Principles of Professional Practice to Work in the Financial Services Industry Essay Example

PRINCIPLES OF PROFESSIONAL PRACTICE IN THE FINANCIAL SERVICES INDUSTRY

Executive summary

This research, mainly aims at looking at some of the principles of professional practices, which are necessary in order to work in the financial services industry. There have been some significant developments that modified in the Australian corporate regulators. The three main arms of the government regulation of the financial sector are the ACCC (Australian Competition and Consumer Commission), ASIC (Australian Securities and Investments Commission) and APRA (Australian Prudential Regulation Authority). The ACCC was the very first regulation to be developed in the year 1995 after the amalgamation of the Trade Practices Commission and the Prices Surveillance Authority (Perkins 11) while the other two regulation bodies established on 1997. The government came up with an inquiry that deliberated the need to have specialized regulatory arrangements to be able to handle the competitive business environments.

1.) It is essential to start by highlighting that the duty of regulating the corporate sector has been the duty of the corporate sector in Australia handled by three able agencies; the ACCC, the ASIC and the APRA. Among the three bodies, the ACCC is the only national agency that deals with the competition issues that face the finance industry (Perkins 1). Established in 1995, and it policies the Trade Policies Act 1974 that has the power to stop those companies that bring in unnecessary competition, which is a crucial way of protecting their customers. ASIC, is generally the national regulator of the corporate entities, established as the Australian Securities commission in 1991. One distinctive characteristic of this organization is that it operates under its’ own Act of the Australian Securities and Investments commission Act 2001,to be able to handle the consumer and investors protection and for all the financial entities. APAR, which is the other body, is responsible for making sure that the funds are used in the right manner as expected.

ATO (Australian Taxation office), is the other body that ensures that the management of the finances of the Industry adheres to the rules and regulations set. The body that administers the superannuation (Resolution of the Complaint), is the Superannuation Complaints Tribunal (SCT) This Act deals with resolving the formal complaints brought forward between the members and superannuation funds, by holding negotiations and conciliations only when no other resolution could be reached (Perkins 5). Among all these organizations, the one that handles and monitors the progress of the industry codes of practice is the SIS Act. The organization sets all the rules that the superannuation fund should follow. The rules set by this Act, relate to the trustees, investments, management, administration and the complaints brought forward. In cases where trustees do not adhere to the regulations, they are faced with particularly difficult penalties administered by this body.

2.) Prudential regulation is the process of making sure that the financial levels are maintained at the minimum levels, to maintain financial soundness. APRA is the main body concerned with regulation of the prudential institutions nationally, in terms of monitoring the insurance companies, deposit takers, and most of all, the superannuation funds.

Both ASIC and APRA still have the power to seize documents under their respective Acts. ASIC mostly follows its enforcement from the corporation Act and hence extending its liability to individuals’. On the other hand, APRA has a collective role of ensuring that its consumers, investors, and the creditors protected and the companies and all financial entities adhere to the company and the competition law. The government department that controls these bodies; APRA, ASIC and ATO is the Australian Prudential Regulation Authority.

3.) ASX is one of the largest companies and trusts created by market capitalization and listed on the Australian Securities Exchange. ASX Company has a compliance that is mainly responsible for bringing into effect the disciplinary action in case a market, clearing and settlement participants or companies breach the set operating rules of ASX. At present, there are two main disciplinary processes followed, but they both depend on when the relevant events occurred.

In relation to the operating rules and disciplinary action, any breaches that occurred any time before 1st August 2010, the ASX Enforcement and Appeal Rulebook, these cases are supposed to be presented before the Disciplinary tribunal (Perkins 28). In case, there will be a need for a right of appeal the decision is made by the Disciplinary tribunal and the appeal Tribunal. On the other hand, any disciplinary action that occurs on the 1st of August 2010 or after this date, they are brought before the ASX Chief Compliance officer (CCO), which is what the Enforcement and Appeals rulebook suggests. In case the need to file an appeal arises, then the decision entirely lies with the Appeal Tribunal.

