Corporations Amendment Regulations 2001 (No. 4) (Cth)
Corporations Amendment Regulations 2001 (No. 4) 1
Statutory Rules 2001 No. 319 2
I, PETER JOHN HOLLINGWORTH, Governor-General of the Commonwealth of Australia, acting with the advice of the Federal Executive Council, make the following Regulations under the
Corporations Act 2001. Dated 8 October 2001
PETER HOLLINGWORTH
Governor-General
By His Excellency’s Command
JOE HOCKEY
Minister for Financial Services and Regulation
These Regulations are the
Corporations Amendment Regulations 2001 (No. 4) .
These Regulations commence on the day on which item 1 of Schedule 1 to the
Financial Services Reform Act 2001 commences.
Schedule 1 amends the
Corporations Regulations 2001 .
(regulation 3)
substitute
1.0.02 Interpretation
(1) In these Regulations:
ABN (Australian Business Number) has the meaning given by section 41 of theA New Tax System (Australian Business Number) Act 1999 .
Act means theCorporations Act 2001 .
agent means a person appointed under subsection 601CG (1) of the Act.
approved deposit fund (orADF ) has the same meaning as in the SIS Act.
approved foreign bank :
(a) in relation to a participant of a licensed market, means a bank:
(i) established by or under the law of a foreign country; and
(ii) in relation to which there is in force an approval given by the market licensee in accordance with its operating rules; and
(b) in relation to a financial services licensee other than a participant of a licensed market, means a bank:
(i) regulated by an overseas regulator; and
(ii) in relation to which there is in force an approval given by ASIC for the purposes of this definition.
approved form , in relation to a provision of the Act or of these Regulations, means the form that is approved under paragraph 350 (1) (b) of the Act for use for that provision.
associated provisions , in relation to provisions (thecore provisions ) of the relevant old legislation as in force at a particular time, include (but are not limited to):
(a) any regulations or other instruments that are or were in force for the purposes of any of the core provisions at that time; and
(b) any interpretation provisions that apply or applied in relation to any of the core provisions at that time (whether or not they also apply or applied for other purposes); and
(c) any provisions relating to liability (civil or criminal) that apply or applied in relation to any of the core provisions at that time (whether or not they also apply or applied for other purposes); and
(d) any provisions that limit or limited, or that otherwise affect or affected, the operation of any of the core provisions at that time (whether or not they also limit or limited, or affect or affected, the operation of other provisions).
ASTC means ASX Settlement and Transfer Corporation Pty Limited.
ASTC certificate cancellation provisions means the provisions of the ASTC operating rules that deal with:
(a) the cancellation of certificates or other documents of title to Division 4 financial products; and
(b) matters incidental to the cancellation of those certificates or documents.
ASTC-regulated transfer means a transfer of a Division 4 financial product:
(a) within the meaning of:
(i) Division 4 of Part 7.11 of the Act; and
(ii) regulations relating to transfer made for sections 1074A and 1074E of the Act; and
(b) that is effected through ASTC; and
(c) that, according to the ASTC operating rules, is an ASTC-regulated transfer.
benefit fund has the meaning given by section 16B of theLife Insurance Act 1995 .
building society has the same meaning as in section 16 of the RSA Act.
capital guaranteed , for a superannuation product or an RSA product, means that the contributions and accumulated earnings may not be reduced by a negative investment return or a reduction in the value of an asset in which the product is invested.
capital guaranteed fund means a public offer superannuation fund, or a sub-fund of a public offer superannuation fund, that has the following characteristics:
(a) its investments comprise 1 or more of the following only:
(i) deposits with an ADI;
(ii) investments in a capital guaranteed superannuation product or RSA product;
(b) the contributions and accumulated earnings of its members cannot be reduced by negative investment returns (within the meaning of subregulation 5.01 (1) of the SIS Regulations) or by any reduction in the value of its assets.
capital guaranteed member means a member whose interest in a public offer superannuation fund is fully invested in a capital guaranteed fund.
Division 3 asset means:
(a) shares mentioned in paragraph 1073A (1) (a) of the Act; or
(b) debentures mentioned in paragraph 1073A (1) (b) of the Act; or
(c) interests in a registered scheme mentioned in paragraph 1073A (1) (c) of the Act; or
(d) securities mentioned in paragraph 1073A (1) (e) of the Act.
Division 3 rights means:
(a) rights mentioned in paragraph 1073A (1) (d) of the Act; and
(b) rights related to securities mentioned in paragraph 1073A (1) (e) of the Act.
Division 3 securities means Division 3 assets and Division 3 rights.
Division 4 financial product has the meaning given by regulation 7.11.03.
eligible termination payment has the meaning given by Subdivision AA of Division 2 of Part III of theIncome Tax Assessment Act 1936 .
Exchange body means:
(a) Australian Stock Exchange Limited; or
(b) a subsidiary of Australian Stock Exchange Limited.
excluded ADF has the same meaning as in the SIS Act.
exempt public sector superannuation scheme (EPSSS ) has the same meaning as in the SIS Act.
financial business means a business that:
(a) consists of, or includes, the provision of financial services; or
(b) relates wholly or partly to the provision of financial services.
form means an approved form or a prescribed form.
friendly society has the meaning given by section 16C of theLife Insurance Act 1995 .
FSR commencement means the commencement of item 1 of Schedule 1 to theFinancial Services Reform Act 2001 .
income stream financial product means an annuity or other facility that is a financial product which provides an income stream, including:
(a) an income stream that is an investment life insurance product; or
(b) an income designated under section 9 of the
Social Security Act 1991 or section 5H of theVeterans’ Entitlements Act 1986 ;but does not include any of the following:
(c) a financial product under paragraph 764A (1) (ba) of the Act;
(d) anything that is not a financial product under section 765A of the Act;
(e) available money;
(f) deposit money;
(g) a managed investment product;
(h) a security;
(i) a loan that has not been repaid in full;
(j) gold, silver or platinum bullion.
Note In accordance with subsections 761G (6) and (7) of the Act, superannuation products and RSA products are not income stream financial products.
investment-based financial product means:
(a) a financial product under section 763B of the Act; or
(b) a financial product under paragraph 764A (1) (ba) or (j) of the Act; or
(c) a financial product under paragraph 764A (1) (m) of the Act that is specified to be an investment-based financial product; or
(d) a security; or
(e) a managed investment product; or
(f) an investment life insurance product; or
(g) a deposit product;
but does not include any of the following:
(h) anything that is not a financial product under section 765A of the Act;
(i) an income stream financial product.
Note In accordance with subsections 761G (6) and (7) of the Act, superannuation products and RSA products are not income stream financial products.
Lloyd’s has the same meaning as in theInsurance Act 1973 .
non-cash payment financial product means a financial product under section 763D of the Act, other than:
(a) a derivative; or
(b) a financial product under paragraph 764A (1) (k) of the Act; or
(c) anything that is not a financial product under section 765A of the Act.
non-Division 3 securities means financial products to which Division 3 or 4 of Part 7.11 of the Act applies because of a declaration made by ASIC under paragraph 1075A (1) (b) of the Act.
old Corporations Act means theCorporations Act 2001 as in force immediately before the FSR commencement.
policy committee has the same meaning as in the SIS Act.
pooled superannuation trust (orPST ) has the same meaning as in the SIS Act.
pre-FSR securities means securities defined in subsection 92 (3) of the old Corporations Act.
preserved benefits means preserved benefits under:
(a) Subdivision 6.1.2 of the SIS Regulations; or
(b) Subdivision 4.1.2 of the RSA Regulations.
proper ASTC transfer means:
(a) an ASTC-regulated transfer of a Division 4 financial product effected:
(i) through the prescribed CS facility operated by the ASTC; and
(ii) in accordance with the operating rules of the ASTC; and
(b) an ASTC-regulated transfer that the ASTC, in accordance with its operating rules, determines:
(i) to comply substantially with the applicable provisions of those operating rules; and
(ii) to be taken to be, and always to have been, a proper ASTC transfer.
public offer entity has the same meaning as in the SIS Act.
public offer superannuation fund has the same meaning as in the SIS Act.
registration number means:
(a) for a company — the number allotted to the company under paragraph 118 (1) (a) or 601BD (1) (a) of the Act; or
(b) for a registered body — the number allotted to it under section 601CB or 601CE of the Act; or
(c) for an auditor or a liquidator (including an official liquidator or a liquidator of a specified body corporate) — the number allotted to a person on registration of that person as an auditor or a liquidator.
regulated superannuation fund has the same meaning as in the SIS Act.
restricted non-preserved benefits means restricted non-preserved benefits under:
(a) Subdivision 6.1.3 of the SIS Regulations; or
(b) Subdivision 4.1.3 of the RSA Regulations.
retirement savings account has the same meaning as in the RSA Act.
risk-based financial product means:
(a) a financial product under section 763C of the Act; or
(b) a life risk insurance product;
but does not include any of the following:
(c) a derivative;
(d) anything that is not a financial product under section 765A of the Act.
Note In accordance with subsections 761G (5) and (7) of the Act, general insurance products are not risk-based financial products.
RSA Act means theRetirement Savings Accounts Act 1997 .
RSA Regulations means theRetirement Savings Accounts Regulations 1997 .
settlement authority means:
(a) a participating market licensee; or
(b) a prescribed CS facility.
settlement documents , in relation to a transaction (other than a guaranteed securities loan), means:
(a) if the agreement for the transaction has not been discharged — documents the supply of which in accordance with the agreement is sufficient to discharge the obligations of the seller under the agreement, in so far as the obligations relate to the supply of documents in connection with the transaction; or
(b) if the agreement for the transaction has been discharged, whether by performance or otherwise — documents the supply of which in accordance with the agreement would, if the agreement had not been discharged, be sufficient to discharge the obligations of the seller under the agreement, in so far as the obligations relate to the supply of documents in connection with the transaction.
SIS Act means theSuperannuation Industry (Supervision) Act 1993 .
SIS Regulations means theSuperannuation Industry (Supervision) Regulations 1994 .
sub-plan , in relation to a regulated superannuation fund, means a segment of the fund comprising a member or members of the fund, being a sub-plan that the trustee determines should be made.
successor fund has the same meaning as in the SIS Regulations.
superannuation entity has the same meaning as in the SIS Act.
superannuation interest has the same meaning as in the SIS Act.
superannuation scheme means a complying superannuation fund within the meaning of section 267 of theIncome Tax Assessment Act 1936 .
superannuation-sourced money means money in relation to which:
(a) the provider of a financial service knows that the money:
(i) will be paid to a person as an eligible termination payment by the trustee of a regulated superannuation fund; or
(ii) has been paid in that way at any time during the previous 6 months; or
(b) the provider of the financial service ought reasonably to know that fact.
TDS nominee , in relation to the transfer delivery service provisions of a settlement authority, means the clearing nominee mentioned in the definition oftransfer delivery service provisions .
transfer delivery service provisions , in relation to a settlement authority, means provisions of the operating rules of the settlement authority under which a dealer (dealer 1 ) may elect to bring about a transfer of securities of a particular kind and number to another dealer (dealer 2 ) by:
(a) dealer 1 transferring securities of that kind and number to a clearing nominee of the settlement authority; and
(b) the clearing nominee transferring securities of that kind and number to dealer 2.
trustee in relation to a superannuation scheme, includes a person responsible for the administration and management of the scheme.
unrestricted non-preserved benefits means unrestricted non-preserved benefits under:
(a) Subdivision 6.1.4 of the SIS Regulations; or
(b) Subdivision 4.1.4 of the RSA Regulations.
