Tag: ASIC

ANZ responds to fiduciary duty breach claims

From Investor Daily.

Last week, ASIC issued a report confirming in-house product bias within institutionally-aligned licensees between 2015 and 2017, finding that 68 per cent of all client funds across these businesses had been invested in products owned and operated by related entities.

A review of sample files where advice to switch products to an in-house product was provided also found that as many as 75 per cent did not meet the FOFA fiduciary duty in ASIC’s opinion.

Responding to questions from InvestorDaily, a spokesperson for ANZ said its internal review of in-house versus external product distribution had yielded different results to those of the regulator, but noted the bank was unaware how ASIC gauged the numbers.

“Our assessment of the split between ANZ Financial Planning customers’ investments in ANZ products and those in external products is closer to 47/53 respectively, but we do not know what methodology ASIC have used,” the spokesperson said.

The bank said it also permits advisers to apply to recommend products not included on their APLs, and last year received 1,200 of these requests – an “overwhelming majority” of which the spokesperson said were approved.

The spokesperson added that the bank “will continue to work with ASIC and all the other regulators to help them with the important work they do to keep our industry secure and accountable”.

ANZ’s comments follow the release of an internal letter written by the bank’s chief executive, Shayne Elliott, addressing the royal commission into banking, superannuation and financial services.

In the letter, Mr Elliott said seeing all the bank’s instances of misconduct over the last decade laid out in a single document was “confronting”.

“It’s completely unacceptable that we have caused some of our customers financial harm and emotional stress. I’m ultimately accountable for this and once again apologise,” Mr Elliott said.

“Of course, it would be easy to lay the blame on a few bad apples or to say that these are largely historical technical glitches resulting from large complex IT systems. That would be wrong.”

Spokespeople for AMP and Westpac both referred InvestorDaily to the FSC, which has also challenged the investigative approach used by the regulator.

What Does CBA And The BBSW Case Mean?

Just 24 hours after the announcement of a new CEO, when we were assured that CBA were well on the way to addressing their known issues; ASIC lobbed a bombshell in the shape of the BBSW case.

CBA said today:

Commonwealth Bank has fully co-operated with ASIC’s investigation over the last two years.

Commonwealth Bank disputes the allegations made by ASIC. As this matter is before the courts, it is not appropriate to comment further at this time.

Put to one side whether CBA was part of the group of banks that fixed the pricing of BBSW, and the knock-on effect on product pricing; surely this issue was on the “risk” list in the bank, and should have been disclosed.

If it was not, it should have been. This may once again speak to cultural issues in the organisation.  There is clearly much to fix.  What else is on the risk list?

We discussed the implications on 2GB with Ross Greenwood.

More broadly, we have to consider whether the sheer complexity of the organisation is part of the problem. Perhaps CBA should be split into a series of small entities, for example, separated into its retail division, corporate, wealth, insurance and trading divisions. The question of whether CBA is simply too big and complex to manage, is in our view the underlying and most critical question to be addressed.

 

ASIC commences civil penalty proceedings against Commonwealth Bank of Australia for BBSW conduct

ASIC has today commenced legal proceedings in the Federal Court in Melbourne against the Commonwealth Bank of Australia (CBA) for unconscionable conduct and market manipulation in relation to CBA’s involvement in setting the bank bill swap reference rate (BBSW) between 31 January 2012 and October 2012.

The BBSW is the primary interest rate benchmark used in Australian financial markets and was administered by the Australian Financial Markets Association (AFMA) during the relevant period. On 27 September 2013, AFMA changed the method by which the BBSW is calculated. The conduct that the proceedings relate to occurred before this change in methodology. Since 1 January 2017 ASX Limited has been the administrator of the BBSW, introducing a new Volume Weight Average Price (VWAP) based calculation methodology.

During the relevant period CBA had a large number of products which were priced or valued off BBSW. ASIC alleges that on three specific occasions CBA traded with the intention of affecting the level at which BBSW was set so as to maximise its profits or minimise its losses to the detriment of those holding opposite positions to CBA’s.

ASIC alleges it was unconscionable for CBA to trade in this way, and also to enter into products priced off the BBSW without disclosing its trading practices to its customers and counterparties. ASIC also alleges that CBA’s trading  created an artificial price and a false appearance with respect to the market for some of these products.

