent headings for definitions sections. These changes facilitate a more adaptive, efficient, and navigable legislative framework which ensures that the legislative intent is met.

8.16 The amendments in Schedule 2 to the Bill are minor and technical in nature, and do not engage policy considerations.

Human rights implications

8.17 Schedule 2 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

8.18 Schedule 2 to the Bill is compatible with human rights as it does not raise any human rights issues.

Schedule 3 - Rationalisation of Ending ASIC Instruments

Overview

8.19 Schedule 3 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

8.20 Schedule 3 amends the Corporations Act and the NCCPA to provide for longstanding and accepted matters that are currently contained in ASIC legislative instruments.

8.21 When ASIC-made legislative instruments notionally amend the primary law it causes complexity in navigating and understanding the operation of the law, and therefore undermines accessibility. By moving these matters into primary law the amendments provide industry and consumers with greater certainty and clarity when interacting with Treasury laws.

8.22 The amendments incorporating ASIC Class Order [CO 12/340] amend Part 5D.1 and Part 5D.5 of the Corporations Act to allow a proposed licensed trustee company to apply to the Minister for approval to exceed the 15 per cent voting control limit, for the purposes of satisfying the condition to be listed as a trustee company in the Corporations Regulations.

8.23 The amendments incorporating ASIC Corporations (Financial Services Guide Given in a Time Critical Situation) Instrument 2022/498 modify section 941E of the Corporations Act to require that the information in a Financial Services Guide be up to date as at the time it is given to the client, or in the case of a time critical case, up to date as at the time a subsection 941D(3) statement is given to the client.

8.24 The amendments incorporating ASIC Corporations (PDS Requirements for General Insurance Quotes) Instrument 2022/66 add a new section 1012GA to the Corporations Act. The new provision sets out the circumstances when a regulated person does not have to provide a PDS to a retail client in relation to an offer to issue, or arrange the issue of, a general insurance product.

8.25 The amendments incorporating ASIC Corporations (Describing Debentures-Secured Notes) Instrument 2022/61 add a new subsection 283BH(4) to section 283BH of the Corporations Act. The new provision creates a new category of debenture called a 'secured note', which applies to debentures with sufficient first ranking security that do not satisfy the higher 'debenture' or 'mortgage debenture' tests.

8.26 The amendments incorporating ASIC Class Order [CO 14/41] amend the NCCPA to provide exemptions for credit providers or consumer lease providers to not provide a written notice that a change to a credit contract or consumer lease had been agreed to if the change is for less than 90 days.

Human rights implications

8.27 Schedule 3 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

8.28 Schedule 3 to the Bill is compatible with human rights as it does not raise any human rights issues.

Schedule 4 - Miscellaneous and Technical Amendments

Overview

8.29 Schedule 4 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

8.30 Schedule 4 to the Bill makes a number of miscellaneous and technical amendments to various laws in the Treasury portfolio. The amendments demonstrate the Government's ongoing commitment to the care and maintenance of Treasury portfolio legislation.

8.31 The amendments correct drafting errors, repeal inoperative provisions, address unintended outcomes, and ensure that the law gives effect to the original policy intent.

Human rights implications

8.32 Schedule 4 to the Bill engages the following human rights and freedoms:

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The right to privacy and reputation.

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The right to work.

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The right to justice.

Right to privacy and reputation

8.33 Schedule 4 to the Bill engages the right to privacy and reputation under Article 17 of the ICCPR. Article 17 requires parties to the ICCPR to uphold the individual right not to have one's private, family and home life or correspondence unlawfully or arbitrarily interfered with. It also includes the right to protection by law of one's reputation. According to the Parliamentary Joint Committee on Human Rights' Guide to Human Rights, the right to privacy includes:

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the right to respect for confidential and private information, particularly the storing, use and sharing of such information; and

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the right to control dissemination of information about one's private life.

8.34 The Parliamentary Joint Committee on Human Rights' Guide to Human Rights states the right to reputation requires legislative protection, including the right to a remedy, against unlawful attacks against a person's reputation, including attacks by private individuals as well as by the state.

8.35 The right to privacy and reputation is not an absolute right and is subject to permissible limits. The right can be limited as long as it can be demonstrated that the limitation meets the limitation criteria.

Overview of provisions that interact with the right to privacy and reputation

Protected information

8.36 Schedule 4 to the Bill makes changes to the Commonwealth Registers Act 2020 that positively engages the right to privacy. The Commonwealth Registers Act 2020 was introduced to create a new Commonwealth business registry regime.

8.37 Consistent with other registry Acts, section 17 of the Commonwealth Registers Act 2020 is intended to specify that it is an offence for a person to disclose protected information obtained in the course of their official employment.

