Overview

The Financial Services Reform Act 2001 was enacted to overhaul the regulatory framework for financial services and markets in Australia, addressing gaps in the existing legal structure and ensuring comprehensive oversight. This legislative instrument, issued under the authority of the Australian Securities and Investments Commission, modifies Class Order [00/175] in response to the transition from the former Corporations Law to the new Corporations Act 2001. The policy objective is to streamline and modernise the regulatory language and definitions within financial services legislation, ensuring clarity and consistency with the new legal framework. This variation aligns with the broader goals of the Financial Services Reform Act, which seeks to enhance market integrity and investor protection in the financial services sector.

Scope and Application

The Australian Securities and Investments Commission (ASIC) has modified Class Order [00/175] under the Corporations Act 2001, effective from the commencement of Schedule 1 to the Financial Services Reform Act 2001. This legislative instrument updates references within the Class Order to align with the new terminology and structure of the Corporations Act 2001, replacing outdated references to "Corporations Law" with "Corporations Act 2001". The variation also revises the definitions within Schedule B to reflect the new categories of regulated principals, exempt dealers, and exempt investment advisers as outlined in the Act, while also incorporating those who hold an Australian financial services licence. These amendments apply to regulated principals, exempt dealers, exempt investment advisers, and holders of an Australian financial services licence, along with their representatives, during the transition period defined under section 1431 of the Act. The updated Class Order pertains to financial markets operated by entities rather than just stock markets, thus broadening its scope. This legislative change ensures that the regulatory framework remains consistent with the current legislative environment and effectively governs the entities and individuals involved in financial services within Australia.

Key Provisions

The legislative instrument under discussion is a variation to Class Order [00/175], which is a part of the Corporations Act 2001. The main operative sections of this variation (subsection 741(1)) involve several modifications to the text of the Class Order, primarily to update references from the former "Corporations Law" to the new "Corporations Act 2001". This includes changes to the heading, introductory words, and specific paragraphs within the schedule (Schedule B) of the Class Order. The changes aim to reflect the transition from the old legislative framework to the new one established by the Financial Services Reform Act 2001. This Act imposes specific obligations and requirements on the parties and entities it governs. For example, the updated Class Order now refers to a "regulated principal" during a transition period, as defined in section 1431 of the Act, and includes any representatives to whom subsection 1436(2) applies. Additionally, it mentions "exempt dealers" or "exempt investment advisers" as defined by the Act before the commencement of the Financial Services Reform Act 2001, and persons holding an Australian financial services licence and their representatives. These definitions and references are crucial for ensuring that the regulatory framework remains clear and applicable to the correct entities within the financial sector. In terms of penalties and consequences, the legislative instrument itself does not specify any offences or penalties for breach. However, under the broader framework of the Corporations Act 2001, non-compliance with the provisions of a class order can lead to significant legal repercussions. The Act provides for both civil and criminal penalties, including fines and imprisonment, depending on the nature and severity of the breach. The specific penalties are determined by the courts, taking into account the particular circumstances of each case. It is essential for regulated entities to adhere to the updated Class Order to avoid potential enforcement actions by the Australian Securities and Investments Commission.