ASIC is seeking declarations that CBA contravened s12CA, s12CB, s12DA, 12DB and s12DF of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), s912A(1), s1041A, s1041B and s1041H of the Corporations Act 2001 (Cth) (Corporations Act).

Further, ASIC has sought from the Court pecuniary penalties against CBA and an order requiring CBA to implement a compliance program.

ASIC will be making no further comment at this time.

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Background

ASIC commenced legal proceedings in the Federal Court against the Australia and New Zealand Banking Group (ANZ) on 4 March 2016 (refer: 16-060MR) and against National Australia Bank (NAB) on 7 June 2016 (refer: 16-183MR).

On 10 November 2017, the Federal Court made declarations that each of ANZ and NAB had attempted to engage in unconscionable conduct in attempting to seek to change where the BBSW set on certain dates and that each bank failed to do all things necessary to ensure that they provided financial services honestly and fairly. The Federal Court imposed pecuniary penalties of $10 million on each bank (refer: [2017] FCA 1338).

On 20 November 2017, ASIC accepted enforceable undertakings from ANZ and NAB which provides for both banks to take certain steps and to pay $20 million to be applied to the benefit of the community, and that each will pay $20 million towards ASIC’s investigation and other costs (refer: 17-393MR).

On 5 April 2016, ASIC commenced legal proceedings in the Federal Court against the Westpac Banking Corporation (Westpac) (refer: 16-110MR). The matter is awaiting judgment.

ASIC has previously accepted enforceable undertakings relating to BBSW from UBS-AG, BNP Paribas and the Royal Bank of Scotland (refer: 13-366MR, 14-014MR, 14-169MR). The institutions also made voluntary contributions totaling $3.6 million to fund independent financial literacy projects in Australia.

In July 2015, ASIC published Report 440, which addresses the potential manipulation of financial benchmarks and related conduct issues.

The Government has recently introduced legislation to implement financial benchmark regulatory reform and ASIC has consulted on proposed financial benchmark rules.

Financial Advice Conflicts Still Exists In Vertically Integrated Firms

An Australian Securities and Investments Commission (ASIC) review of financial advice provided by the five biggest vertically integrated financial institutions has identified areas where improvements are needed to the management of conflicts of interest. 68% of clients’ funds were invested in in-house products.

This highlights the problems in vertically integrated firms, something which the Productivity Commission is also looking at.

The review looked at the products that ANZ, CBA, NAB, Westpac and AMP financial advice licensees were recommending and at the quality of the advice provided on in-house products.

The review was part of a broader set of regulatory reviews of the wealth management and financial advice businesses of the largest banking and financial services institutions as part of ASIC’s Wealth Management Project.

The review found that, overall, 79% of the financial products on the firms’ approved products lists (APL) were external products and 21% were internal or ‘in-house’ products. However, 68% of clients’ funds were invested in in-house products.

The split between internal and external product sales varied across different licensees and across different types of financial products. For example, it was more pronounced for platforms compared to direct investments. However, in most cases there was a clear weighting in the products recommended by advisers towards in-house products.

ASIC noted that vertical integration can provide economies of scale and other benefits to both the customer and the financial institution. Consumers might choose advice from large vertically integrated firms because they seek that firm’s products due to factors such as convenience and access, and recommendations of ‘in-house’ products may be appropriate. Nonetheless, conflicts of interest are inherent in vertically integrated firms, and these firms still need to properly manage conflicts of interest in their advisory arms and ensure good quality advice.

ASIC will consult with the financial advice industry (and other relevant groups) on a proposal to introduce more transparent public reporting on approved product lists, including where client funds are invested, for advice licensees that are part of a vertically integrated business. ASIC noted that any such requirement is likely to cover vertically integrated firms beyond those included in this review. The introduction of reporting requirements would improve transparency around management of the conflicts of interests that are inherent in these businesses.

ASIC also examined a sample of files to test whether advice to switch to in-house products satisfied the ‘best interests’ requirements. ASIC found that in 75% of the advice files reviewed the advisers did not demonstrate compliance with the duty to act in the best interests of their clients. Further, 10% of the advice reviewed was likely to leave the customer in a significantly worse financial position. ASIC will ensure that appropriate customer remediation takes place.

Acting ASIC Chair Peter Kell said that ASIC is already working with the major financial institutions to address the issues that have been identified in the report on quality of advice and management of conflicts of interest.

