Relaxation of disclosure rules is just a temporary move

Optus boss Kelly Bayer Rosmarin. Illustration: John Spooner

Big business has jumped too early in celebrating Treasurer Josh Frydenberg’s relaxation of continuous disclosure laws, with ASIC making clear yesterday the laws won’t change any time soon.

At Thursday’s Senate hearings, enforcement boss Daniel Crennan stressed Frydenberg’s temporary relaxation of civil laws was just that and didn’t impact criminal laws where the tests remained the same.

Just to make sure everyone understood, ASIC chair James Shipton told the Senate his team had a “laser-like focus” on disclosure laws that remained undented by the Treasurer’s changes.

He did admit the decision to amend the Corporations Act so that companies and their officers would be liable for continuous disclosure breaches only if there was “knowledge, recklessness or negligence” with respect to updates on price-sensitive information might have an “impact” on shareholders’ ability to gain ­information. “We are already monitoring the nature and the types of disclosure to markets on an ongoing basis,” Mr Shipton said.

“We will watch for any emerging risks. We will watch for any anomalies. We will react accordingly.”

Big business and its lawyers loved Frydenberg’s statement because it went some way towards stopping class actions based on continuous disclosure breaches.

It didn’t go as far as they wanted but it was a step in the right direction which was then taken to be “well, we may as well make this a permanent change”.

Based on the ASIC statements yesterday the chances of that happening are zero for the right reasons.

Corporate disclosure is a fundamental tenet of the corporations law and to water it down is a dramatic and incorrect step. If the problem is too many class actions then let’s deal with that separately, as is already happening.

Frydenberg has already moved to look at licensing litigation funders and there is a parliamentary hearing into their role based on fear they are collecting too much of the class action spoils and in the process sponsoring too many class actions.

That is a different debate to the moves to water down civil standards on disclosure laws permanently, which have no merit.

Shipton said ASIC was continuing to investigate issues “where there is significant risk of consumer harm”.

“Past illegal conduct including behaviour identified by the Hayne royal commission continues to be a priority,” he added.

Shipton said the corporate plod actively sought to warn consumers where they were at risk of financial harm and noted “there has never been a greater need for the financial services industry to live up to community expectations”.

The same statement applies to regulators and ASIC’s role will be judged accordingly.

Virus hits Optus

Relaxation of COVID-19 lockdowns has had a positive impact on consumer sentiment but sales remain “challenging”, according to Optus boss Kelly Bayer Rosmarin.

This follows a sharp fall in the March quarter, with revenue down 9 per cent to $2.1bn and a slump in profits to $37m from $228m a year ago.

In her first briefing as Optus boss, Bayer Rosmarin said business conditions remained tough but there were signs of blue sky.

She faces a tough task to recover consumer loyalty in the wake of considerable concern caused by the industry-wide issues with call centres.

Consumers complain about lengthy delays on calls and in getting technicians to fix problems.

COVID-19 caused a shutdown in Philippines call centres and Optus hired 500 new staff while also retraining 1500 retail staff to help operate the phones.

But consumer frustration is a long-time problem.

For the full year Optus reported revenues down 2 per cent to $8.9bn and net profit down 39 per cent to $402m.

Equipment sales fell 22 per cent in the first quarter in a sign consumers were avoiding new purchases amid the economic uncertainty created by COVID-19.

Asked about the level of consumer distress Bayer Rosmarin said it was too early to know the real impact, noting the company had moved quickly to offer support and cancel penalty charges for late fees.

Optus is being hit with the same margin falls that Telstra is suffering with the switch to NBN for fixed-line services.

Free cash flow in the March quarter was up 21 per cent to $539m and for the year stood at $1.4bn, after investments of $1.4bn on new 5G infrastructure.

Bayer Rosmarin has built out her executive ranks with three new appointments this week which just happened to all be women.

They included former NBN executive Poppy Fassos as head of risk management, Libby Roy as head of small business and Kate Aitken as head of HR.

Bayer Rosmarin replaced Allen Lew as head of Optus at the end of March, right in the middle of the COVID-19 turmoil.

She said sales had stabilised at low levels after the initial period of free fall in business.

Digital trend

COVID-19 fast-forwarded the digitisation of the Australian economy and News Corp is following this trend with its decision to publish 92 digital-only papers across regional Australia.

The decision unveiled by News Corp Australia chief Michael Miller on Thursday means 375 journalists will serve these publications.

The company, which publishes this newspaper, said more than 640,000 Australians were subscribing to News Corp digital news content, with subscriptions increasing at an annual rate of 24 per cent.

Three Sydney titles, the Wentworth Courier, Mosman Daily and North Shore Times, will resume print editions.

These titles are in the strongholds of classified advertising rival Domain, explaining the decision to maintain print and online versions.

Mr Miller said portfolio changes would “make us less complex for our partners to leverage and we will build on the innovations already in place”.

These include REA Group, Australia’s real estate digital leader; small business advertiser News Xtend; News Connect data which gives businesses access to the right consumer segments; and the nation’s premium subscription broadcaster including Foxtel, Kayo and Binge Entertainment.

News.com.au has increased in audience to more than 12.2 million monthly users.

The ACCC is working on a code of conduct between digital platforms and news content providers to provide payment for the latter’s content.

A combination of 92 digital-only regional and community mastheads and the now more state-focused city mastheads including the Herald Sun and Daily Telegraph will support regional communities.