ASIC Class Order [CO 02/0247]

Overview

The Financial Services Reform Act 2001, enacted by the Parliament of Australia, introduced significant changes to the regulatory framework for financial services, aiming to enhance consumer protection and market integrity. This legislative instrument, F2006B01571, is a variation to the Class Order [98/1417] under the Corporations Act 2001, effective from the commencement of Schedule 1 to the Financial Services Reform Act 2001. The amendment aims to broaden the definition of who can be a financial services licensee, thereby ensuring that a wider range of entities are subject to the same regulatory standards, ultimately addressing the gap in the regulatory oversight of financial services providers. The policy objective behind this variation is to align the regulatory definitions with the evolving financial services landscape, ensuring that the Australian Securities and Investments Commission can effectively monitor and regulate financial service providers.

Scope and Application

The Australian Securities and Investments Commission Corporations Act 2001 - Subsection 341(1) - Variation pertains to the regulation and modification of financial services within Australia, specifically targeting entities involved in financial transactions and securities. This legislative instrument amends Class Order [98/1417] by altering the definition of certain financial roles, notably removing the references to "a licensed securities dealer or a futures broker" and replacing them with "or a financial services licensee". This change effectively broadens the scope of entities subject to regulatory oversight under the Act to include financial services licensees, ensuring that a wider range of financial entities are governed under the updated definitions. The variation also extends the definition of "financial services licensee" to include not just those licensed under the Act but also regulated principals during a specified transition period. The geographic and jurisdictional reach of this legislation is national, applying uniformly across Australia, with its impact felt in the Commonwealth and state jurisdictions alike. There are no specific exclusions or thresholds outlined within this legislative variation, but the application may be further detailed or restricted through subordinate instruments as necessary.

Key Provisions

Under the Australian Securities and Investments Commission Corporations Act 2001, specifically under subsection 341(1), Class Order [98/1417] is varied with effect from the commencement of Schedule 1 to the Financial Services Reform Act 2001. The key operative sections of this variation are the omission of the words "a licensed securities dealer or a futures broker" from paragraph (d) and the substitution of these words with "or a financial services licensee" (subsection 341(1)). Additionally, the definition of "financial services licensee" is added to the "Interpretation" section, clarifying that it means a financial services licensee within the meaning of the Act and, during a specified transition period, also includes a regulated principal referred to in items 1 and 3 of the table in subsection 1430(1) of the Act. The Act imposes specific obligations and requirements on the parties governed by it. It mandates that the definition of "financial services licensee" is expanded to include a broader category of entities, namely financial services licensees within the meaning of the Act and regulated principals during a transition period. This necessitates that entities previously not considered as financial services licensees, such as certain regulated principals, now fall under the regulatory oversight provided by the Corporations Act 2001. Consequently, these entities must comply with the requirements and standards set forth by the Act, including any registration, reporting, and conduct obligations that apply to financial services licensees. In terms of offences, penalties, or consequences for breach, the legislative instrument does not specify any particular sanctions for non-compliance with the varied Class Order. However, under the broader framework of the Corporations Act 2001, non-compliance with its provisions can result in significant civil or criminal penalties. These can include fines, imprisonment, or both, depending on the severity and nature of the breach. For instance, misleading or deceptive conduct can attract penalties of up to $1.1 million for a corporation and/or imprisonment for up to five years under section 1041H of the Act. The precise penalties for any breach related to the varied Class Order would be determined based on the specific context and nature of the non-compliance, in line with the overall regulatory regime established by the Corporations Act 2001.