(2) In these Regulations, a reference to a form by number is a reference to the form so numbered in Schedule 2.
omit paragraph 350 (b)
insert paragraph 350 (1) (b)
omit paragraph 350 (b)
insert paragraph 350 (1) (b)
insert
1.0.05A Lodgment with ASIC
(1) For the definition of
lodge with ASIC in section 761A of the Act, the definition relates to each provision of Chapter 7 of the Act that includes the expressionlodge with ASIC .(2) For paragraph 1364 (2) (c) of the Act:
(a) a statement that is to be given to ASIC in accordance with subsection 912C (1) of the Act may be lodged with ASIC in the prescribed form; and
(b) a report that is to be given to ASIC in accordance with subsection 912D (1) of the Act may be lodged with ASIC in the prescribed form; and
(c) written notice that is to be given to ASIC in accordance with subsection 912D (2) of the Act may be lodged with ASIC in the prescribed form; and
(d) information that is to be given to ASIC in accordance with subsection 912E (2) of the Act may be lodged with ASIC in the prescribed form; and
(e) information that is to be provided to ASIC in accordance with paragraph 913B (1) (ca) of the Act may be lodged with ASIC in the prescribed form.
substitute
(i) subject to regulation 7.6.03:
(A) the ACN, ARBN or ARSN of the corporation or managed investment scheme; or
(B) if the last 9 digits of its ABN are the same, and in the same order, as the last 9 digits of its ACN, ARBN or ARSN (if the corporation or managed investment scheme has an ACN, ARBN or ARSN) — its ABN; and
substitute
(b) paragraphs 12 (2) (b) and (c) of the Act.
insert
1.0.22 Territorial application of Act For subsection 5 (9) of the Act, each of the external Territories is included in this jurisdiction for the purposes of Chapter 7 of the Act (other than Parts 7.2 to 7.5 and Part 7.11) in relation to:
(a) a superannuation product within the meaning of section 761A of the Act; and
(b) an RSA product within the meaning of section 761A of the Act; and
(c) a financial service that relates to a superannuation product within the meaning of section 761A of the Act; and
(d) a financial service that relates to an RSA product within the meaning of section 761A of the Act.
omit
substitute
2C.1.01 Prescribed financial market (Act s 170 (3)) For subsection 170 (3) of the Act,
prescribed financial market means any of the following:
(a) Australian Stock Exchange Limited;
(b) Bendigo Stock Exchange Ltd;
(c) Stock Exchange of Newcastle Limited.
omit
omit subsection 601DH (1) of the Corporations Law
insert subsection 601DH (1) of the Act
insert
Part 6.5 The takeover procedure
6.5.01 Wholesale holders For paragraph 648J (4) (a) of the Act, $500 000 is specified in relation to an investment-based product.
Note Under subsection 648J (7) of the Act, a holder of securities is awholesale holder if the value of the securities equals or exceeds the amount specified in the regulations made for the purposes of paragraph 648J (7) (a).
Part 6.6 Variation of offers
6.6.01 Right to withdraw acceptance
(1) For paragraph 650E (3) (a) of the Act, a notice under paragraph 650E (2) (a) of the Act relating to securities entered on a register or subregister of a prescribed CS facility must be in a form approved by the operating rules of that prescribed CS facility for Part 6.6 of the Act (which may include an electronic form).
(2) For paragraph 650E (4) (a) of the Act, if securities are entered on a register or subregister of a prescribed CS facility, a person to whom section 650E of the Act applies must take the action that the operating rules of the prescribed CS facility require in relation to the return of the securities.
(3) For paragraph 650E (5) (a) of the Act, if a person withdraws an acceptance of an offer, the bidder must take any action that the operating rules of the prescribed CS facility require in relation to any of the securities:
(a) to which the acceptance relates; and
(b) that are entered on a register or subregister of the prescribed CS facility.
Part 6.8 Acceptances
6.8.01 Acceptance of offers made under off-market bid For paragraph 653A (b) of the Act, if the operating rules of a prescribed CS facility require an acceptance of an offer to which paragraph 653A (a) applies to be made in a particular way, to the extent that the acceptance relates to the securities in the offer, the acceptance must be made in that way.
6.8.02 Acceptances by transferees and nominees of offers made under off-market bid For paragraph 653B (4) (a) of the Act, a notice relating to securities entered on a register or subregister of a prescribed CS facility must be in a form approved by the operating rules of the prescribed CS facility for Part 6.8 of the Act (which may include an electronic form).
insert
Chapter 6A Compulsory acquisitions and buy-outs
Part 6A.1 Compulsory acquisitions and buy-outs after takeover bid
6A.1.01 Terms on which securities to be acquired For paragraph 661C (4) (a) of the Act, an election relating to securities entered on an electronic register or subregister of a prescribed CS facility must be in an electronic form approved by the operating rules of the prescribed CS facility.
6CA.1.01 Continuous disclosure: other disclosing entities For paragraph 675 (2) (d) of the Act, the disclosure of information under section 675 of the Act is not required if:
(a) the information is confidential; or
(b) the disclosure of the information would contravene a law; or
(c) the information is about a matter of supposition; or
(d) the information is not definite enough to make disclosure appropriate; or
(e) the information relates to an incomplete proposal or a matter that is in the course of negotiation; or
(f) the information was prepared or created for the internal management purposes of the entity; or
(g) the information is a trade secret; or
(h) a reasonable person would not expect the information to be disclosed.
insert
6D.2.03 Sophisticated investors
(1) For subparagraph 708 (8) (c) (i) of the Act, $2.5 million is specified.
(2) For subparagraph 708 (8) (c) (ii) of the Act, $250 000 is specified.
Note Under subsection 708 (8) of the Act, an offer of a body’s securities does not need disclosure to investors under Part 6D.2 of the Act if it appears from a certificate given by a qualified accountant no more than 6 months before the offer is made that the person to whom the offer is made:(a) has net assets of at least the amount specified in regulations made for the purposes of subparagraph 708 (8) (c) (i); or
(b) has a gross income for each of the last 2 financial years of at least the amount specified in regulations made for the purposes of subparagraph 708 (8) (c) (ii).
substitute
Chapter 7 Financial services and markets
Part 7.1 Preliminary
Division 1 General
7.1.01 Prescribed financial market operators For the definition of
prescribed financial market in section 9 of the Act, the following market operators are prescribed:
(a) Australian Stock Exchange Limited;
(b) Bendigo Stock Exchange Ltd;
(c) Stock Exchange of Newcastle Limited.
7.1.02 Participant For subparagraph (b) (vi) of the definition of
participant in section 761A of the Act, section 792A of the Act is prescribed.
7.1.03 Prescribed CS facility For the definition of
prescribed CS facility in section 761A of the Act, ASX Settlement and Transfer Corporation Pty Limited (also known as ‘ASTC’) is a prescribed CS facility.
7.1.04 Derivatives
(1) For paragraph 761D (1) (b) of the Act, the prescribed period is:
(a) for a spot foreign exchange contract — 2 business days; and
(b) in any other case — 1 business day.
(2) For subsection 761D (2) of the Act, an arrangement is declared to be a derivative if the following conditions are satisfied in relation to the arrangement:
(a) the arrangement is not a spot foreign exchange contract;
(b) under the arrangement, a party to the arrangement must, or may be required to,provide at some future time (which may be less than 1 day after the arrangement is entered into) consideration of a particular kind or kinds to someone;
(c) the amount of the consideration, or the value of the arrangement, is ultimately determined, derived from or varies by reference to (wholly or in part) the value or amount of something else (of any nature whatsoever and whether or not deliverable), including, for example, one or more of the following:
(i) an asset;
(ii) a rate (including an interest rate or exchange rate);
(iii) an index;
(iv) a commodity.
(3) In this regulation:
spot foreign exchange contract means a foreign exchange arrangement involving the provision, at some future time, of consideration that is determined by reference to an exchange rate on the day the arrangement is entered into.
7.1.05 Specific things that are not financial products: superannuation interests For paragraph 765A (1) (q) of the Act, an exempt public sector superannuation scheme within the meaning of the SIS Act is prescribed.
7.1.06 Specific things that are not financial products: credit facility
(1) For subparagraph 765A (1) (h) (i) of the Act, each of the following is a
credit facility :
(a) the provision of credit:
(i) for any period; and
(ii) with or without prior agreement between the credit provider and the debtor; and
(iii) whether or not both credit and debit facilities are available;
(b) a facility:
(i) known as a bill facility; and
(ii) under which a credit provider provides credit by accepting, drawing, discounting or indorsing a bill of exchange or promissory note;
(c) the provision of credit by a pawnbroker in the ordinary course of a pawnbroker’s business (being a business which is being lawfully conducted by the pawnbroker);
(d) the provision of credit by the trustee of the estate of a deceased person by way of an advance to a beneficiary or prospective beneficiary of the estate;
(e) the provision of credit by an employer, or a related body corporate of an employer, to an employee or former employee (whether or not it is provided to the employee or former employee with another person);
(f) the provision of a mortgage that secures obligations under a credit contract (other than a lien or charge arising by operation of any law or by custom);
(g) a guarantee related to a mortgage mentioned in paragraph (f);
(h) a guarantee of obligations under a credit contract.
(2) The provision of consumer credit insurance that includes a contract of general insurance for the
Insurance Contracts Act 1984 is not a credit facility.(3) In this regulation:
credit means a contract, arrangement or understanding:
(a) under which:
(i) payment of a debt owed by one person (a
debtor ) to another person (acredit provider ) is deferred; or(ii) one person (a
debtor ) incurs a deferred debt to another person (acredit provider ); and(b) including any of the following:
(i) any form of financial accommodation;
(ii) a hire purchase agreement;
(iii) credit provided for the purchase of goods or services;
(iv) a contract, arrangement or understanding for the hire, lease or rental of goods or services, other than a contract, arrangement or understanding under which:
(A) full payment is made before or when the goods or services are provided; and
(B) for the hire, lease or rental of goods — an amount at least equal to the value of the goods is paid as a deposit in relation to the return of the goods;
(v) an article known as a credit card or charge card;
(vi) an article, other than a credit card or a charge card, intended to be used to obtain cash, goods or services;
(vii) an article, other than a credit card or a charge card, commonly issued to customers or prospective customers by persons who carry on business for the purpose of obtaining goods or services from those persons by way of a loan;
(viii) a liability in respect of redeemable preference shares;
(ix) a financial benefit arising from or as a result of a loan;
(x) assistance in obtaining a financial benefit arising from or as a result of a loan;
(xi) issuing, indorsing or otherwise dealing in a promissory note;
(xii) drawing, accepting, indorsing or otherwise dealing in a negotiable instrument (including a bill of exchange);
(xiii) granting or taking a lease over real or personal property;
(xiv) a letter of credit.