‘There is ongoing work focusing on remediation where advice-related failures have led to poor customer outcomes, and the results of this review will feed into that work,’ said Mr Kell.

ASIC is already working with the institutions to improve compliance and advice quality through action such as:

  • improvements to monitoring and supervision processes for financial advisers; and
  • improvements to adviser recruitment processes and checks.

ASIC will continue to ban advisers with serious compliance failings.

ASIC highlighted that the findings from this review should be carefully examined by other vertically integrated firms. ‘While this review focused on five major financial services firms, the lessons should be considered by all vertically integrated firms in the financial services sector.’

Download the report

Irresponsible Mortgage Lending A Significant Risk For Seniors

From NestEgg.com.au

Surging property prices in Australia’s capital cities can be attributed to irresponsible lending, but it’s not just young buyers suffering the consequences, a consumer organisation has said.

In its submission to the royal commission into Misconduct in the Banking, Superannuation and Finance sector, the not-for-profit consumer organisation, the Consumer Action Law Centre (CALC) said the number of Aussie households facing mortgage stress has “soared” nearly 20 per cent in the last six months, and argued that lenders are to blame.

Referencing Digital Finance Analytics’ prediction that homes facing mortgage stress will top 1 million by 2019, CALC said older Australians are at particular risk.

The organisation explained: “Irresponsible mortgage lending can have severe consequences, including the loss of the security of a home.

“Consumer Action’s experience is that older people are at significant risk, particularly where they agree to mortgage or refinance their home for the benefit of third parties. This can be family members or someone who holds their trust.”

Continuing, CALC said a “common situation” features adult children persuading an older relative to enter into a loan contract as the borrower, assuring them that they will execute all the repayments.

“[However] the lack of appropriate inquiries into the suitability of a loan only comes to light when the adult child defaults on loan repayments and the bank commences proceedings for possession of the loan in order to discharge the debt,” CALC said.

The centre referred to a Financial Ombudsman Service (FOS) case study in which retiree and pensioner, Anne, entered into a loan contract with her son Brian. The repayments were to be made out of Brian’s salary and Anne’s pension. The loan was requested in order to extend her home so that Brian could live with her.

Following loan approval, the lender provided more advances under the loan contract. The advances were used to pay off Brian’s credit debt and buy a car.

When Brian left his job to travel, Anne could no longer afford the repayments and the lender said it would repossess her home.

“Anne lodged a dispute with FOS. After considering the dispute, FOS concluded that Anne was appropriately a co-debtor in the original loan contract, as she had received a direct benefit from the loan (the extension to her home and therefore an increase in its value),” CALC said.

“However, FOS considered that she was not liable for the further advances as she did not directly benefit from the application of the funds. Even though the repayment of Brian’s credit card debts may have provided more towards the household income, FOS concluded that this was not a direct benefit to Anne.

“Neither was the purchase of a car for Brian, as there was no information to show that Anne used the car or relied on Brian to transport her.”

CALC also expressed concern that the Household Expenditure Measure (HEM) is not a robust enough living expense test.

Noting that the Australian Prudential Regulation Authority shares their concern, the centre said the reliance on the HEM test raises concerns about the robustness of the actual measure.

“APRA states that it has concerns about whether these benchmarks provide realistic assessments of a borrower’s living expenses.

“In the same vein, ASIC has issued proceedings against Westpac in the Federal Court for failing to properly assess whether borrowers could meet repayment obligations, due to the use of benchmarks rather than the actual expenses declared by borrowers.”

CALC warned that over-indebtedness has ramifications for the economy but also for individuals and families.

Highlighting the link between high levels of debt and lower standards of living, CALC said it can have significant long-term effects as well, with the capacity to damage housing, health, education and retirement prospects

ASIC Updates Commonwealth Bank Financial Planning Licence Conditions

ASIC says under additional licence conditions imposed on Commonwealth Financial Planning Ltd and Financial Wisdom Ltd by the Australian Securities and Investments Commission, CBA will review all advice given to customers of five former representatives. CBA will pay compensation where customers have suffered loss.

