ASIC Class Order [CO 02/0248]

Overview

The Australian Securities and Investments Commission Corporations Act 2001 is a pivotal piece of legislation enacted to reform and regulate financial services in Australia. The Act was introduced by the Australian Parliament to address various issues within the financial services sector, including the need for improved oversight and regulation to protect investors and maintain market integrity. One specific amendment under this Act, detailed in the Legislative instrument F2006B01646, pertains to the variation of Class Order [98/1418]. This variation, effective from the commencement of Schedule 1 to the Financial Services Reform Act 2001, aims to update definitions and regulatory requirements to ensure they align with the current legislative framework. The policy objective is to provide clarity and precision in the definitions of key terms, particularly concerning financial services licensees, thereby enhancing the regulatory environment and ensuring that the protections afforded to consumers and investors are robust and up-to-date.

Scope and Application

The Corporations Act 2001, as varied by subsection 341(1) through the legislative instrument F2006B01646, applies to financial services licensees within the framework of Australian securities and investment regulation. This variation of Class Order [98/1418] extends the definition of "financial services licensee" to include not only those licensed under the Act but also regulated principals during a specified transition period. The Act applies to entities and individuals engaged in financial services, impacting their regulatory obligations and scope of conduct. Geographically, the Act has a national reach as it is a Commonwealth legislation, thereby affecting entities and individuals across Australia. The variation ensures that the interpretation of "financial services licensee" is aligned with the broader regulatory objectives of the Corporations Act, including during transitional periods specified in the Act itself. The legislative instrument provides for the exclusion of certain entities from the broadened definition during non-transition periods, thereby ensuring precise application of the Act’s provisions.

Key Provisions

The Australian Securities and Investments Commission Corporations Act 2001, through subsection 341(1), modifies Class Order [98/1418] by making specific changes to the definition of a financial services licensee. Paragraph (c) of the Class Order now includes “or a financial services licensee” instead of “licensed securities dealer or a futures broker”. Additionally, the definition of “financial services licensee” is expanded to encompass a financial services licensee under the Act, as well as a regulated principal during the transition period as outlined in subsection 1431(1) of the Act. These changes were made effective from the commencement of Schedule 1 to the Financial Services Reform Act 2001. The Act imposes obligations on the financial services sector by clarifying the definition of “financial services licensee”. This includes financial services licensees under the Act and regulated principals during the transition period. The purpose of these modifications is to ensure that the regulatory framework adequately covers all relevant entities and activities within the financial services industry. Financial entities must now comply with the expanded definition, ensuring they meet the regulatory standards set forth by the Corporations Act 2001. There are no direct offences, penalties, or civil/criminal consequences specified within the text of this legislative instrument for breach of the modified Class Order. However, entities that fail to comply with the updated regulatory definitions and requirements may face enforcement actions under the broader provisions of the Corporations Act 2001. Such actions may include administrative penalties, fines, or legal proceedings to ensure compliance with the regulatory standards set by the Australian Securities and Investments Commission. The specific penalties would depend on the nature and severity of the non-compliance, as outlined in other sections of the Act.