7.1.07 Specific things that are not financial products: surety bonds For paragraph 765A (1) (y) of the Act, a surety bond is not a financial product.
7.1.08 Specific things that are not financial products: bank drafts For paragraph 765A (1) (y) of the Act, a bank draft, including (but not limited to):
(a) a cheque drawn by a financial institution on itself; or
(b) a cheque drawn by a financial institution on a financial institution other than itself;
is not a financial product.
7.1.09 Obligations related to clearing and settlement facility For paragraph 768A (1) (b) of the Act, the following obligations are prescribed:
(a) each obligation arising from a contract to transfer a financial product mentioned in paragraph 764A (1) (a) of the Act;
(b) each obligation arising from a contract to transfer a financial product mentioned in paragraph 764A (1) (b) of the Act;
(c) each obligation arising from acquiring or providing a financial product mentioned in paragraph 764A (1) (c) of the Act;
(d) each obligation arising from a contract to transfer a financial product mentioned in paragraph 764A (1) (j) of the Act;
(e) each obligation arising from a contract to transfer a financial product mentioned in paragraph 764A (1) (ba) of the Act.
7.1.10 Conduct that does not constitute operating a clearing and settlement facility
(1) For paragraph 768A (2) (i) of the Act, the conduct of TNS Clearing Pty Limited in becoming the legal counterparty to a broker-to-broker trade in quoted securities that is executed on the financial market known as the Australian Stock Exchange in the course of novation does not constitute operating a
clearing and settlement facility .(2) For paragraph 768A (2) (i) of the Act, the conduct of:
(a) the Stock Exchange of Newcastle Limited, or an agent of that body; or
(b) a participant of the Stock Exchange of Newcastle Limited, or an agent of the participant; or
(c) Bendigo Stock Exchange Limited, or an agent of that body; or
(d) a participant of the Bendigo Stock Exchange Limited, or an agent of the participant;
in operating a facility in accordance with the operating rules of a licensed market does not constitute operating a
clearing and settlement facility if the requirements of subregulation (3) are met.
(3) For subregulation (2), the requirements are:
(a) the market licensee must have, and must be responsible for enforcing, operating rules that apply to a participant of the licensed market in relation to the participant’s obligations arising from transactions carried out on the licensed market; and
(b) a participant mentioned in paragraph (a), or an agent of the participant appointed in accordance with the operating rules of the licensed market, must be responsible for fulfilling the obligations owed to another participant or agent arising from transactions carried out on the licensed market; and
(c) the market licensee is not the operator of any other clearing and settlement facility; and
(d) each participant of the licensed market is not the operator of any other clearing and settlement facility; and
(e) each agent of a participant of the licensed market is not the operator of any other clearing and settlement facility.
(4) In this regulation:
novation means the replacement of a contract (theoriginal contract ) between the buyer and seller of financial products with:
(a) a contract between the buyer and TNS Clearing Pty Limited in the same terms as the original contract; and
(b) a second contract between the seller and TNS Clearing Pty Limited in the same terms as the original contract.
Division 2 Retail clients and wholesale clients
7.1.11 Meaning of retail client and wholesale client : motor vehicle insurance product
(1) For subparagraph 761G (5) (b) (i) of the Act, a
motor vehicle insurance product is a contract that provides insurance cover (whether or not the cover is limited or restricted in any way) in respect of one or more of the following:
(a) loss of, or damage to, a motor vehicle;
(b) liability for loss of, or damage to, property caused by or resulting from impact of a motor vehicle with some other thing.
(2) A motor vehicle insurance product does not include:
(a) insurance to or in relation to which the
Marine Insurance Act 1909 applies; or(b) insurance entered into, or proposed to be entered into, for the purposes of a law (including a law of a State or Territory) that relates to:
(i) workers’ compensation; or
(ii) compulsory third party compensation.
(3) In this regulation:
motor vehicle means a vehicle that is designed:
(a) to travel by road; and
(b) to use volatile spirit, steam, gas, oil, electricity or any other power (not being human power or animal power) as its principal means of propulsion; and
(c) to carry passengers;
and includes a motor cycle.
(4) However, a motor vehicle does not include:
(a) an omnibus; or
(b) a tram; or
(c) a motor vehicle the carrying capacity of which exceeds 2 tonnes.
7.1.12 Meaning of retail client and wholesale client : home building insurance product
(1) For subparagraph 761G (5) (b) (ii) of the Act, a
home building insurance product is a contract that provides insurance cover (whether or not the cover is limited or restricted in any way) in respect of destruction of or damage to a home building.(2) A home building insurance product does not include insurance entered into, or proposed to be entered into, for the purposes of a law (including a law of a State or Territory) that relates to building or construction work in relation to a home building.
(3) In this regulation:
home building means:
(a) a building used, or intended to be used, principally and primarily as a place of residence; and
(b) out-buildings, fixtures and structural improvements used for domestic purposes, being purposes related to the use of the principal residence;
on the site and, without limiting the generality of the expression, includes:
(c) fixed wall coverings, fixed ceiling coverings and fixed floor coverings (other than carpets); and
(d) services (whether underground or not) that are the property of the insured or that the insured is liable to repair or replace or pay the cost of repairing and replacing; and
(e) fences and gates wholly or partly on the site.
site , in relation to a building, means the site specified in the relevant contract of insurance as the site on which the building is situated.
(4) A home building does not include:
(a) a hotel; or
(b) a motel; or
(c) a boarding house; or
(d) a building that:
(i) is in the course of construction; and
(ii) is being constructed by the insured, or an intending insured, in the course of a construction business; or
(e) a temporary building or structure or a demountable or moveable structure; or
(f) a caravan (whether fixed to the site or not).
7.1.13 Meaning of retail client and wholesale client : home contents insurance product
(1) For subparagraph 761G (5) (b) (iii) of the Act, a
home contents insurance product is a contract that provides insurance cover (whether or not the cover is limited or restricted in any way) in respect of loss of or damage to the contents of a residential building.(2) A home contents insurance product does not include:
(a) insurance to or in relation to which the
Marine Insurance Act 1909 applies; or(b) insurance entered into, or proposed to be entered into, for the purposes of a law (including a law of a State or Territory) that relates to:
(i) workers’ compensation; or
(ii) compulsory third party compensation.
(3) In this regulation:
contents , in relation to a residential building, means any of the following items:
(a) furniture, furnishings and carpets (whether fixed or unfixed);
(b) household goods;
(c) clothing and other personal effects;
(d) a picture;
(e) a work of art;
(f) a fur;
(g) a piece of jewellery;
(h) a gold or silver article;
(i) a document of any kind;
(j) a collection of any kind;
(k) swimming pools that:
(i) are not fixtures; and
(ii) are owned by the insured or by a member of the insured’s family ordinarily residing with the insured;
but does not include an article or thing to which the definition of
residential building applies.
residential building means:
(a) a building used principally and primarily as a place of residence on the site; and
(b) out-buildings used for domestic purposes, being purposes related to the use of the principal residence on the site.
(4) A residential building does not include:
(a) a hotel; or
(b) a motel; or
(c) a boarding house; or
(d) a building that is in the course of construction; or
(e) a temporary building or structure or a demountable or moveable structure.
7.1.14 Meaning of retail client and wholesale client : sickness and accident insurance product
(1) For subparagraph 761G (5) (b) (iv) of the Act, a
sickness and accident insurance product is a contract that has either of the following characteristics:
(a) the contract provides insurance cover (whether the cover is limited or restricted in any way) in respect of the insured person contracting a sickness or disease or a specified sickness or disease or sustaining an injury or a specified injury;
(b) if the insured person dies as a result of the sickness, disease or injury, the contract provides insurance cover (whether the cover is limited or restricted in any way) in respect of the death.
(2) A sickness and accident insurance product does not include:
(a) sickness and accident policies which are guaranteed ‘renewable’ at the option of the insured or where the insurer guarantees not to cancel the policy in response to a change in the risk where such a policy has been effected for a predetermined period of years in excess of 1 year; or
(b) insurance to or in relation to which the
Marine Insurance Act 1909 applies; or(c) insurance entered into, or proposed to be entered into, for the purposes of a law (including a law of a State or Territory) that relates to:
(i) workers’ compensation; or
(ii) compulsory third party compensation.
7.1.15 Meaning of retail client and wholesale client : consumer credit insurance product
(1) For subparagraph 761G (5) (b) (v) of the Act, a
consumer credit insurance product is a contract that has the following characteristics:
(a) the contract provides insurance cover (whether the cover is limited or restricted in any way) in respect of:
(i) the death of the insured person; or
(ii) the insured person contracting a sickness or disease; or
(iii) the insured person sustaining an injury; or
(iv) the insured person becoming unemployed;
(b) the amount of the liability of the insurer under the contract is to be ascertained by reference to a liability of the insured person under a specified agreement to which the insured person is a party.
(2) A consumer credit insurance product does not include:
(a) insurance to or in relation to which the
Marine Insurance Act 1909 applies; or(b) insurance entered into, or proposed to be entered into, for the purposes of a law (including a law of a State or Territory) that relates to:
(i) workers’ compensation; or
(ii) compulsory third party compensation.
7.1.16 Meaning of retail client and wholesale client : travel insurance product
(1) For subparagraph 761G (5) (b) (vi) of the Act, a
travel insurance product is a contract that provides insurance cover (whether or not the cover is limited or restricted in any way) in respect of one or more of the following:
(a) financial loss in respect of:
(i) fares for any form of transport to be used; or
(ii) accommodation to be used;
in the course of the specified journey in the event that the insured person does not commence or complete the specified journey;
(b) loss of or damage to personal belongings that occurs while the insured person is on the specified journey;
(c) a sickness or disease contracted or an injury sustained by the insured person while on the specified journey;
(d) loss, damage or compensation for an event occurring to the insured person during a specified journey that ordinarily forms a part of insurance commonly regarded as travel insurance, including
(i) loss of cash or credit cards; and
(ii) legal liability; and
(iii) hijack; and
(iv) kidnap; and
(v) ransom.
(2) A travel insurance product does not include:
(a) insurance to or in relation to which the
Marine Insurance Act 1909 applies; or(b) insurance entered into, or proposed to be entered into, for the purposes of a law (including a law of a State or Territory) that relates to:
(i) workers’ compensation; or
(ii) compulsory third party compensation.
(3) In this regulation:
specified journey means a journey in relation to which insurance cover is provided by the contract.
7.1.17 Meaning of retail client and wholesale client : personal and domestic property insurance product
(1) For subparagraph 761G (5) (b) (vii) of the Act, a
personal and domestic property insurance product is a contract that provides insurance cover (whether or not the cover is limited or restricted in any way) in respect of loss or damage to property that is:
(a) wholly or predominantly used for personal, domestic or household purposes by:
(i) the insured; or
(ii) a relative of the insured; or
(iii) any person with whom the insured resides; and
(b) ordinarily used for that purpose.
(2) A personal and domestic property insurance product does not include:
(a) insurance to or in relation to which the
Marine Insurance Act 1909 applies; or(b) insurance entered into, or proposed to be entered into, for the purposes of a law (including a law of a State or Territory) that relates to:
(i) workers’ compensation; or
(ii) compulsory third party compensation.