As at 10 January 2018, CBA has reported to ASIC that approximately $1.9 million of compensation is due to customers of the five advisers. Compensation is likely to increase as CBA reviews further customer files. CBA recently wrote to over 3,500 customers of the five advisers informing them their advice was being reviewed. Following completed reviews CBA has issued assessment outcome letters to over 1,000 customers. CBA will continue to issue assessment outcome letters and compensation offers to affected customers between now and 31 March 2018.

ASIC appointed KordaMentha Forensic (KordaMentha) to complete a compliance review under the additional licence conditions. KordaMentha determined that CBA should review advice given by 16 potentially high-risk advisers, and has now reviewed and is satisfied with the processes that CBA used to:

  • select samples of advice given by the 16 advisers for review
  • review the appropriateness of advice given by the 16 advisers
  • calculate whether any inappropriate advice given by the 16 advisers resulted in customers losing money of suffering loss, and
  • conclude that all of the customers of five of the advisers should be reviewed in the compensation program and that no further review is required for 11 advisers.

The current round of compensation is in addition to $4.97 million including interest already offered to customers of different advisers under the additional licence conditions compensation scheme, as reported on in KordaMentha’s December 2016 compliance report.

For more information see the KordaMentha Compliance Report Part 3.

Background

In August 2014, ASIC imposed additional conditions on the Australian Financial Services licences of Commonwealth Financial Planning Ltd and Financial Wisdom Ltd, with the licensees’ consent. Under the additional licence conditions, ASIC appointed KordaMentha Forensic to assess the adequacy of CBA’s 2012 review of potentially high-risk advisers.

KordaMentha’s Identification Report (December 2015, available from the ASIC website) reported that the two licensees had taken reasonable steps to identify potentially high-risk advisers in 2012, but after identifying them, did not adequately review 17 of them to determine whether their clients should be included in a review and compensation program.

KordaMentha later determined that one of the 17 advisers did not need to be reviewed because the adviser had not, as CBA had previously informed KordaMentha, advise a high number of clients to invest 25% or more of their portfolios in property investments.

To address CBA’s failure to adequately review the remaining 16 advisers, KordaMentha’s Identification Report and subsequent work set out the ‘Additional Processes’ that the Licensees were required to take for the advisers:

  1. A review of a sample of six client files for each of the advisers to determine any instances of inappropriate advice that led to loss. For advisers where CBA identified no inappropriate advice with loss, KordaMentha did not require any further review. For advisers where CBA identified inappropriate advice with loss, step (ii) was required.
  2. A review of a further 25 files of the adviser. If no further instances of inappropriate advice with loss were identified, KordaMentha did not require the Licensees to take any further action or review for that adviser. If, after step (i) and (ii) (31 files reviewed), CBA identified that an adviser had provided between two and five instances of instances of inappropriate advice that led to loss, KordaMentha’s default position was that step (iii) was required – that CBA should review a further 25 files of that adviser. If six or more instances on inappropriate advice with loss were identified, CBA was required to implement the full compensation program for all of the adviser’s clients.
  3. A review of a further 25 files.
  4. If, after step (i) or (ii) or (iii) (between six and 56 files reviewed per adviser), CBA identified a total of six or more instances of inappropriate advice with loss, CBA was required to implement the full compensation program for the all of the adviser’s clients.

As a result of these steps:

  • KordaMentha does not require CBA to conduct any further review of 11 of the 16 advisers. KordaMentha concluded that those 11 advisers have been adequately reviewed by CBA and should have no further review under the additional licence conditions.
  • KordaMentha requires CBA to apply the full review and compensation program to all customers of the remaining five advisers, which includes reviewing their advice, issuing review outcome letters including compensation offers if applicable, and offering customers up to $5000 for an independent assessment of their advice.
  • Any customers who CBA identifiedin steps (i), (ii) or (iii) as having lost money through inappropriate advice, from any of the 16 advisers, will be compensated.

Previous KordaMentha reports on the additional licence conditions

The report released today is KordaMentha’s fourth report under the additional licence conditions. Previous reports are published on ASIC’s website at the following links:

  • Comparison Report (April 2015): REP 431
  • Identification Report (December 2015): REP 462
  • Compliance Report Part 1 & 2 (December 2016): REP 504

Next steps

ASIC will continue to report publicly on compensation under the additional licence conditions. ASIC will publish Compliance Report Part 4 when KordaMentha completes its assessment of CBA’s compliance with the additional licence conditions.

ASIC begins shadow shopping brokers

From Australian Broker.