4.) There are mainly three professional bodies which include the Financial Policy Committee (FPC), a Prudential Regulation Authority (PRA) and finally the consumer Protection and markets Authority (CPMA). The first body FPC is mainly created within the bank of England, and its primary function is to maintain the financial stability of the company. The second body PRA aims at making sure that there is wise spending of the institutions that are involved in taking deposits, insurer, as well as the Investment banks (Perkins 55). The CPMA mainly aims at promoting the confidence in the financial market as well as maintain a strong link to the other regulators. When comparing the way the businesses reacted towards the government attempt of membership making of these professional bodies was rejected. This was because most of the businesses did not like the prescriptive approach but rather preferred to join from their own voluntary will which they considered being flexible and highly supportive. Membership sometimes is compulsory and at other times, it may be voluntary since most organizations are aware of the need for their employees to join associations. However, this will depend on the encouragement given to the workers by their superiors. For example, an organization can decide to assist their members in paying the membership fee, allow subscription to their journals among others.

5.) The treasury is a significant sector in the diverse industry and it focuses on giving a new approach to the financial regulation as well as making propositions to financial changes in the industry. It is mainly responsible for the supervision of the safety and soundness of the financial firms. The department of finance mainly concerns with performing the following duties; banking, insurance, dealing with securities and managing the funds.

6.) Industry codes are mainly developed by the industries’ associations in the financial sector. Each of the codes sets out the Service Standards that one can expect from the same company that one is dealing with (Perkins 68). Some examples of codes of practice in the finance industry are the general insurance Code of practice and the Code of banking practice (Perkins 45).. The decision to join an industry’s code of practice has always been voluntary. The ASIC monitors industry compliance with the code of practice by following the regulatory guide.

7.) According to section 911A of the Corporation Act 2001, it is clear that its aim is to ensure that the financial services hold an Australian Financial Services License which is part of its responsibilities as issued and monitored by ASIC. Corporation Governance means that a person has to make a financial investment, manage the financial risks as well as make the non-cash payments for the financial products or even facilities (Perkins 34).

8.) Some of the Acts related to the financial Service Sector are the Financial Intelligence unit Act 2001, the International Trust Act and the Exchange Information Act. The information on these financial sectors could easily be retrieved on this website; (http://www.svgifsa.com/industry.htm) and (http://www.treasury.gov.au/content/financial_services.asp?ContentID=328&titl=Financial%20Services).

1. (a)The ASIC (Australian Securities and Investments commission) plays the role of ensuring that the trustees of the superannuation funds comply with their obligations, which mostly means that they try to comply with the members of the funds or those who contributed the funds, and monitor how their disbursement according to the policies of FSR.

(b) Consumers also needed to be protected and this was the duty of ASIC.

(c) From my understanding, the ASIC information sheets contain all essential facts, tips and safety checks that would be necessary to help any new and interested member to join the body (Perkins29). It also sheds some light into how the body is regulated.

(d) ASIC press release mostly analyses the application of specific integrated technology in the industry in order to target the most complex and largest products. In summary, ASIC and the Financial Reporting Council (FRC) called on all company boards and management to take very active interest in preparing early enough for the adoption of the standards of the international Accounting Standards Board (IASB), which was necessary for its application in Australia (Perkins 18) .The two bodies encouraged the companies to familiarize themselves with the new changes or they would be at risk of breaching the financial reporting requirements of the Act. This was vital to maintain high quality financial reporting by Australian companies, and to promote investor protection and market confidence,

(e) On the issues about unclaimed money in the industry, the page with all the details can be accessed from the following link:
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/info%2083-unclaimed-money.pdf/$file/info%2083-unclaimed-money.pdf

2.) Prudential regulation is the process of making sure that the financial levels are maintained at the minimum levels, to maintain financial soundness.

(b)APRA is the main body concerned with regulation of the prudential institutions nationally, in terms of monitoring the insurance companies, deposit takers, and most of all, the superannuation funds.

3. (a) The monetary policy decisions involving the appropriate interest rates in the money market Reserve banks Of Australia (RBA), is the body that is responsible for formulating and implementing monetary policy (Perkins 78). The RBA board is the one that makes decisions about the interest rates put forward considering the political situation, but not relying on the governments’ decision so as to remain focused on the long –term goals.

(b).The relationship of RBA and the government is mainly on the independence with the consultations and accountability.

(c) The current governor of RBA is H.C. Coombs, who is the longest serving governor.

(d) The current inflation rate is 3.6%

(e) The RBA aims at achieving an inflation rate of at least 2-3 percent.