(3) In this regulation:
property includes any of the following:
(a) moveables;
(b) valuables;
(c) a caravan or mobile home;
(d) an on-site mobile home;
(e) a trailer;
(f) a marine pleasure craft;
(g) a horse;
(h) a domestic pet;
(i) a mobile phone.
relative means any of the following relatives of an insured person:
(a) mother;
(b) step-mother;
(c) father;
(d) step-father;
(e) brother;
(f) half-brother;
(g) sister;
(h) half-sister;
(i) spouse (including defacto spouse);
(j) son;
(k) step-son;
(l) adopted son;
(m) daughter;
(n) step-daughter;
(o) adopted daughter;
(p) grandparent;
(q) grandchild;
(r) nephew;
(s) niece;
(t) uncle;
(u) aunt;
(v) mother-in-law;
(w) father-in-law.
(4) For paragraph (1) (b), property is taken to be intended to be used ordinarily for personal, domestic or household purposes if the insured signs a written statement that the property is intended to be used ordinarily for 1 or more of those purposes.
7.1.18 Retail clients and wholesale clients: price of investment-based financial products
(1) This regulation makes arrangements about the price for the provision of an investment-based financial product.
Note Under paragraph 761G (7) (a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA product, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.
Under paragraph 761G (10) (a) of the Act, the regulations may also deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products.
In general, the ‘price’ of a product will be the amount that is paid to acquire or be issued with the financial product. The test for the price of the product in paragraph 761G (7) (a) of the Act will be determined at or before the time the client acquires, or is issued with, the financial product. If a client pays over $500 000 to acquire or be issued with the financial product, the client will be a wholesale client in respect of the product.
Price
(2) For paragraph 761G (7) (a) of the Act, the amount applicable in relation to an investment-based financial product is $500 000.
Working out price: general rule
(3) For paragraph 761G (10) (a) of the Act, the price of an investment-based financial product:
(a) is the amount that is paid or payable to acquire or purchase the investment-based financial product; and
(b) does not include any amount paid for or in respect of the investment-based financial product following its issue or acquisition unless the issue or acquisition would not have taken place without an arrangement to pay the amount.
Note An amount deposited in a deposit account will not generally be regarded as part of the ‘price’ paid to acquire or purchase the financial product.
(4) For subregulation (3), in calculating any amount payable or paid to acquire or purchase the investment-based financial product:
(a) disregard any amount payable to the extent to which it is to be paid out of money lent by:
(i) the person offering the investment-based financial product; or
(ii) an associate of that person; and
(b) disregard any amount paid to the extent to which it was paid out of money lent by:
(i) the person offering the investment-based financial product; or
(ii) an associate of that person; and
(c) include any amount paid or payable to cover:
(i) fees or charges that are paid to the issuer or any other person that relates to the issue of the investment-based financial product; and
(ii) fees or charges that are paid to the issuer or any other person that relates to the issue of the investment-based financial product; and
(d) despite paragraph (c), disregard any amount of remuneration or other benefits paid or payable to a person for the provision of financial product advice or other related services provided directly to:
(i) the client; or
(ii) another person acting on behalf of the client.
Group products
(5) If the investment-based financial product is a group product covered by section 1012H of the Act:
(a) the amount in subregulation (2) is to be used to determine the status of each person who elects, or may elect, to be covered by the investment-based financial product; and
(b) subregulation (3) is to be used to determine the amount to be paid for the person to be covered by the investment-based financial product.
7.1.19 Retail clients and wholesale clients: value of investment-based financial products
(1) This regulation makes arrangements about the value of an investment-based financial product to which a financial service relates.
Note Under paragraph 761G (7) (a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA product, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.Under paragraph 761G (10) (a) of the Act, the regulations may also deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products.
In general, the ‘value’ of a product will be the amount that the product is worth once it is issued or acquired by the client. It is anticipated that the test for the value of the product in paragraph 761G (7) (a) of the Act will usually be used to assess a client’s status as a retail or wholesale client at or before the time that a financial service (eg financial product advice, disposal of the product) is provided to the client in respect of an existing product.
Value
(2) For paragraph 761G (7) (a) of the Act, the amount applicable in relation to an investment-based financial product is $500 000.
Working out value: general rule
(3) For paragraph 761G (10) (a) of the Act, the value of an investment-based financial product on a day is:
(a) if the financial product is a security, or a financial product under paragraph 764A (1) (j) of the Act — the market value of the investment-based financial product; or
(b) if paragraph (a) does not apply — the amount of money that stands to the client’s credit in relation to that investment-based financial product.
(4) For subregulation (3), in calculating the value of an investment-based financial product:
(a) disregard any amount standing to the client’s credit in relation to the investment-based financial product to the extent that it is to be paid, or was paid, out of money lent by:
(i) the person offering the investment-based financial product; or
(ii) an associate of that person; and
(b) disregard any amount of fees or charges:
(i) that the product issuer has an actual or accrued right to deduct, or otherwise to have access to, from the value of the investment-based financial product (whether or not the amount has been deducted); or
(ii) that has accrued as at the time that the client’s status as a retail or wholesale client is assessed.
Cumulative value of products
(5) If, at a single point in time:
(a) a financial service that is being provided to a client is:
(i) financial product advice; or
(ii) arranging for a person to engage in conduct in accordance with subsection 766C (2) of the Act; and
(b) the financial service is provided in respect of:
(i) more than 1 investment-based financial product; or
(ii) more than 1 income financial stream financial product; or
(iii) a combination of investment-based financial products and income financial stream financial products; and
(c) either:
(i) the total price for the provision of those financial products is at least $500 000; or
(ii) the price or value of all of those financial products is at least $500 000;
the value of the financial products is taken, for subregulation (3), to be greater than the amount mentioned in subregulation (2).
(6) Subregulation (5) does not affect the operation of Part 7.9 of the Act, and Part 7.9 of these Regulations, to the extent that they require the provision of a Product Disclosure Statement in relation to the financial product advice.
Note Although the effect of subregulation (5) is that the value of the investment-based financial products is taken to be at least $500 000 in the circumstances mentioned in that subregulation, a client must still be provided with appropriate product disclosure and other requirements in accordance with Part 7.9 of the Act as a retail client in relation to a particular investment-based financial product where the price of the product is less than $500 000.In any situation in which a Product Disclosure Statement would be required for a retail client (the situations described in Subdivision B of Division 2 of Part 7.9 of the Act), the limit of $500 000 must be reached for any single investment-based financial product, or income stream financial product, before the client will be treated as a wholesale client.
Group products
(7) If the investment-based financial product is a group product covered by subsection 1012H (1) of the Act:
(a) the amount in subregulation (2) is to be used to determine the status of each person who elects, or may elect, to be covered by the investment-based financial product; and
(b) subregulation (3) is to be used to determine the value of the investment-based financial product to the extent that it stands, or will stand, to the credit of, each person who elects, or may elect, to be covered by the investment-based financial product.
Time of assessment
(8) If a financial services provider needs to assess the status of a client as either retail or wholesale at a particular time in order to ensure that the client complies with the Act, or for any related purpose, the value of a financial product may be assessed at any time, whether or not a financial service is being provided at that time in relation to that product.
Note Subregulation (8) will ensure that a provider of financial services may assess a client’s status at any time (for example, the provider may need to ascertain whether a periodic statement must be sent to the client under section 1017D of the Act because the client is a retail client).
7.1.20 Retail clients and wholesale clients: price of income stream financial products
(1) This regulation makes arrangements about the price for the provision of an income stream financial product.
Note Under paragraph 761G (7) (a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA product, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.Under paragraph 761G (10) (a) of the Act, the regulations may also deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products.
In general, the ‘price’ of a product will be the amount that is paid to acquire or be issued with the financial product. The test for the price of the product in paragraph 761G (7) (a) of the Act will be determined at or before the time the client acquires, or is issued with, the financial product. If a client pays over $500 000 to acquire or be issued with the financial product, the client will be a wholesale client in respect of the product.
Price
(2) For paragraph 761G (7) (a) of the Act, the amount applicable in relation to an income stream financial product is $500 000.
Working out price: general rule
(3) The price of an income stream financial product:
(a) is the amount that is paid or payable to acquire or purchase the income stream financial product; and
(b) does not include any amount paid for or in respect of the income stream financial product following its issue or acquisition unless the issue or acquisition would not have taken place without an arrangement to pay the amount.
Note Additional amounts contributed to an allocated annuity will not generally be regarded as part of the ‘price’ paid to acquire or purchase the financial product.
(4) For subregulation (3), in calculating any amount payable or paid to acquire or purchase the income stream financial product:
(a) disregard any amount payable to the extent to which it is to be paid out of money lent by:
(i) the person offering the income stream financial product; or
(ii) an associate of that person; and
(b) disregard any amount paid to the extent to which it was paid out of money lent by:
(i) the person offering the income stream financial product; or
(ii) an associate of that person; and
(c) include any amount paid or payable to cover:
(i) fees or charges that are paid to the issuer or any other person that relates to the issue of the income stream financial product; and
(ii) fees or charges that are paid to the issuer or any other person that relates to the issue of the income stream financial product; and
(d) despite paragraph (c), disregard any amount of remuneration or other benefits paid or payable to a person for the provision of financial product advice or other related services provided directly to:
(i) the client; or
(ii) another person acting on behalf of the client.
7.1.21 Retail clients and wholesale clients: value of income stream financial products
(1) This regulation makes arrangements about the value of an income stream financial product.
Note Under paragraph 761G (7) (a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA product, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.Under paragraph 761G (10) (a) of the Act, the regulations may also deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products.
In general, the ‘value’ of a product will be the amount that the product is worth once it is issued or acquired by the client. It is anticipated that the test for the value of the product in paragraph 761G (7) (a) of the Act will usually be used to assess a client’s status as a retail or wholesale client at or before the time that a financial service (eg financial product advice, disposal of the product) is provided to the client in respect of an existing product.
Value
(2) For paragraph 761G (7) (a) of the Act, the amount applicable in relation to an income stream financial product is $500 000.
Working out value: general rule
(3) For paragraph 761G (10) (a) of the Act, the value of an income stream product is the amount worked out in accordance with any of the following paragraphs:
(a) if the terms of the income stream financial product provide for the calculation of a commutation value — the commutation value;
(b) if the terms of the income stream financial product do not permit commutation — the minimum commutation amount calculated in accordance with ordinarily accepted actuarial standards;
(c) if the income stream financial product is of a kind in relation to which money stands to the client’s credit for the income stream financial product — the amount of money standing to the client’s credit.
(4) For subregulation (3), in calculating the value of an income stream financial product:
(a) disregard any amount standing to the client’s credit in relation to the income stream financial product to the extent that it is to be paid, or was to be paid, out of money lent by:
(i) the person offering the income stream financial product; or
(ii) an associate of that person; and
(b) disregard any amount of fees or charges:
(i) that the product issuer has an actual or accrued right to deduct from the value of the income stream financial product (whether or not the amount has been deducted); or
(ii) that has accrued as at the time that the client’s status as a retail or wholesale client is assessed.
