ASIC Class Order [CO 03/578]

Overview

The Australian Securities and Investments Commission Corporations Act 2001, enacted by the Parliament of Australia, serves as a comprehensive legislative framework governing corporate activities and financial services within the country. One of the key gaps it was designed to address is the need for regulation of financial services to ensure consumer protection and market integrity. Specifically, this Act aims to maintain fair and efficient markets, and to protect consumers from unscrupulous conduct by financial service providers. The legislative instrument, F2007B00408, issued on 2 July 2003 by Brendan Byrne as a delegate of ASIC, provides an exemption under paragraph 951B(1)(a) of the Act for certain entities from the obligations to provide a Financial Services Guide when making a market for a financial product through a licensed market. This exemption is intended to alleviate some regulatory burdens on financial services licensees and their authorised representatives, while still maintaining oversight to protect consumers.

Scope and Application

The legislative instrument, F2007B00408, specifies an exemption under the Corporations Act 2001, providing relief from certain obligations for specified entities. This exemption applies to financial services licensees and their authorised representatives who are engaged in making a market for a financial product through a licensed market. This means that these entities are not required to provide a Financial Services Guide as mandated by sections 941A and 941B of the Act when performing these specific activities. The exemption is geographically and jurisdictionally applicable within the bounds of the Commonwealth of Australia and pertains to entities that are licensed to provide financial services and their representatives. The instrument further defines the terms "licensed market" and "makes a market for a financial product," clarifying the scope of activities covered by the exemption. It is important to note that this exemption does not extend beyond the confines of the Act and is specifically tailored to the circumstances outlined within the legislative instrument.

Key Provisions

Under the Corporations Act 2001 (the Act), section 951B(1)(a) provides a legislative exemption that relieves certain entities from specific obligations related to financial services. Specifically, section 951B(1)(a) exempts financial services licensees and authorised representatives of such licensees from the requirements under sections 941A and 941B (paragraph 1). These sections mandate that a Financial Services Guide be provided to clients when a financial service is rendered. The exemption applies in the context of making a market for a financial product through a licensed market (paragraph 2). The terms "licensed market" and "makes a market for a financial product" are defined under sections 761A and 766D of the Act, respectively (paragraph 3). The Act imposes certain obligations on financial services licensees and their authorised representatives. These entities must ensure they are operating within the parameters set out by the Corporations Act and the relevant sections. For instance, while they are exempt from the requirement to provide a Financial Services Guide under sections 941A and 941B, they must still comply with other regulatory requirements that govern the provision of financial services. This includes ensuring that their market-making activities are conducted within the confines of a licensed market, as defined by section 761A, and that these activities meet the criteria set out in section 766D. The Act also delineates the potential consequences for non-compliance with its provisions. While the specific offences and penalties for breaching sections 941A and 941B are not detailed within this exemption, general penalties for breaches of the Corporations Act can be severe. For instance, individuals found guilty of civil penalty provisions can face significant fines. The maximum penalty for a body corporate can reach up to 10,000 penalty units for each contravention, whereas individuals can face penalties of up to 5,000 penalty units. Additionally, criminal penalties can apply, which may include imprisonment depending on the severity and intent behind the breach. It is essential for financial services licensees and their authorised representatives to adhere strictly to the legislative requirements to avoid these serious repercussions.