The Financial Services Royal Commission – What you need to know (Part 2)

This article provides a comprehensive summary of the three Practice Guidelines that have been published by the Financial Services Royal Commission.

Practice and procedures that will govern the Financial Services Royal Commission
Practice Guideline 1 – Procedures establishing the conduct of the Financial Services Royal Commission

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Financial Services Royal Commission) published Practice Guideline 1 (PG1) on 22 January 2018 (updated on 6 February 2018). PG1 sets out general guidance about the procedures it will apply to the conduct of the commission.

PG1 provides information about the processes by which the Financial Services Royal Commission will seek information and submissions from the public. To assist in the collation and administration of information and submissions from the public, the Financial Services Royal Commission has established an online submission page to receive public submissions and information relevant to its terms of reference. The online form is designed to enable the user and the Commission to organise information provided to it in line with the terms of reference. The form asks the user to describe the misconduct of the financial services entity, when it occurred, the user’s views on what contributed to the misconduct, the steps taken to complain about the conduct, and the outcome of the complaint.

The Financial Services Royal Commission requires any documents produced to it to be produced electronically. The Commission has published a document management protocol for the production of electronic documents to the Commission.

The Financial Services Royal Commissions has established a procedure for persons or entities to make claims of confidentiality and non-publication orders under s 6D(3) of the Act. If a person wishes to make a claim for confidentiality, the person must mark the pages (or part of the page) with the word ‘confidential’ (or otherwise follow the applicable protocol in the document management system) and provide a note stating the basis of the claim, to whom the confidentiality is said to be owed, and the direction sought. The Commission will maintain confidentiality over the claim pending the determination of the application, decide the application on the papers or by way of a hearing, and notify the person of the decision.

Practice Guideline 2 – Procedure for making a claim for legal professional privilege

The Financial Services Royal Commission published Practice Guideline 2 (PG2) on 29 January 2018. PG2 sets out the way in which the Commission will receive and consider a claim for legal professional privilege (LPP) under s 6AA(1) of the Act.

The Act provides that an assertion that a document is subject to LPP will not be a reasonable excuse for failing or refusing to produce the document unless: (1) a court has found the document (or part of the document) to be subject to LPP, or (2) a claim that the document (or part of the document) is subject to LPP has been made to the Commission within the time for production (or within such time as the Commission allows).
If a person seeks to assert a claim for LPP, they must follow the following steps:

  • In respect to Court findings or orders that a document is subject to LPP: The person (or their legal practitioner) must inform the Solicitor Assisting the Financial Services Royal Commission of their intention to claim privilege as soon as practicable, and provide the solicitor assisting with a copy of the judgment or order recording the finding of privilege (and evidence to confirm there has been no waiver or loss of privilege).
  • Where the whole of the document has been found to be subject to LPP, the document does not have to be produced to the Financial Services Royal Commission at first instance.
  • Where part(s) of the document have been found to be subject to LPP, those part(s) are to be redacted and produced (in redacted form) to the Financial Services Royal Commission.
  • In respect to a claim that a document is subject to LPP: The person (or their legal practitioner) must provide written notice of the claim of LPP to the Solicitor Assisting the Financial Services Royal Commission within the time for production, together with any evidence or written submissions in support of the claim for LPP.
  • Where the whole of the document is the subject of the claim for LPP, the document does not need to be produced to the Financial Services Royal Commission in the first instance.
  • Where part(s) of the document are the subject of the claim for LPP, those part(s) are to be redacted and produced (in redacted form) to the Financial Services Royal Commission.

For the purpose of deciding whether to accept or reject a claim for LPP, the Financial Services Royal Commission may:

  • Require the person to produce the document the subject of the claim for LPP for inspection by written notice; and
  • Exercise powers to summon witnesses and take evidence under s 2 of the Act.

If the Financial Services Royal Commission accepts the claim, the Commission will return the document to the person, and will disregard the whole, or the relevant part, of the document for the purposes of any report or decision the Commission makes.

If the Commission decides to reject the claim, the Commission may retain the document and use it for the purposes of the inquiry.

Practice Guideline 3 – Procedures for leave to appear and witnesses

The Financial Services Royal Commission published Practice Guideline 3 (PG3) on 8 February 2018. PG3 sets out the process by which the Financial Services Royal Commission will consider applications for leave to appear, and deal with witnesses appearing before the Commission.

Leave to appear

The Financial Services Royal Commission has indicated that applications for leave to appear will be granted in limited circumstances. Those circumstances are when an applicant has a direct or substantial interest in the hearing of a case study the subject of an inquiry. It will generally be granted when an applicant has been summonsed to give evidence, is the subject of an inquiry to be undertaken, or may be the subject of an adverse allegation.