(5) If it is not reasonably practicable to ascertain an amount in accordance with subregulation (3), the value of the income stream product is an amount calculated as follows:
(a) identify the price for the provision of the income stream;
(b) subtract the total of any amounts paid out of the income stream (including any regular payments and any capital amounts);
(c) subtract an amount representing the reasonable administrative fees or other expenses of the issuer (including any costs or fees relating to the product that were disclosed to the client at or before the time the product was issued);
(d) add interest on:
(i) the amount paid for the income stream financial product; or
(ii) an amount, or a reasonable notional amount, representing the value of the income stream financial product;
based on movements in the rate of the All Groups Consumer Price Index number (being the weighted average of the 8 Australian capital cities) published by the Australian Statistician.
Group products
(6) If the income stream financial product is a group product covered by subsection 1012H (1) of the Act:
(a) the amount in subregulation (2) is to be used to determine the status of each person who elects, or may elect, to be covered by the income stream financial product; and
(b) subregulation (3) is to be used to determine the value of the income stream financial product to the extent that it stands, or will stand, to the credit of, each person who elects, or may elect, to be covered by the income stream financial product.
Time of assessment
(7) If a financial services provider needs to assess the status of a client as either retail or wholesale at a particular time in order to ensure that the client complies with the Act, or for any related purpose, the value of a financial product may be assessed at any time, whether or not a financial service is being provided at that time in relation to that product.
Note Subregulation (7) will ensure that a provider of financial services may assess a client’s status at any time (for example, the provider may need to ascertain whether a periodic statement must be sent to the client under section 1017D of the Act because the client is a retail client).
7.1.22 Retail clients and wholesale clients: value of derivatives
(1) This regulation makes arrangements about the value of a derivative:
(a) that is a financial product under section 761A of the Act; and
(b) to which section 765A of the Act does not apply.
Note Under paragraph 761G (7) (a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA product, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.Under paragraph 761G (10) (a) of the Act, the regulations may also deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products.
Value
(2) For paragraph 761G (7) (a) of the Act:
(a) the amount applicable in relation to a single derivative is $100 000; and
(b) if the derivative is included in 2 or more related financial products, the amount applicable in relation to the related financial products is $500 000.
Working out value: general rule
(3) For paragraph 761G (10) (a) of the Act, the value of a derivative is the face value, or the notional amount in respect of, the financial product (in dollar terms) as at the date on which the relevant arrangement is entered into by the parties.
Time of assessment
(4) If a financial services provider needs to assess the status of a client as either retail or wholesale at a particular time in order to ensure that the client complies with the Act, or for any related purpose, the value of a financial product may be assessed at any time, whether or not a financial service is being provided at that time in relation to that product.
Note Subregulation (4) will ensure that a provider of financial services may assess a client’s status at any time (for example, the provider may need to ascertain whether ongoing disclosure of a significant event must be sent to the client under section 1017B of the Act because the client is a retail client).
7.1.23 Retail clients and wholesale clients: price of non-cash payment financial products
(1) This regulation makes arrangements about the price for the provision of a non-cash payment financial product.
Note Under paragraph 761G (7) (a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA product, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.
In general, the ‘price’ of a product will be the amount that is paid to acquire or be issued with the financial product. The test for the price of the product in paragraph 761G (7) (a) of the Act will be determined at or before the time the client acquires, or is issued with, the financial product. If a client pays over $500 000 to acquire or be issued with the financial product, the client will be a wholesale client in respect of the product.
Price
(2) For paragraph 761G (7) (a) of the Act, the amount applicable in relation to a non-cash payment financial product is $500 000.
Working out price: general rule
(3) The price of a non-cash payment financial product:
(a) is the amount that is paid or payable to acquire or purchase the non-cash payment financial product; and
(b) does not include any amount paid for or in respect of the non-cash payment financial product following its issue or acquisition unless the issue or acquisition would not have taken place without an arrangement to pay the amount.
Note Additional amounts paid into a smart card or cheque account after its issue will not generally be regarded as part of the ‘price’ paid to acquire or purchase the financial product.
(4) For subregulation (3), in calculating any amount payable or paid to acquire or purchase the non-cash payment financial product:
(a) include any amount paid or payable to cover:
(i) fees or charges that are paid to the issuer or any other person that relates to the issue of the non-cash payment financial product; and
(ii) fees or charges that are paid to the issuer or any other person that relates to the issue of the non-cash payment financial product; and
(b) despite paragraph (a), disregard any amount of remuneration or other benefits paid or payable to a person for the provision of financial product advice or other related services provided directly to:
(i) the client; or
(ii) another person acting on behalf of the client.
7.1.24 Retail clients and wholesale clients: value of non-cash payment products
(1) This regulation makes arrangements about the value of a non-cash payment financial product to which a financial service relates.
Note Under paragraph 761G (7) (a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA product, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.In general, the ‘value’ of a product will be the amount that the product is worth once it is issued or acquired by the client. It is anticipated that the test for the value of the product in paragraph 761G (7) (a) of the Act will usually be used to assess a client’s status as a retail or wholesale client at or before the time that a financial service (eg financial product advice, disposal of the product) is provided to the client in respect of an existing product.
Value
(2) For paragraph 761G (7) (a) of the Act, the amount applicable in relation to a non-cash payment financial product is $500 000.
Working out value: general rule
(3) For paragraph 761G (10) (a) of the Act, the value of a non-cash payment financial product on a day is the amount of money that stands to the client’s credit in respect of that product.
(4) For subregulation (3), in calculating an amount of money, disregard any amount of fees or charges:
(a) that the product issuer has an actual or accrued right to deduct, or otherwise to have access to, from the value of the non-cash payment financial product (whether or not the amount has been deducted); or
(b) that has accrued as at the time that the client’s status as a retail or wholesale client is assessed.
Time of assessment
(5) If a financial services provider needs to assess the status of a client as either retail or wholesale at a particular time in order to ensure that the client complies with the Act, or for any related purpose, the value of a financial product may be assessed at any time, whether or not a financial service is being provided at that time in relation to that product.
Note Subregulation (5) will ensure that a provider of financial services may assess a client’s status at any time (for example, the provider may need to ascertain whether ongoing disclosure of a significant event must be sent to the client under section 1017B of the Act because the client is a retail client).
7.1.25 Retail clients and wholesale clients: life risk insurance and other risk-based financial products
(1) This regulation makes arrangements about the value of a risk-based financial product.
(2) Paragraph 761G (7) (a) of the Act does not apply to a risk-based financial product.
Note Under paragraph 761G (7) (a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA product, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.Under paragraph 761G (10) (a) of the Act, the regulations may also deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products.
Under paragraph 761G (10) (b) of the Act, the regulations may also modify the way in which paragraph 761G (7) (a) applies in particular circumstances.
7.1.26 Superannuation-sourced money For the purpose of assessing the price of a financial product, or the value of a financial product to which a financial service relates, under paragraph 761G (7) (a) of the Act, superannuation-sourced money is not to be counted if:
(a) the financial service provided to a person is:
(i) financial product advice; or
(ii) if the person was a retail client — the provision of a financial product in circumstances in which a Product Disclosure Statement would need to be given to the client under Part 7.9 of the Act (including section 1012A, 1012B, 1012C or 1012IA); and
(b) the financial product to which the financial service relates is a product other than a non-cash payment financial product; and
(c) the person who was the holder of the relevant superannuation interest in the regulated superannuation fund was or would have been a retail client under subsection 761G (6) of the Act if they had held or acquired the product after FSR commencement.
Example If:
(a) the price for an income stream financial product or an investment-based financial product is $700 000; and
(b) the client uses $400 000 of superannuation-sourced money and $300 000 of other funds;
then, unless the client is a wholesale client for another reason, the client will be a retail client due to the operation of paragraph 761G (7) (a) of the Act.
Note Under subsections 761G (5), (6) and (7) of the Act, general insurance products, superannuation products and RSA products are not financial products to which the restriction on counting superannuation-sourced money towards the price applies. This applies in addition to the exclusion for non-cash payment products under paragraph (b) of this regulation.
7.1.27 Retail clients and wholesale clients: effect of wholesale status
(1) For subsection 761G (10) of the Act if, at any time, the holder of a financial product is a wholesale client in relation to the product because of paragraph 761G (7) (a) of the Act:
(a) the holder is taken, on and after that time, to be a wholesale client in relation to the product as between the holder and the issuer of that product for the period during which the holder holds that product; and
(b) paragraph (a) applies whether or not the holder would, but for that paragraph, have otherwise been or become a retail client in relation to that product at some time.
(2) For subsection 761G (10) of the Act, if:
(a) a person is a wholesale client in relation to the product because of paragraph 761G (7) (a) or paragraph (1) (a); and
(b) another person becomes a holder of the financial product; and
(c) the issuer did not know, and could not reasonably be expected to have known:
(i) whether another person had become the holder of the financial product; or
(ii) whether any subsequent holder of the financial product was a retail client or a wholesale client;
the issuer is taken not to be guilty of any offence, or to be liable under civil penalty or civil liability provisions under the Act, merely because the issuer has not treated any subsequent holder of that financial product as a retail client.
7.1.28 Retail clients and wholesale clients: assets and income
(1) For subparagraph 761G (7) (c) (i) of the Act, $2.5 million is specified.
(2) For subparagraph 761G (7) (c) (ii) of the Act, $250 000 is specified.
Note Under paragraph 761G (7) (c) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA product, the product or service is provided to the person as a retail client unless:(a) the client is a wholesale client under paragraph 761G (7) (a), (b) or (d) of the Act; or
(b) the person who acquires the product or service gives the provider of the product or service, before the provision of the product or service, a copy of a certificate given within the preceding 6 months by a qualified accountant that states that the person:
(i) has net assets of at least the amount specified in regulations made for the purposes of subparagraph 761G (7) (c) (i) of the Act; or
(ii) has a gross income for each of the last 2 financial years of at least the amount specified in regulations made for the purposes of subparagraph 761G (7) (c) (ii) of the Act a year.
Division 3 When does a person provide a financial service?
7.1.29 Activities conducted by accountants
(1) For paragraph 766A (2) (b) of the Act, the following circumstances are circumstances in which a qualified accountant is taken not to provide a financial service within the meaning of paragraph 766A (1) (a) of the Act:
(a) advising in relation to the preparation or auditing of financial statements;
(b) advising or acting in the capacity of a controller, administrator, receiver, manager, liquidator or trustee in bankruptcy in relation to the administration (including the disposal) of an entity or estate;
(c) advising on the financing of the acquisition of assets that are not financial products (for example, advising on the advantages and disadvantages of financing alternatives such as leasing and hire purchase);
(d) advising on the processes for the establishment, structuring and operation of a superannuation fund within the meaning of the SIS Act;
(e) advising on debt management, including factoring, defeasance and the sale of debts;
(f) advising on taxation issues, including in relation to the taxation implications of financial products;
(g) advising on the management of risk associated with conducting a business, including risk management through the use of financial products (for example, hedging);
(h) advising on business planning, including advice in relation to the establishment, structuring and administration of a business;
(i) conducting a due diligence on a business;
(j) valuing the assets of, or shares in, a business, or part of that business.