ASIC has launched the second phase of its review into the mortgage broking industry by delving into the suitability of brokers’ advice through a mystery shopping exercise.

ASIC said this is part of its effort to better understand the home loan purchase process, which goes beyond broker remuneration.

“While broker remuneration practices may have an impact on home loan choice, ASIC recognises that a range of other factors influence which home loan products are purchased, and that the purchase experience may vary across purchase channel, i.e. via broker compared to directly from a lender,” said Michael Saadat, ASIC’s senior executive leader for deposit takers, insurers and credit services.

Saadat told Australian Broker that ASIC is conducting consumer and broker research to better understand the home loan purchase process as part of its review of mortgage broking practices.

The research looks to determine what factors – beyond broker commission – affect how and which home loan products clients buy, and whether and how consumer outcomes could be improved.

Within this, ASIC aims to gain insight around how consumers buy home loans, identifying critical points in the buying process, key inputs and decision-making criteria at such points, and how behaviour is influenced during the process.

Saadat said ASIC also wants to understand how the broker shapes which product a consumer buys and whether the advice offered results in positive consumer outcomes. These include making an informed choice, buying products that meet needs, and being provided with the right amount and relevant information in order to make a choice.

In November, Saadat told Australian Broker magazine that anything discovered through shadow shopping “will be more about understanding to what extent brokers are potentially not meeting their legal obligations, and whether ASIC, for example, needs to produce more guidance around what they can or can’t say to consumers or whether some other action is required”.

In the past, ASIC had pointed to record-keeping as something brokers needed to improve on to better explain the process that had occurred.

“This is not about going into the review thinking that there are significant problems that need to be uncovered; in fact this is about really trying to understand how the interactions between the broker and the consumer are playing out, given that we don’t get any sense of that really from the loan files,” he said at the time.

Major industry players supported ASIC’s recommendations in the Review of Mortgage Broker Remuneration when it was released in March 2017. However, they advised ASIC and the government to proceed with caution in implementing those recommendations.

ANZ and ASIC reach settlement on suspected third party frauds

ANZ today announced it is filing joint court submissions with the Australian Securities and Investments Commission (ASIC) on an agreed settlement for a number of cases where car finance brokers or dealers engaged in suspected fraud when submitting loan applications on behalf of customers to Esanda between 2013 and 2015.

In a statement of agreed facts, ANZ acknowledged it did not take reasonable steps to verify customers’ financial situation in relation to 12 loan contracts in circumstances where there was reason to doubt the information being provided by third party intermediaries.

The third party intermediaries involved in these cases were: United Financial Services Pty Ltd trading out of the Best Buys Auto car dealerships; Motorcycle Finance and Insurance Pty Ltd; and Combined Motor Traders Pty Ltd.

ANZ detected and reported the suspected fraudulent conduct by these third party intermediaries. ANZ has disaccredited the individuals responsible for submitting the 12 loan contracts and no longer accepts loan applications from them.

Commenting on the agreed settlement, ANZ Group Executive Australia Fred Ohlsson said: “ANZ has worked closely with ASIC on its investigation of this matter. We take our responsible lending obligations seriously and we have since taken steps to strengthen our ability to prevent and detect fraud by third parties.”

Since reporting the issue, ANZ has significantly increased both the supervision and training of asset finance brokers.

ANZ has agreed to pay a $5 million fine as part of the settlement and $390,000 of ASIC’s costs. This is subject to court approval. ASIC acknowledged ANZ’s cooperation throughout the investigation.
ASIC has also reviewed ANZ’s proposed approach to remediating approximately 320 customers who took out car loans through these three intermediaries (between 2013 and 2015), with the total remediation amount expected to be around $5m.

Will Your Interest Only Loan Get Refinanced?

The Australian Financial Review featured some of our recent research on the problem of refinancing interest only loans (IO).  Many IO loan holders simply assume they can roll their loan on the same terms when it comes up for periodic review.  Many will get a nasty surprise thanks to now tighter lending standards, and higher interest rates.  Others may not even realise they have an IO loan!

Thousands of home owners face a looming financial crunch as $60 billion of interest-only loans written at the height of the property boom reset at higher rates and terms, over the next four years.

Monthly repayments on a typical $1 million mortgage could increase by more than 50 per cent as borrowers start repaying the principal on their loans, stretching budgets and increasing the risk of financial distress.