4.) The ACCC (Australian Competition and Consumer Commission), is the only national agency that deals with the competition issues that face the finance industry (Perkins 1). Established in 1995, and it policies the Trade Policies Act 1974 that has the power to stop those companies that bring in unnecessary competition, which is a crucial way of protecting their customers. According to the recent press release of ACCC, the Australian Competition and consumer commission has instituted legal proceedings in the Federal Court, to be able to offer consumer protection.

5. (a) ASX is one of the largest companies and trusts created by market capitalization and listed on the Australian Securities Exchange. ASX Company has a compliance that is mainly responsible for bringing into effect the disciplinary action in case a market, clearing and settlement participants or companies breach the set operating rules of ASX

(b) A float is a series of numbers which have no digit before or after the decimal point thence their representation is slower and less accurate than the fixed point representation (Perkins 19).

(c) A continuous disclosure in ASX involves the company secretary who arranges with the corporate communication for the information to be placed on Cardno’s website and other electronic media on confirmation from ASX.

(d) Insider trading mainly occurs when someone makes an investment decision that is based on information that is available to the general public.

(e) According to the current Market Statistics option, the top 10 most traded stocks for the week by value were: PTT ,SCB ,BBL ,KTB ,BANPU ,PTTCH .KBANK ,CPF ,TOP ,and ADVANC .Using the same ratings by order of volume ,the order was as follows: LL,TMB ,BTS ,JAS ,BLAND, GSTEEL ,IRPC ,HEMRAJ ,KTB ,and IEC.

1) In Australia, the financial Services reform Act (FSR) which covers a broad area of finance, aims at providing standardization within the financial services industry. This Act was established in the year 2002, and its main aim was to operate the superannuation funds, primarily regulated under the Superannuation industry Act (SIS) and established earlier in the year 1993. Some of the other regulatory bodies include APRA (Australian Prudential Regulation Authority), which was responsible for reviewing the annual accounts, just to make sure that they were in compliance with the SIS.

2) The treasury is a significant sector in the diverse industry and it focuses on giving a new approach to the financial regulation as well as making propositions to financial changes in the industry (Perkins 23). It is mainly responsible for the supervision of the safety and soundness of the financial firms. The department of finance mainly concerns with performing the following duties; banking, insurance, dealing with securities and managing the funds.

3) The Corporate Law Economic reform program or the Audit Reform and Corporate Disclosure Act 2004 (CLERP) established by the government responses to given Wallis Inquiry recommendations into the financial system. Most of the principles that were guiding the CLERP were freedom of the market, protection of investors and the quality disclosure of relevant information to the market (Perkins 12). Most of the formed organizations are regulated in order to keep pace with the rapid changing business environment for the best practice. The CLERP amendments were mostly base on the Government’s response to the Ramsay report on the independence of the Australian company Auditors and the recommendations of the HIH Royal Commission. The amendments mainly categorized into three categories, are concerned with improving the internal auditor independence, improving the ASIC abilities to prosecute as well as continuous disclosure of necessary information in the market.

4) The Financial Services and Insurance from the smart company, Small Business Investment Structure by Investing Times and finally the Savings and investment by FN Arena. Financial Services and Insurance news is about the insights for Australia’s small and medium business owners and entrepreneurs. It includes the recent financial services and insurance news, trends and features and entrepreneur interviews about the financial services and insurance industry in Australia. The RBA board is the one that helps to regulate the interest rates of the loans given to these SME’S considering the political situations of the country (Perkins 40). The article by investing times, aims at providing Assistance to those clients who are interested in making the clients to be shareholders and reduce their tax rates as well as their limited liabilities after doing the necessary references in the ATO (Australian taxation Offices). In the article on Savings and investment, the emphasis is mainly on striking a balance in the market in accordance to the Consumer Protection and market Authority (CPMA). It aims at promoting a great link in the financial market.

In conclusion, it is vital to consider all these principles and follow the policies in the respective bodies in order to acquire the professional practice, necessary in the financial service industry (Perkins 10). With all these principles at hand, then it will be possible to ensure that all authorized financial representatives in these industries, are able to perform to their best and even pass on training to those around them

Work Cited

J. Perkins, the Wallis Report and the Australian Financial System, University Press, Australia,

Melbourne: 1998.