(2) Subregulation (1) applies only if the service does not involve the qualified accountant making a recommendation, providing a statement of opinion, or giving a report of either of those things, that:
(a) is intended to influence a person in making a decision in relation to:
(i) a particular financial product; or
(ii) a class of financial products; or
(iii) an interest in a particular financial product; or
(iv) an interest in a class of financial products; or
(b) could reasonably be regarded as being intended to influence a person in that way.
(3) In this regulation:
business includes an incorporated entity and an unincorporated entity.
qualified accountant has the meaning given by section 88B of the Act.
Part 7.2 Licensing of financial markets
Division 1 Market licensees’ obligations
7.2.01 Obligation to inform ASIC of certain matters: contraventions of licence or Act For paragraph 792B (3) (b) of the Act, a matter to which that paragraph relates is any matter that, in the opinion of a market licensee, constitutes or may constitute a contravention of:
(a) a condition of a licence held by a financial services licensee; or
(b) Subdivision A or B of Division 2 of Part 7.8 of the Act; or
(c) Division 3 of Part 7.8 of the Act; or
(d) Subdivision B of Division 6 of Part 7.8 of the Act.
7.2.02 Obligation to inform ASIC of certain matters: becoming director, secretary or executive officer of market licensee
(1) This regulation applies if a person becomes a director, secretary or executive officer of a market licensee or of a holding company of a market licensee (including when the person changes from one of those positions to another).
(2) For subsection 792B (5) of the Act, the information to be given to ASIC by the market licensee is:
(a) the person’s name and contact details; and
(b) the date of appointment to the position; and
(c) the person’s educational qualifications and financial market experience; and
(d) if the market licensee is aware of any details of a conviction of the kind mentioned in subsection 206B (1) of the Act — the details; and
(e) whether the market licensee knows whether the person:
(i) is an undischarged bankrupt; or
(ii) has entered into a deed of arrangement or composition of a kind mentioned in subsections 206B (3) and (4) of the Act;
and, if the market licensee knows the information, details of what the market licensee knows.
7.2.03 Obligation to inform ASIC of certain matters: ceasing to be director, secretary or executive officer of market licensee
(1) For subsection 792B (5) of the Act, this regulation applies if a person ceases to be a director, secretary or executive officer of a market licensee or of a holding company of a market licensee (including when the person changes from one of those positions to another).
(2) The information to be given to ASIC by the market licensee is:
(a) the person’s name and contact details; and
(b) the position that the person held; and
(c) the date on which the person ceased to hold the position; and
(d) if the person ceases to be a director, secretary or executive officer because the person is changing from the position to another in the company, the new position; and
(e) if the reason for ceasing to hold the position is:
(i) because of a contravention of the Corporations Act or another law of a State or Territory; or
(ii) because the person has become an undischarged bankrupt;
details of the reason.
7.2.04 Obligation to inform ASIC of certain matters: voting power in market licensee
(1) This regulation applies if a market licensee becomes aware that a person has come to have, or has ceased to have, more than 15% of the voting power in the market licensee or in a holding company of the market licensee.
(2) For subsection 792B (5) of the Act, the information to be given to ASIC by the market licensee is:
(a) the person’s name and contact details; and
(b) if known by the market licensee, the date on which the person came to have, or ceased to have, more than 15% of the voting power; and
(c) if the market licensee knows the voting power that the person had immediately before the person came to have, or ceased to have, more than 15% of the voting power, that voting power; and
(d) whether the market licensee knows the manner in which the person came to have, or ceased to have, more than 15% of the voting power, and, if the market licensee knows the manner, details of what the market licensee knows.
7.2.05 Giving ASIC information about a listed disclosing entity
(1) For subsection 792C (2) of the Act, the following information is prescribed:
(a) a stock exchange automated trading system notification message;
(b) an Australian Stock Exchange voiceline announcement.
(2) In this regulation:
Australian Stock Exchange voiceline announcement means a message from the Australian Stock Exchange that is:
(a) spoken over an announcement system; and
(b) a summary of information lodged with the Australian Stock Exchange by a company or other entity that is included in the official list of a financial market.
Stock exchange automated trading system notification message means a brief message that is:
(a) transmitted to computer terminals of persons linked to the Stock Exchange Automated Trading System; and
(b) a summary of information lodged with the Australian Stock Exchange by a company or other entity that is included in the official list of a financial market.
7.2.06 Annual report of market licensee For subsection 792F (2) of the Act, if an annual report by a market licensee does not contain any of the following information, the information must accompany the annual report:
(a) a description of the activities the market licensee has undertaken in the financial year;
(b) the resources (including financial, technological and human resources) that the market licensee had available, and used, in order to ensure that it has complied with its obligations in Chapter 7 of the Act, and, in particular, the obligation contained in subparagraph 792A (c) (i) of the Act;
(c) an analysis of the extent to which the market licensee considers that the activities undertaken, and resources used, have resulted in full compliance with all its obligations under Chapter 7 of the Act.
Division 2 The market’s operating rules and procedures
7.2.07 Content of licensed market’s operating rules For subsection 793A (1) of the Act, the following matters are matters with which the operating rules of a licensed market must deal:
(a) access to the licensed market, including the criteria for determining persons who are eligible to be participants;
(b) ongoing requirements for participants, including:
(i) the conduct of participants in relation to the licensed market with the objective of promoting honesty and fair practice; and
(ii) requirements that facilitate the monitoring of participants’ conduct in relation to the licensed market, including the monitoring of their compliance with the operating rules; and
(iii) provision for the expulsion, suspension or disciplining of a participant for conduct in relation to the licensed market that is inconsistent with just and equitable principles in the transaction of business; and
(iv) provision for the expulsion, suspension or disciplining of a participant for breaches of the operating rules; and
(v) provision for the expulsion, suspension or disciplining of a participant for breaches of Chapter 7 of the Act, or regulations made under that Chapter; and
(vi) provision for the expulsion, suspension or disciplining of a participant for breach of a condition on the participant’s Australian financial services licence; and
(vii) provision for the expulsion, suspension or disciplining of a participant for a failure or expected failure to meet the participant’s obligations under commitments entered into on the licensed market;
(c) execution of orders;
(d) the way in which disorderly trading conditions are to be dealt with, including disruptions to trading;
(e) the class or classes of financial products that are to be dealt with on the licensed market by participants, including:
(i) a description of the nature of each class of financial product; and
(ii) for a class of derivatives, the standard terms of the arrangement that constitutes the derivative; and
(iii) for a class of derivatives, a description of the asset, rate, index, commodity or other thing that is used for the matters mentioned in paragraph 761D (1) (c) of the Act;
(f) the terms of the contract formed between participants that enter into a transaction through the licensed market (to the extent to which paragraph (e) does not require that information);
(5C) If the responsible person of a superannuation entity receives a notice of non-compliance, the responsible person must give to each product holder:
(a) a statement of the circumstances (including details of the non-compliance) that gave rise to the issue of the notice; and
(b) a statement of the effect on the fund of the issue of the notice (including details of the effect on the entity’s taxation position); and
(c) details of action that the responsible person has taken, or proposes to take, to have the entity become a complying fund or a pooled superannuation trust for the purposes of Division 2 of Part 5 of the Act.
(5D) For subsection (5C), a
notice of non-compliance means a notice issued under section 40 of the SIS Act to the trustee of a fund stating that the fund is not a complying fund or a pooled superannuation trust.
Fund transfers
(5E) For subsections 1017B (5), (6) and (7), a reference to an event, in relation to a superannuation product, includes:
(a) the transfer of a member to a different category of membership or to a different fund; and
(b) the transfer of the benefits of a member to an RSA or to an EPSSS.
11.1 After subsection 1017C (8)
insert
(8A) The obligation of a responsible person under this section to give information on request by a person arises only if the person pays the amount specified by the responsible person as the charge for giving the information.
(8B) The amount of the charge must not exceed the reasonable cost to the responsible person of giving the information (including all reasonably related costs — for example, costs of searching for, obtaining and collating the information).
(8C) A member who acts as a representative for or on behalf of a policy committee is not liable to any charge for information given to the member in that capacity.
(8D) In the case of information to be suppliedto a concerned person under Subdivision 4.9 of Part 7.9 of the
Corporations Regulations 2001 , a charge may be made only if:
(a) the person to whom the information is to be given has requested the information; and
(b) the person had been given the same information during the period of 12 months immediately preceding the date on which the request is made.
Part 12 Modifications relating to information when member leaves a fund
12.1 After subsection 1017D (3)
insert
(3A) For a superannuation product or an RSA product, the periodic statement in relation to the reporting period mentioned in paragraph 1017D (2) (d) must be given as soon as the issuer becomes aware that that person or another person (the
former product holder ) has ceased to hold the product, and, in particular, the issuer must make reasonable efforts to give the information within 1 month after becoming aware that the former product holder has ceased to hold the product.(3B) The issuer of a superannuation product or an RSA product must make all reasonable efforts:
(a) to give the information about the amount of insured death or disability benefits to which the former product holder may have been entitled; and
(b) to give the information about a continuation option (if any) applying to those benefits (as mentioned in either paragraph 7.9.54 (b) or 7.9.65 (b) of the
Corporations Regulations 2001 ) in a reasonable time before the option lapses.(3C) Subject to subsection (3D), if a person ceases to hold a superannuation product or RSA product:
(a) after the end of the completed reporting period (the
completed period ); and(b) before the periodic report is issued for that period;
the information required by this section to be given to or in relation to the person may be given in respect of the period consisting of the completed period and the period mentioned in paragraph 1017D (2) (d) instead of the period in respect of the person’s periodic statement for the period mentioned in paragraph 1017D (2) (d).
(3D) Subsection (3C) does not apply if the period mentioned in paragraph 1017D (2) (d) is greater than:
(a) for a particular superannuation product — 6 months; or
(b) for a particular RSA product — 3 months.
12.2 After subsection 1017DA (3)
insert
(3A) If:
(a) a death or disability benefit exists in relation to a member of a fund; and
(b) a continuation option is available in relation to the member;
the trustee of the fund must provide the member with a Product Disclosure Statement in relation to the continuation option.
Part 13 Modifications relating to exceptions to exit reporting period provisions
13.1 After subsection 1017D (7)
insert
(8) An RSA provider need not give information under this section to the holder of an RSA product who is transferring the amount of the RSA product if:
(a) the RSA holder has received sufficient information under Subdivision 5.8 of Part 7.9 of the
Corporations Regulations 2001 to enable the RSA holder to understand the effect of the transfer; and(b) the RSA provider reasonably believes that the RSA holder does not need the information because:
(i) the RSA holder has received or will receive, from the RSA institution to which the amount is being transferred, information under Subdivision 5.4 of Part 7.9 of the
Corporations Regulations 2001 in respect of the RSA holder’s exit reporting period; or(ii) the RSA holder has received or will receive, from the trustee of the superannuation entity to which the amount is being transferred, information under Subdivision 5.3 of Part 7.9 of the
Corporations Regulations 2001 in respect of the RSA holder’s exit reporting period; or(iii) the RSA holder has received or will receive, from the trustee of the EPSSS to which the amount is being transferred, information to the same general effect as that required under Subdivision 5.3 of Part 7.9 of the
Corporations Regulations 2001 in respect of the RSA holder’s exit reporting period.(9) A superannuation product provider need not give information under this section to the holder of a superannuation product who is transferring to another superannuation entity or to an EPSSS, or whose benefits are being transferred into an RSA, if:
(a) the product holder has received sufficient information under Subdivision 5.8 of Part 7.9 of the
Corporations Regulations 2001 to enable the product holder to understand the effect of the transfer; and(b) the superannuation provider reasonably believes that the product holder does not need the information because, the product holder has received or will receive, from:
(i) the trustee of the superannuation entity to which the amount is being transferred, information under Subdivision 5.3 of Part 7.9 of the
Corporations Regulations 2001 in respect of the product holder’s exit reporting period; or(ii) the RSA provider to which the product holders benefits are being transferred, information under Subdivision 5.4 of Part 7.9 of the
Corporations Regulations 2001 in respect of the product holder’s exit reporting period; or(iii) the trustee of the EPSSS to which the amount is being transferred, information to the same general effect as that required under Subdivision 5.3 of Part 7.9 of the
Corporations Regulations 2001 in respect of the product holder’s exit reporting period.