8.38 However, other registry Acts specify that the information concerned is 'protected information' while the Commonwealth Registers Act 2020 only specifies 'information'. The application of the law is too broad in scope and beyond the intent of the Commonwealth Registers Act 2020.

8.39 Schedule 4 to the Bill clarifies that it is only an offence to disclose protected information obtained in the course of a person's employment. The amendments ensure that persons covered under the Commonwealth Registers Act 2020 would be provided with the confidence that their private information is not subject to disclosure under the Act. This is consistent with the right under Article 17 of the ICCPR and the following principles of the Guide to Human Rights:

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preserving notions of personal autonomy and human integrity,

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respect for private life,

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respect for the home,

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respect for family life,

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respect for correspondence, and

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right to reputation.

Reference Checking and Information Sharing Protocol for Australian credit licensees

8.40 Schedule 4 to the Bill enhances the operation of ASIC's Reference Checking and Information Sharing Protocol and in doing so, engages with the right to privacy and reputation.

8.41 Under the Protocol, Australian financial services licensees and Australian credit licensees are required to conduct reference checking and information sharing in relation to individuals to whom the protocol applies, being a licensee, or former or current authorised representative. This may be done either by requesting information about the individual or providing information about the individual, as the case may be.

8.42 The amendments in Schedule 4 ensure that aggregators are appropriately subject to the Protocol, in the same way Australian credit licensees and Australian financial service licensees continue to be subject to the Protocol.

8.43 Subjecting aggregators to the Protocol's requirements means that aggregators may request, share, maintain and store information related to Australian credit licensees. Consistent with the existing protections provided to Australian credit licensees and Australian financial service licensees, aggregators would be provided with qualified privilege protections relating to the information they share.

8.44 The amendments present privacy implications for individual Australian credit licensees such as mortgage brokers, whose personal information may be requested, stored and shared by aggregators. By providing qualified privilege to aggregators, the amendments also limit individual Australian credit licensees' right to a remedy against unlawful attacks to their reputation.

Justification for limitations on right to privacy and reputation

8.45 To the extent the amendments limit the right to privacy and reputation, those limitations are justified. The limitations are in pursuit of the legitimate objective of enhancing the application of the Protocol to ensure that employment information about all financial advisers and mortgage brokers are readily available across the financial advising and mortgage brokering industry. The objective improves reference checking measures for Australian credit licensees and ensures consistent practice across the sector.

8.46 There is a rational connection between the limitations on the right to privacy and reputation and the legitimate objective described above. The limitations are likely to be effective in achieving the objective because encouraged information sharing of Australian credit licensees by aggregators ensure that:

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employment information about all financial advisers and mortgage brokers are readily available, and

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reference checking protocols of Australian credit licensees are enhanced, helping to remove 'bad apples' from the industry.

8.47 The amendments are reasonable and necessary in pursuit of the legitimate objective. Australian financial services licensees and Australian credit licensees are required to comply with the Protocol made by ASIC in the form of a legislative instrument. Requirements of the Protocol are provided under section 912 A of the Corporations Act and section 47 of the NCCPA. The amendments in Schedule 4 to the Bill clarify obligations for aggregators under the Protocol.

8.48 Aggregators often work closely with other Australian credit licensees under service agreements and often hold information about activities of other Australian credit licensees and their authorised credit representatives that would be relevant for information sharing under the Protocol. The amendments ensure that mortgage intermediaries such as aggregators, who are Australian credit licensees, are appropriately subject to the Protocol, in the same way other Australian credit licensees and Australian financial service licensees continue to be subject to the Protocol.

8.49 To the extent the amendments limit the right to privacy, they are proportionate to the legitimate objective they seek to give effect to. The amendments are sufficiently precise to ensure that the Protocol captures aggregators and operates as intended to ensure consistent practice across the financial advising and mortgage brokering sector. The limitations do not impose further restrictions to individual Australian credit licensees under the Protocol.

Right to work

8.50 Schedule 4 to the Bill positively engages the right to work under the International Covenant on Economic, Social and Cultural Rights (ICESCR). Article 6(1) of the ICESCR provides for the right for all to gain a living by work which is freely chosen or accepted, and that steps must be taken to safeguard this right. Article 6(2) of the ICESCR provides for parties to the Convention to take steps to achieve the full realisation of this right, including technical and vocational guidance.

8.51 Schedule 4 to the Bill promotes this right by clarifying provisions related to education requirements for 'providers', a term encompassing financial advisers. Section 1684D of the Corporations Act sets out qualification requirements for providers.

8.52 Transitional provisions inserted by the Financial Sector Reform (Hayne Royal Commission Response-Better Advice) Act 2021 were intended to more clearly set out, but not modify, the timeframes in which an existing provider must meet the education and training standards, or the courses approved by the Minister.