DFA analysis shows that over the next few years a considerable number of interest only loans (IO) which come up for review, will fail current underwriting standards.  So households will be forced to switch to more expensive P&I loans, assuming they find a lender, or even sell. The same drama played out in the UK a couple of years ago when they brought in tighter restrictions on IO loans.  The value of loans is significant. And may be understated.

A few observations. ASIC in 2015, released a report that found lenders providing interest-only mortgages needed to lift their standards to meet important consumer protection laws. They identified a number of issues relating to bank underwriting practices. We would also make the point that despite the low losses on interest-only loans to date in Australia, in a downturn they are more vulnerable to credit loss.

In April this year we addressed the problem of IO loans.

Lenders need to throttle back new interest only loans. But this raises an important question. What happens when existing IO loans are refinanced?

Less than half of current borrowers have complete plans as to how to repay the principle amount.

Interest-only loans may seem like a convenient way to reduce monthly repayments, (and keep the interest charges as high as possible as a tax hedge), but at some time the chickens have to come home to roost, and the capital amount will need to be repaid.

Many loans are set on an interest-only basis for a set 5-year or 10-year  term, at which point the lender is required to reassess the loan and to determine whether it should be rolled on the same basis. Indeed, the recent APRA guidelines contained some explicit guidance:

For interest-only loans, APRA expects ADIs to assess the ability of the borrower to meet future repayments on a principal and interest basis for the specific term over which the principal and interest repayments apply, excluding the interest-only period

There is a strong correlation between interest-only and investment mortgages, so they tend to grow together. Worth reading the recent ASIC commentary on broker originated interest-only loans.

But if households are not aware they have IO loans in the first place, then this raises the systemic risks to a whole new level. The findings from the follow-up study by UBS, after their “Liar-Loans” report (using their online survey of 907 Australians who recently took out a mortgage – they claim a sampling error of just +/-3.18% at a 95% confidence level) are significant.

They say their survey showed that only 23.9% of respondents (by value) took out an interest only loan in the last twelve months. This compares to APRA statistics which showed that 35.3% of loan approvals in the year to June were interest only.

They believe the most likely explanation for the lack of respondents indicating they have IO mortgages is that many customers may be unaware that they have taken out an interest only mortgage. In fact, around 1/3 of interest only borrowers do not know that they have this style of mortgage.

 

ASIC Licenses First Crowd-sourced Funding Intermediaries

The Australian Securities and Investments Commission (ASIC) has licensed the first crowd-sourced funding (CSF) intermediaries under the new CSF regime.

Seven companies have been issued with Australian Financial Services (AFS) licence authorisations to act as intermediaries able to provide a crowd-sourced funding service. With the grant of these new authorisations eligible public companies will now be able to use the CSF regime to raise capital by making offers of ordinary shares to investors via the on-line platform of one of these intermediaries.

ASIC Commissioner John Price said that this marked a significant milestone for crowd-sourced funding in Australia.

‘ASIC has been assessing applications as a matter of priority, as suitable intermediaries needed to be licensed before fundraising under the new regime could commence. Intermediaries have an important gatekeeper role which will be key to building and maintaining investor trust in crowd-sourced fundraising, so we are pleased to have now issued the first tranche of authorisations,’ he said.

The CSF regime is designed to provide start-ups and small to medium sized companies with a new means to access capital to develop and grow. CSF offers are subject to fewer regulatory requirements than other forms of public fundraising.

The newly licensed intermediaries have now been added to ASIC’s register of AFS licensees. ASIC’s free online search can be used by investors, potential crowd-sourced funders and others to confirm the authorisations held by individual licensees. ASIC encourages both CSF investors and companies to check whether their intermediary holds an AFS licence with appropriate authorisation to provide CSF services.

ASIC has previously highlighted the importance of investors understanding both the benefits and risks of investing via crowd-sourced funding. Further information regarding crowd-funding can be found on ASIC’s MoneySmart website.

Background

On 29 September 2017 the Corporations Amendment (Crowd-sourced Funding) Act 2017 and associated regulations came into effect – establishing a regulatory framework to facilitate crowd-sourced equity funding in Australia.

One of the key objectives of the regime is to reduce the regulatory burden on smaller companies associated with raising funds from the public via the issue of ordinary shares.