Part 14 Modifications relating to obligation to give information about financial products
14.1 After subsection 1017B (7)
insert
(7A) Subject to subsections (7B) and (7C), this section does not apply if:
(a) the responsible person has an address for a concerned person, and:
(i) is satisfied on reasonable grounds that that address is incorrect; and
(ii) has taken reasonable steps to locate the concerned person but has been unable to do so; or
(b) the responsible person has no address for the concerned person, and:
(i) has been unable to obtain an address for the concerned person; and
(ii) has taken reasonable steps to locate the concerned person, but has been unable to do so.
(7B) If the responsible person has refrained, in reliance on subsection (7A), from giving information to a concerned person, the responsible person must give information to the concerned person if the responsible person later becomes aware of the concerned person’s address or location.
(7C) Subsection (7B) applies only in respect of information that the responsible person becomes liable to give to the concerned person after becoming aware of the concerned person’s address or location.
14.2 After subsection 1017C (8)
insert
(8A) Subject to subsections (8B) and (8C), this section does not apply if:
(a) the responsible person has an address for a concerned person, and:
(i) is satisfied on reasonable grounds that that address is incorrect; and
(ii) has taken reasonable steps to locate the concerned person but has been unable to do so; or
(b) the responsible person has no address for the concerned person, and:
(i) has been unable to obtain an address for the concerned person; and
(ii) has taken reasonable steps to locate the concerned person, but has been unable to do so.
(8B) If the responsible person has refrained, in reliance on subsection (8A), from giving information to a concerned person, the responsible person must give information to the concerned person if the responsible person later becomes aware of the concerned person’s address or location.
(8C) Subsection (8B) applies only in respect of information that the responsible person becomes liable to give to the concerned person after becoming aware of the concerned person’s address or location.
14.3 After subsection 1017D (7)
insert
(8) Subject to subsections (9) and (10), this section does not apply if:
(a) the issuer has an address for a holder, and:
(i) is satisfied on reasonable grounds that that address is incorrect; and
(ii) has taken reasonable steps to locate the holder but has been unable to do so; or
(b) the issuer has no address for the holder, and:
(i) has been unable to obtain an address for the holder; and
(ii) has taken reasonable steps to locate the holder, but has been unable to do so.
(9) If the issuer has refrained, in reliance on subsection (8), from giving information to a holder, the issuer must give information to the holder if the issuer later becomes aware of the holder’s address or location.
(10) Subsection (9) applies only in respect of information that the issuer becomes liable to give to the holder after becoming aware of the holder’s address or location.
14.4 After subsection 1017DA (3)
insert
(3A) Subject to subsections (3B) and (3C), this section does not apply if:
(a) the trustee has an address for a holder or former holder, and:
(i) is satisfied on reasonable grounds that that address is incorrect; and
(ii) has taken reasonable steps to locate the holder or former holder but has been unable to do so; or
(b) the trustee has no address for the holder or former holder, and:
(i) has been unable to obtain an address for the holder or former holder; and
(ii) has taken reasonable steps to locate the holder or former holder, but has been unable to do so.
(3B) If the trustee has refrained, in reliance on subsection (3A), from giving information to a holder or former holder, the trustee must give information to the holder or former holder if the trustee later becomes aware of the holder’s or former holder’s address or location.
(3C) Subsection (3B) applies only in respect of information that the trustee becomes liable to give to the holder or former holder after becoming aware of the holder’s or former holder’s address or location.
Part 15 Modifications for confirmation of transactions
15.1 After subsection 1017F (5)
insert
(5A) Despite subsection (5), if:
(a) the cost of a transaction (including taxes and charges) is not known at the time at which confirmation of the transaction would be required to be given; and
(b) all of the other information required under subsection (7) in relation to confirmation of the transaction is known at that time;
the confirmation of the transaction is to be provided in accordance with subsection (5B).
(5B) Confirmation is to be provided as follows:
(a) all of the information required, except for the cost of the transaction, is to be provided as soon as practicable in accordance with subsection (5);
(b) the cost of the transaction may be provided in whichever of the following can be done first:
(i) a secondary confirmation notice provided as soon as practicable after the cost is known;
(ii) a standing facility mentioned in paragraph 1017F (5) (b);
(iii) the first periodic report under section 1017D after the cost is known.
Part 16 Modifications relating to reporting periods
16.1 Paragraph 1017D (2) (a)
substitute
(a) each reporting period lasts for:
(i) a period, not exceeding 1 year, fixed by the issuer; or
(ii) a longer period fixed by ASIC on the application of the issuer to which the period relates;
Schedule 10B Information in Product Disclosure Statement for certain funds (regulation 7.9.12)
1 On front or cover page, or first page, of document
1.1 Name and contact details of the fund and the trustee of the fund.
Note See paragraph 1013D (1) (a) of the Act.
1.2 ABN of the trustee.
1.3 The date of the Product Disclosure Statement.
Note See section 1013G of the Act.
1.4 A prominent statement that:
(a) the document describes the main features of the fund; and
(b) if an employer is not a financial services licensee, or is not an authorised representative, the employer must not give financial product advice about the fund or recommend a superannuation product; and
(c) a person who wants advice about superannuation products should get advice from a financial services licensee or an authorised representative.
1.5 If the Product Disclosure Statement is provided before the product is issued, the following statement:
‘This document should be read before making a decision to join the fund.’.
1.6 A prominent statement:
(a) that further information about the product is available to a person who asks for it; and
(b) that the provision of the further information may be subject to a charge; and
(c) about how to ask for further information; and
(d) that a person who needs more information about a financial services licensee should contact the financial services licensee.
1.7 A statement that when a person asks for further information, the trustee will provide all information that the trustee reasonably believes a member would reasonably need to make an informed assessment of:
(a) the management and financial condition of the fund; and
(b) the investment performance of the fund.
1.8 A statement that a person who leaves the fund within a few years of joining may get back less than the amount of contributions paid because of the level of investment returns earned by the fund and the fund’s charges.
1.9 If the fund provides an allocated pension, a statement that:
(a) the amount that the person can take out each year is subject to minimum and maximum limits set by the Government; and
(b) an allocated pension may not provide an income stream for the rest of the person’s life; and
(c) payments will only be made while there is enough money in the account for the allocated pension provided by the fund.
1.10 A statement that dispute resolution is available.
Note See paragraph 1013D (1) (g) of the Act.
1.11 If a cooling-off period is available in relation to the fund, a statement that the cooling-off period exists.
2 Contributions
2.1 Details of who can make contributions to the fund, how they can be made and any restrictions (for example, a minimum initial contribution) on making contributions.
3 Benefits
3.1 A statement of the method of calculation of any significant benefits to which a holder of the product will or may become entitled on joining the fund.
4 Death and/or disability insurance
4.1 A statement:
(a) whether the fund provides death insurance, disability insurance, or both; and
(b) whether those benefits are compulsory or voluntary; and
(c) whether a person must give information about the person’s health before being eligible for insurance cover; and
(d) the time from which a person would be covered by the insurance and when the cover would cease.
4.2 If it is possible for a person to nominate a beneficiary in relation to death benefits — a statement explaining how and when to nominate a beneficiary.
5 Your investment options and their risk profiles (or, if no choice of investment strategy is offered, investment strategy of the fund and its risk profile)
5.1 If the fund offers members a choice of investment strategy, a statement:
(a) identifying each investment strategy; and
(b) the objective of each of those investment strategies; and
(c) identifying the investment strategy that the trustee will use if the person does not choose one; and
(d) the relationship between risk and return associated with each investment strategy; and
(e) if the investment strategy is such that the fund is not a capital guaranteed fund — a statement that the benefits in the strategy are not guaranteed and the value of the investment may rise or fall.
5.2 If no choice of investment strategy is offered, a statement:
(a) of the objective of the investment strategy of the fund; and
(b) about the relationship between risk and return associated with that strategy; and
(c) if the fund is not a capital guaranteed fund — that the benefits in the strategy are not guaranteed and the value of the investment may rise or fall.
6 Investment returns in recent years
6.1 For each of the identified investment strategies, or if none, for the fund:
(a) the annual effective net earnings rate for each of the most recent 5 financial years (if available); and
(b) the compound average of the annual effective net earnings rate for 5 financial years ending with the most recent financial year (if available); and
(c) a statement that the net earnings rate may not be the same as the rate credited to particular members because of the effect of charges made by the fund and, if relevant, the reserving policy of the fund; and
(d) a statement that past net earnings rates are not an indicator of future net earnings rates.
6.2 If the fund maintains reserves, the objective of the reserving policy and its effect on the amount credited to members’ accounts.
6.3 The information mentioned in subitem 6.1 must not have been first published or issued by the fund more than 15 months before the date the information was given to the person.
6.4 Subitem 6.1 does not apply to a year of income if the fund or investment strategy was not operating for the whole year of income.
7 Charges of the fund
7.1 For any contribution charge, direct account charge, investment management charge, exit charge or switching charge of the fund, a description of:
(a) the charge; and
(b) the amount of the charge:
(i) expressed as a fixed amount; or
(ii) if it is not practicable to express fixed amount, expressed as a percentage of:
(A) the contributions made in respect of a member; or
(B) the member’s benefits in the fund; or
(C) the assets of the fund; and
(c) against what, or to whom, the amount or percentage will be charged (for example, against contributions made in respect of the member to the fund or against the assets of the fund); and
(d) if the amount or percentage varies for different classes of members, the minimum or maximum limit for each amount or percentage.
7.2 The information in subitem 7.1 must also be provided for any death and disability insurance charge of the fund.
7.3 A statement outlining:
(a) the circumstances in which and the times when any charge may be increased or decreased; and
(b) any maximum limit, for a charge, mentioned in the governing rules of the fund.
7.4 If a charge referred to in subitem 7.1 cannot be expressed as an amount or a percentage, the trustee must explain how it will be determined.
7.5 If the fund offers a choice of investment strategies and the information mentioned in subitem 7.1 involves different rates of charge, the information must be given for each investment strategy.
7.6 For a death and disability insurance charge that is determined by a premium rate table, the table may be attached to the Product Disclosure Statement and referred to in this item of the Product Disclosure Statement.
