ASIC Class Order [CO 03/705]

Overview

The Australian Securities and Investments Commission Corporations Act 2001, enacted in 2001, was designed to create a comprehensive regulatory framework for financial services and products in Australia, ensuring that the financial system is fair, efficient, and transparent. This Act was introduced to address the need for a unified regulatory structure that could respond to the complexities of modern financial markets and protect consumers from unscrupulous practices. The Corporations Act 2001 provides the legal foundation for the regulation of corporations, financial products, and financial services in Australia. The Act is administered by the Australian Securities and Investments Commission (ASIC), which aims to ensure that financial markets operate in a way that is fair and efficient, and that consumers are treated fairly. The policy objective behind the Act is to foster confidence in the financial system, which in turn supports economic growth and stability. The legislative instrument F2007B00418, issued in 2003 under the authority of the Act, provides an exemption from certain licensing requirements for financial services licensees in relation to the provision of advice or arrangements involving eligible non-cash payment facilities, thereby streamlining the regulatory environment for certain financial activities.

Scope and Application

The Australian Securities and Investments Commission (ASIC) has issued an exemption under paragraph 911A(2)(l) of the Corporations Act 2001, which applies to financial services licensees who are exempt from holding an Australian financial services licence for the provision of certain financial services in the ordinary course of their business. Specifically, the exemption applies to licensees who advise a person on eligible non-cash payments facilities they may use to pay for goods or services, or arrange for such dealings, as long as the licensee is not an issuer of a non-cash payments facility and their licence does not already authorise the provision of such services. This exemption encompasses non-cash payments facilities issued by Australian authorised deposit-taking institutions, entities authorised under the Payment Systems (Regulation) Act 1998, and participants in designated payment systems within the meaning of that Act. The exemption's scope is defined by the geographic and jurisdictional reach of the Corporations Act, which applies across the Commonwealth of Australia. The instrument takes effect upon gazettal, and the interpretation section clarifies the meaning of "eligible non-cash payments facility" and "non-cash payments facility" within this context.

Key Provisions

The key provisions of this legislative instrument, issued under the Corporations Act 2001, establish an exemption for financial services licensees (licensees) from holding an Australian financial services licence for certain financial services. Specifically, the exemption applies to the provision of services that involve advising a person (person 1) about an eligible non-cash payments facility that person 1 may use, or has used, to pay another person (person 2) for goods or services, including financial products or services (paragraph 911A(2)(l)(a)). Additionally, the exemption extends to arranging for person 1 to deal in an eligible non-cash payments facility (paragraph 911A(2)(l)(b)). An eligible non-cash payments facility is defined as one issued by an Australian authorised deposit-taking institution (ADI), or by a person authorised under the Payment Systems (Regulation) Act 1998, or by a participant in a designated payment system within the meaning of that Act (section 5). However, this exemption does not apply to licensees who are issuers of non-cash payments facilities or whose licences already authorise the provision of these services (section 3). The obligations imposed on licensees by this exemption are primarily focused on compliance with the terms outlined in the instrument. Licensees must ensure that their activities involving eligible non-cash payments facilities fall within the scope of the exemption. They must also be aware of and comply with the conditions that the exemption does not apply if they are issuers of non-cash payments facilities or if their existing licence already covers the services described in the exemption. This means that licensees must conduct their activities in accordance with the stipulations of the exemption and avoid actions that would render the exemption inapplicable. Breaching the conditions of this exemption could lead to various legal consequences. While specific offences and penalties are not detailed in this legislative instrument, breaches of the Corporations Act 2001 generally can result in significant civil and criminal penalties. For instance, licensees found to be operating outside the bounds of their exemption may face fines, legal action, or other enforcement measures as provided under the Act. The maximum penalties for breaches of the Corporations Act can include substantial fines for corporations and imprisonment for individuals, depending on the severity and intent of the breach. Therefore, it is crucial for licensees to adhere strictly to the conditions set out in this exemption to avoid any legal repercussions.