The Financial Services Royal Commission may, at any time, vary or withdraw leave to appear, or make it subject to altered or additional limitations or conditions.

The process of making an application for leave to appear will be governed by the following process:

  • As the Financial Services Royal Commission determines its program (and scope) of public hearings (to be published on its website), the Commission will invite written applications for leave to appear from a person or entity who believe they have a direct or substantial interest in the scope of a particular hearing.
  • An application for leave to appear is to be made by an application form ‘Application for Leave to Appear at the Royal Commission’ (available on the Commission website). The form will need to be submitted together with a short submission setting out the basis upon which the applicant has a direct or substantial interest in the case study or subject of inquiry.
  • The application will be determined on the papers in advance of each hearing. The outcome will be communicated to the applicant (or their legal representative). The Commission may give further consideration of the application at a hearing.

The Financial Services Royal Commission has indicated that it will be unlikely a person or entity will be given unconditional leave to appear. The Financial Services Royal Commission has indicated it anticipates most grants of leave to appear will be confined to a particular inquiry or case study in which the person or entity has a direct or substantial interest.

Where a person or entity is granted leave to appear:

  • The person or entity to whom leave to appear is granted is entitled to participate (or be legally represented) in the public hearing concerning the relevant case study or inquiry. The Commission may grant leave to appear on conditions, such as limiting leave to appear to topics or issues.
  • The person to whom leave to appear is granted (or their legal representative) may apply to have evidence tendered or heard, apply for leave to cross examine a witness, and make submissions about the findings available to the Financial Services Royal Commission following the relevant hearing.
  • The Financial Services Royal Commission may determine the nature and extent of other conditions attaching to granting applications for leave to appear.

Witnesses

Counsel Assisting the Financial Services Royal Commission have the responsibility of identifying, contacting and calling each individual whom they wish to give evidence as a witness; determining whether an individual will be called to give evidence at a hearing; determining the order in which witnesses are to give evidence; and determining which documents are tendered during public hearings.

Individuals who are required to give evidence will be provided with a summons to appear at the Financial Services Royal Commission.

The Financial Services Royal Commission has indicated that it will receive evidence from witnesses in the form of a witness statement. Where a person is legally represented, their witness statement will be prepared by their legal representative. Where a person is not legally represented, their witness statement will be prepared by counsel and the solicitors assisting the commission. The Financial Services Royal Commission will serve a notice to produce for the purpose of enabling the witness statement to be produced.

The Financial Services Royal Commission has indicated that the cross examination of witnesses will be by leave only. It has indicated that it will not permit general, open ended cross-examination. Where persons represented before the Commission have a common or similar interest in relation to the evidence of a witness, it is expected that the legal representatives consult with each other, and with counsel assisting, in relation to the order and area of cross examination. If no agreement is reached, the Commissioner will direct the order for cross examination.

‘In order to consider whether a person has a sufficient interest to cross examine a witness, the Financial Services Royal Commission will require the cross examiner to identify the purpose of the cross examination, set out the issues to be canvassed, and provide copies of documents which they propose to take the witness through. The Commissioner has emphasised that the Financial Services Royal Commission is an inquiry and not a judicial proceeding, and cross examination will be permitted only to the extent it will assist the Commissioner in his task of investigating and providing a written report. The Financial Services Royal Commission has reserved its right to limit or restrict cross examination under s 6FA of the Act.

The procedure for the examination and cross examination of a witness summoned to give evidence at the Financial Services Royal Commission will be as follows:

  • Where the witness is legally represented, the legal representative will be permitted to lead the witness’s evidence in chief, which will largely be achieved by adopting their witness statement on oath or affidavit (before it is tendered).
  • Counsel Assisting the Commission may then ask questions of the witness after evidence in chief has been led.
  • Other persons who have leave to appear may (with the leave of the Commission) cross examine the witness.
  • The legal representative for the witness may re-examine the witness.
  • Following this, Counsel Assisting the Commission may re-examine the witness.

Counsel Assisting the Royal Commission will determine which and when documents are tendered, subject to the Commissioner’s control.
A person who has leave to appear at a hearing may be given confidential access to documents that are likely to be tendered as exhibits at the public hearing. One purpose for this is to enable a person to identify whether any application can or should be made for a suppression order.

If a person seeks to have a document placed before a public hearing, they must notify the Solicitor Assisting the Commission that they wish to have a document placed before the public hearing. A copy of the document must be provided. Counsel Assisting the Commission will decide whether or not the documents are to be tendered. Any application to tender the document may only be made to the Commissioner if this process has been completed, and Counsel Assisting the Commission has refused to tender a document.

Part 1 of this post can be viewed here

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