8 Ongoing management charges
8.1 The following statement:
‘The ongoing management charges charged by a fund over a year can be expressed as a percentage of the fund’s assets.
In the last [
insert ‘year’, ‘2 years’, ‘3 years’, ‘4 years’or ‘5 years’as appropriate ], the ongoing management charges of this fund, expressed as a percentage of the fund’s assets, were:’;
followed, for each of the identified investment strategies, or if none, for the fund, by a statement of:
(a) the actual ongoing management charge percentage for:
(i) the latest year of income of the fund (at the time the Product Disclosure Statement is published); and
(ii) the 4 previous years of income of the fund with the exception that this does not apply to a previous year of income ending on or before 30 June 2001; and
(b) the actual ongoing management charge percentage relating to the management of investments for:
(i) the latest year of income of the fund (at the time the Product Disclosure Statement is published); and
(ii) the 4 previous years of income of the fund with the exception that this does not apply to a previous year of income ending on or before 30 June 2001; and
(c) the actual ongoing management charge percentage not relating to the management of investments for:
(i) the latest year of income of the fund (at the time the Product Disclosure Statement is published); and
(ii) the 4 previous years of income of the fund with the exception that this does not apply to a previous year of income ending on or before 30 June 2001; and
(d) the following statement:
‘The effect of these charges on your benefits can be shown by multiplying this percentage by the amount in your account. The following table shows the amount of ongoing management charges, and charges associated with investments by providers in managed investment products and life insurance investment policies, for an account balance of $10 000. The effect of these charges will vary depending on the amount in your account.’;
followed, for each of the identified investment strategies, or if none, for the fund, by a statement of the converted amount for:
(i) the latest year of income of the fund at the time the document is printed; and
(ii) the 4 previous years of income; and
(e) a statement that identifies the charges that are included in the ongoing management charge and disclosed under this item; and
(f) a statement that the person should read the charges section of the document; and
(g) a statement that past charges should not be taken to be an indication of future charges; and
(h) the following statement:
‘The ongoing management charge for a superannuation fund is required by law to be calculated and disclosed. Its purpose is to give a broad indication of the level of costs incurred by a particular fund as a percentage of the value of assets.
Cost include all fees, charges and expenses except for switching costs etc. The level of costs incurred by an individual member will depend on individual circumstances and as a percentage of value of the fund assets of the individual may be more or less than the ongoing management charge.
The ongoing management charge should not be taken to be representative of the actual fee and charges and expenses that will be borne by an individual.
Full details of fees, charges and expenses applicable to individual circumstances are set out in
[section X] of this document.’; and(i) a statement of the possibility that buy and sell spreads may:
(i) reduce the reported amount of an ongoing management charge; and
(ii) affect the reported performance of the fund.
8.2 For paragraph 8.1 (d), the
converted amount is $10 000 multiplied by the ongoing management charge percentage.8.3 The information mentioned in subitem 8.1 must not have been first published or issued by the fund more than 15 months before the date the information was given to the person.
8.4 Subitem 8.1 does not apply to a year of income if the fund or investment strategy was not operating for the whole year of income.
9 General superannuation information
Restrictions on when you can get access to your benefits
9.1 A statement:
(a) that superannuation is a long-term investment; and
(b) that the Commonwealth Government has placed restrictions on when a person can have access to benefits; and
(c) that generally a person cannot access benefits until he or she reaches 65 or the preservation age within the meaning of subregulation 6.01 (2) of the SIS Regulations and has retired; and
(d) of the preservation age within the meaning of subregulation 6.01 (2) of the SIS Regulations.
Member-protection standards
9.2 A brief statement of the effect of the member-protection standards prescribed by Division 5.5 of the SIS Regulations.
Schedule 10C Capital guaranteed fund information and RSA information (regulation 7.9.12)
1 On front or cover page, or first page, of document
1.1 Name and contact details of the fund or RSA and the trustee of the fund or RSA.
Note See paragraph 1013D (1) (a) of the Act.
1.2 ABN of the trustee.
1.3 The date of the Product Disclosure Document.
Note See section 1013G of the Act.
1.4 A prominent statement that:
(a) the document describes the main features of the fund or RSA; and
(b) if an employer is not a financial services licensee, or is not an authorised representative, the employer must not give financial product advice about the fund or RSA or recommend a superannuation product; and
(c) the provision of the further information may be subject to a charge; and
(d) a person who wants advice about superannuation products should get advice from a financial services licensee or an authorised representative.
1.5 If the Product Disclosure Statement is provided before the product is issued, the following statement:
‘This document should be read before making a decision to join the fund or RSA.’.
1.6 A statement:
(a) that the person should consider the appropriateness of the investment having regard to the effect of the lower-risk/lower-return nature of the product on possible benefits in the long term; and
(b) that there are other superannuation arrangements that may provide a greater return over the long term; and
(c) that the person may wish to seek information about the rates of return of those superannuation arrangements; and
(d) a person who needs more information about the financial services licensee should contact the financial services licensee.
1.7 If the fund or RSA provides an allocated pension, a statement that:
(a) the amount that the person can take out each year is subject to minimum and maximum limits set by the Government; and
(b) an allocated pension may not provide an income stream for the rest of the person’s life; and
(c) payments will only be made while there is enough money in the account for the allocated pension provided by the fund or RSA.
1.8 For an RSA:
(a) a brief statement that, subject to any notice period, the amount of the RSA may be transferred at any time to:
(i) another RSA provided by an RSA institution; or
(ii) a superannuation entity or regulated exempt public sector superannuation scheme; or
(iii) a deferred annuity; and
(b) a statement of:
(i) the circumstances in which the RSA provider will pay the RSA holder’s benefits to an eligible rollover fund; and
(ii) the effect of that payment; and
(iii) the contact details of the eligible rollover fund.
1.9 A statement that outlines the means by which the fund or RSA is to be maintained as a capital guaranteed fund or RSA and sets out the name of the institution providing the investments that back the fund or RSA.
1.10 A statement that dispute resolution is available.
Note See paragraph 1013D (1) (g) of the Act.
1.11 If a cooling-off period is available in relation to the fund or RSA, a statement that the cooling-off period exists.
2 Contributions
2.1 Details of who can make contributions to the fund or RSA, how they can be made and any restrictions (for example, a minimum initial contribution) on making contributions.
3 Benefits
3.1 A statement of the method of calculation of any significant benefits to which a holder of the product will or may become entitled on joining the fund or RSA.
4 Death and/or disability insurance
4.1 A statement:
(a) whether the fund or RSA provides death insurance, disability insurance, or both; and
(b) whether those benefits are compulsory or voluntary; and
(c) whether a person must give information about the person’s health before being eligible for insurance cover; and
(d) the time from which a person would be covered by the insurance and when the cover would cease.
4.2 If it is possible for a person to nominate a beneficiary in relation to death benefits — a statement explaining how and when to nominate a beneficiary.
5 Investment returns earned by members in recent years
5.1 If a variable-rate option is, or variable-rate options are, offered by the fund or RSA in relation to the whole, or a part, of the benefits — a statement:
(a) setting out the current rate of interest of each variable-rate option offered; and
(b) setting out:
(i) that the rate, or rates, of return may increase or decrease over time; and
(ii) the annual effective rate of return for the same class of, or similar, options offered by the fund or RSA for each year of the previous 5 years (including variable at-call deposits offered by the RSA provider, or by a capital guaranteed life policy, if the RSA provider did not offer similar variable-rate options for each year of the previous 5 years); and
(iii) the compound average of the annual effective rate of return for the same class of, or similar, options offered by the fund or RSA for each year of the previous 5 years.
5.2 The information mentioned in paragraph 5.1 (b) must not have been first published or issued by the fund or RSA more than 15 months before the date the information was given to the person.
5.3 Paragraph 5.1 (b) does not apply to a year of income if the fund or RSA was not operating for the whole year of income.
6 Fixed rate of returns
6.1 If a fixed-rate option is, or fixed-rate options are, offered by the fund or RSA in relation to the whole, or a part, of the benefits — a statement setting out the prescribed rate of return of each fixed-rate option and the term to which the rate applies.
7 Charges of the fund or RSA
7.1 For any contribution charge, direct account charge or exit charge of a capital guaranteed fund, a description of:
(a) the charge; and
(b) the amount of the charge, expressed either as a fixed amount or as a percentage of:
(i) the contributions made in respect of a member; or
(ii) the member’s benefits in the fund; or
(iii) the assets of the fund; and
(c) against what, or to whom, the amount or percentage will be charged (for example, against contributions made in respect of the member to the fund or against the assets of the fund); and
(d) if the amount or percentage varies for different classes of members, the minimum or maximum limit for each amount or percentage.
7.2 The information in subitem 7.1 may also be provided for any death and disability insurance charge of the fund or RSA.
7.3 A statement outlining:
(a) the circumstances in which and the times when the charge may be increased or decreased; and
(b) any maximum limit, for the charge, mentioned in the governing rules of the fund.
7.4 If fees and charges are deducted before interest is credited to the fund — a statement to the effect that interest is paid net of expenses.
7.5 If a charge referred to in subitem 7.1 cannot be expressed as an amount or a percentage, the trustee must explain how it will be determined.
7.6 For a death and disability insurance charge that is determined by a premium rate table, the table must be attached to the Product Disclosure Statement and referred to in this item of the Product Disclosure Statement.
8 General superannuation information
Restrictions on when you can get access to your benefits
8.1 A statement:
(a) that superannuation is a long-term investment; and
(b) that the Commonwealth Government has placed restrictions on when a person can have access to benefits; and
(c) that generally a person cannot access benefits until he or she reaches 65 or the preservation age within the meaning of subregulation 6.01 (2) of the SIS Regulations and has retired; and
(d) of the preservation age within the meaning of subregulation 6.01 (2) of the SIS Regulations.
Member-protection standards
8.2 A brief statement of the effect of:
(a) the capital guaranteed member-protection standards prescribed by Division 5.5 of the SIS Regulations; or
(b) the RSA holder-protection standards prescribed by Part 3 of the RSA Regulations.
Schedule 10D Persons who are not covered by section 1433 of the Act (regulation 10.2.36)
1 | A person who is or has been an insolvent under administration | 5 years after the start of the administration |
2 | A body corporate that has been an externally-administered body corporate | 5 years after the start of the administration |
3 | A person who has been convicted of fraud | 10 years after the conviction |
4 | A person to whom the following circumstances apply:
| |
5 | A person to whom the following circumstances apply:
| 10 years after the conduct first occurred |
| ||
6 | A person to whom the following circumstances apply:
| |
7 | A person who has had:
cancelled, suspended or revoked by, or as a direct result of the actions of, a regulator | 5 years after the cancellation, suspension or revocation |
8 | A responsible officer of a person mentioned in item 1, or a related body corporate of a person mentioned in item 2 | |
9 | A person an associate of whom is a person mentioned in any of items 3 to 7 | |
10 | A
person who is deemed to be a registered insurance broker under subsection
24 (2) of the This item applies to the person only to the extent that the person operates insurance broking activities that are described in that Act |
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1. These Regulations amend Statutory Rules 2001 No. 193, as amended by 2001 Nos. 208 and 318.
2. Notified in the
Commonwealth of Australia Gazette
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