8.53 Existing providers who have passed the financial adviser exam by the exam cut-off date (1 January 2022, or 1 October 2022 for existing providers eligible for the exam extension) have until 1 January 2026 to meet the education and training standards or the courses approved by the Minister while remaining authorised to provide personal advice to retail clients in relation to relevant financial products.

8.54 Additionally, consistent with previous transitional provisions, it was intended that existing providers who ceased to be relevant providers before the relevant exam cut-off date would also have until 1 January 2026 to meet the education and training standards or the courses approved by the Minister. To be reauthorised before this date, a person would need to pass the financial adviser exam. However, the transitional provisions did not achieve this outcome.

8.55 Schedule 4 to the Bill makes clear that existing providers who do not pass the financial adviser exam by the relevant exam cut-off date and who ceased to be a relevant provider before the relevant exam cut off date:

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are eligible to be re-authorised to provide personal advice once they pass the exam; and

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have until 1 January 2026 to meet the education requirements or courses approved by the Minister.

8.56 The amendments positively engage the right to work by resolving an ambiguity related to qualification requirements for financial advisers.

Right to justice

8.57 Article 14 of the ICCPR ensures that everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law. The Parliamentary Joint Committee on Human Rights' Guidance note 2: Offence provisions, civil penalties and human rights states that offence provisions need to be considered and assessed in the context of Article 14 protections.

8.58 Schedule 4 to the Bill may be considered to interact with Article 14 as it widens the scope of relevant penalty provisions in the Foreign Acquisitions and Takeovers Act 1975 to capture certain actions of foreign persons.

8.59 Consistent with the Foreign Investment Reform (Protecting Australia's National Security) Bill 2020's policy intention, the amendments make clear that foreign persons are liable under relevant penalty provisions, even if they have been issued with an exemption certificate.

8.60 Section 4 of the Foreign Acquisitions and Takeovers Act 1975, defines 'core Part 3 action' as an action taken by a foreign person which is:

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a significant action;

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a notifiable national security action;

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an action where the Treasurer has given the person a notice that the action may pose a national security concern; or

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a reviewable national security action that is notified to the Treasurer.

These actions are further defined under Divisions 2, 4A and 4B of Part 2 of that Act.

8.61 Foreign persons may apply to the Treasurer for various types of exemption certificates under Division 5 of Part 2 of the Foreign Acquisitions and Takeovers Act 1975. An exemption certificate specifies an interest of a kind that, if acquired by the foreign person, does not give rise to a significant action, notifiable action, notifiable national security action, or reviewable national security action.

8.62 Paragraphs 3.84 to 3.97 of the explanatory memorandum to the Foreign Investment Reform (Protecting Australia's National Security) Bill 2020 makes clear that the policy intent is for foreign persons to be required to notify the Treasurer of certain events and be liable for penalty provisions, even if they have been issued with an exemption certificate.

8.63 However, certain existing civil penalty provisions in the Foreign Acquisitions and Takeovers Act 1975 do not capture instances where persons have been issued exemption certificates.

8.64 The objective of Schedule 4 is to clarify that core Part 3 actions taken under an exemption certificate are captured by the relevant penalty provisions. Schedule 4 does not increase impose new penalties or increase penalty amounts.

8.65 Foreign persons who engage in a core Part 3 action and have been issued with an exemption certificate, are liable to the same penalties introduced in the Foreign Investment Reform (Protecting Australia's National Security) Bill 2020.

8.66 The Human Rights Statement of Compatibility of the Foreign Investment Reform (Protecting Australia's National Security) Bill 2020 assessed relevant penalties as appropriate, giving consideration to the following factors:

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the potential benefits and profits that may be derived from non-compliance with the Act

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the need to create a sufficient deterrent to protect the national interest

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the increase in penalties reflecting the seriousness of potential non-compliance and aligning with community standards and expectations

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consistency with the penalties imposed with the intent of deterring illegal behaviour under the Corporations Act

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the fact that the penalties do not amend any of the criminal process or procedural rights that currently exist and are upheld in accordance with Article 14 of the ICCPR

8.67 To the extent the financial penalties apply to bodies corporate, they do not engage any human rights.

8.68 Article 15 of the ICCPR prohibits retrospective criminal laws. The Foreign Investment Reform (Protecting Australia's National Security) Bill 2020 assessed relevant penalties as not being 'criminal' for the purposes of human rights law, based on their nature and severity.

8.69 Consistent with this assessment, Schedule 4 engages but does not limit the right not to be convicted of something that was not a crime when the activity took place in Article 15 of the ICCPR.

Conclusion

8.70 Schedule 4 to the Bill is compatible with human rights as it positively engages the right to work and does not unnecessarily, unreasonably, or disproportionately limit the right to privacy and reputation and the right to justice.