LAW20045 Finance Law

LAW20045 FINANCE LAW RESEARCH ASSIGNMENT HS1- 2021

Instructions and Administration: (Please refer to the Unit Outline)

Type: This is an INDIVIDUAL assignment.

Submission Process: This assignment must be submitted via Turnitin on your Canvas page for LAW20045. Please familiarise yourself with the University’s plagiarism policy (refer to your Unit Outline).

Please submit both Parts together on Canvas.

Word Count: The word count is 3,000 words, excluding footnotes. However, if you annotate your footnotes to include additional information the annotations will be included in the word length.

Value: 30%

Reference Style and Bibliography: You need to use The correct Swinburne Harvard style should be used as much as possible to promote your skills in academic citation. This skill is particularly important in each of your assignments. Please ensure when you use the Harvard style you also insert a pinpoint reference- i.e. a page number or para number: e.g. (Smith 1957, p 203) Please include a bibliography at the end of the assignment, indicating all sources used in the preparation of your answer.

Remember that this is a research assignment. You must have sourced and used sources other than your prescribed material in the compilation of your answer. These sources must mostly come from scholarly peer-reviewed journals and books for the subject published by reputable publishers.

The bibliography does not count towards your final work count. Due Date: Midnight Sunday 24th April 2022.

Penalties: Please refer to the Unit Outline for the policy on late submissions.

A copy (either hard copy or a pdf) of your assignment must be made and retained by you. All assignments must be typed with one and a half spacing, and a margin of at least 2.5 cms.

Attention to style, setting out, spelling, grammar, correct citation of cases and legislation will be rewarded.

Do not provide illustrations (pictures!)

Part A – Problem Solving

Suggested Word Length= 1,000 words

Value = (5+5 =10 marks)

Background

You have recently graduated with a Bachelor of Business from Swinburne University of Technology. Your parents are very proud of you when you land a job with the Australian Financial Complaints Authority (AFCA). Your supervisor wants to test your abilities so hands you case files and wants you to prepare an advice and answer specific questions for each of them.

You rub hands with delight and order an almond milk triple strength decaffeinated soybean café latte and begin!!

Background Facts

Randal is a mechanic by training. He suspects he is bi-polar because of his behavioural patterns (cycles of manic positive enthusiasm followed by dark suicidal depression), and because various members of his family have been treated for depression. Randal has not sought treatment, and instead self-medicates with large volumes of alcohol.

For the past 6 years he spends 6 months of the year working for various mining companies in Western Australia (WA) servicing their equipment. He would then spend the rest of the year with his wife and two young (8 and 10) children in Cambodia, (Although he remains an Australian citizen). When working he would earn approx. AUD $80,000 (post-tax) and he would send approximately $1,250 -$1,500 per month to his family in Cambodia. He kept his money in a current account with THATBANK (reg’d ADI) which he could access from Cambodia.

From June 2020-Dec 2021 he couldn’t work in WA due to COVID-19 restrictions, so he survived by using his savings. He returned to Melbourne in Jan 2022 with a plan to purchase, renovate and then sell a house. After some research and investigation, he purchased with his remaining savings a residential property in Kyneton, Victoria for $180,000. He then approached THATBANK for a housing loan of $50,000 to fund the renovations, but they refused his application on the grounds that he does not have full time work, no assets other than the property in Kyneton, which they valued at $100,000, (the house was uninhabitable).

So, he used his existing credit card (with THATBANK) to pay for the renovations. He soon reached the maximum credit amount of AUD$30,000. It still wasn’t enough to finish the renovations, but THATBANK refused to extend any further credit. He saw an advertisement from ANOTHERBANK (reg’d ADI) that promised to charge no interest for 12 months period if he transferred his credit card debt to them from his existing bank, and upping his credit limit to

$50,000. Believing this would give him enough time to finish the renovations, sell the house and repay the debt, he signed a contract with ANOTHERBANK to transfer his debt from THATBANK.

At the time of signing the contract the loans officer felt that something was not 100 % “right” with Randal, but couldn’t pinpoint the exact problem. So, they secretly contracted THATBANK to discuss Randal’s credit history before Randal closed his account. The officer is worried about a number of issues:

• The value of the property in Kyneton- which Randal had listed at $350,000.
• Randal’s monthly payment deduction of $1,500 from unknown persons in Cambodia, since Randal’s loan application stated that he had no “dependents”.
• Randal was renovating the house himself- and was not a qualified builder. Thus, affecting his ability to resell.
• His state of mental

The officer from THATBANK was under pressure to “dump” Randal’s account because his manager believed Randal would bankrupt himself soon. So, they did not answer any of those questions, citing their duty of confidentiality prevented them from providing any information to ANOTHERBANK (Despite having full knowledge of Randal’s domestic situation and banking history, but not his mental health.).

Questions

1. Is the officer from THATBANK correct when arguing that he was bound by the duty of confidentiality?
2. Could ANOTHERBANK take legal action against THATBANK for remining silent?
3. Was THATBANK correct when denying Randal’s initial housing loan application?
4. Could ANOTHERBANK avoid the contract on the basis that Randal has a history of mental illness?

Part B: Research

Choose ONE of the following options below and answer the accompanying question[s].

Suggested Word Length= 2,000 words Value = [20 marks]

Option One.

“The banking industry has been working hard to implement the recommendations of Commissioner

Hayne’s final report, which included important changes to the Banking Code of Practice”

[Anna Bligh, ABA CEO]1

 Question: Refer to the above quote. Do you think this statement is accurate? More importantly do you think the efforts of the banking industry satisfy any of the concerns raised by the Hayne Royal commission?

Here are some suggested areas raised by the Royal Commission (Choose your own as well!):

• Has the banking industry’s “profits-first” culture, as described in the Royal

Commission, remained intact or shifted towards ensuring regulatory compliance?

• Will the changes to the Banking Code of Practice increase regulatory compliance within the banking industry?

Discuss by referring to scholarly articles as well as case examples and as relevant rules of common law, statute and codes of practice .

Some articles to get you started! Good hunting finding more!!

• https://www.ausbanking.org.au/priorities/
• https://www.ausbanking.org.au/priorities/royal-commission/

1 Australian Banking Association, ‘Changes to the Banking Code of Practice as recommended by the Royal Commission will go live tomorrow.’ 29 February 2020, https://www.ausbanking.org.au/a-new-banking-code-of-practice-for-2020/ (retrieved Tue 18 Jan 2022)

Option Two

Question: Will Australia become a cashless society?

Discuss the implications a cashless society would pose for the relevant regulators such as the ASIC or APRA. Will the current legislative/regulatory scheme effectively regulate a cashless society? Would the ePayments Code need to be amended?

Some articles to get you started! Good hunting finding more!!

• ‘COVID-19 is speeding up Australia's shift towards a cashless future’ (26 Dec 2021) at https://abc.net.au/news/2021-12-26/cashless-society-economy-australia- covid/100725728
• ‘Could COVID-19 turn America into a Cashless Society?’ by Jack Reinelt, 27 October 2020, see https://www.somoglobal.com/blog/could-covid-19-turn-america-into-a- cashless-society

Option Three

Question: Chose your own topic from those listed in the Unit Guide and design your own question.

Here are some suggested “problem areas” for regulators:

• “Pay day lending”;
• High frequency trading;
• Algorithmic trading, or;

Discuss the implications these pose for the regulators such as the ASIC. Can they be regulated? How? Does the current legislative/regulatory scheme effectively regulate these areas?