Overview

The ASIC Class Order [05/1122], issued under the Corporations Act 2001, aims to address the regulatory burden on providers of generic financial calculators, which are tools used for numerical calculations relating to financial products without promoting specific products. These calculators, which can be facilities, devices, tables, or other items, are useful for consumers but can potentially mislead if not designed responsibly. The class order, enacted by the Australian Securities and Investments Commission (ASIC), seeks to facilitate the cost-effective provision of accurate financial information to consumers by exempting providers of such calculators from certain licensing and disclosure requirements, provided the calculators meet specific conditions. This includes allowing users to alter default assumptions, ensuring the assumptions are reasonable, and including clear statements about the calculator's purpose, limitations, and advice on seeking professional financial advice. The class order was introduced as part of the Federal Government's Refinements to Financial Services Regulation, aiming to promote the use of basic online calculators for consumer education.

Scope and Application

ASIC Class Order [CO 05/1122], prepared under the Corporations Act 2001, provides relief for providers of generic financial calculators from certain licensing and conduct requirements. This class order applies to any individual or entity that provides generic financial calculators, which are defined as facilities, devices, tables, or other things used for numerical calculations related to financial products, without advertising or promoting specific financial products. The order exempts these providers from the need to hold an Australian financial services licence with advice authorisation or from the compliance obligations under Parts 7.6 and 7.7 of the Act, provided that certain conditions are met. These conditions include allowing users to alter default assumptions, ensuring the default assumptions are reasonable, and displaying clear and prominent statements about the calculator's purpose, limitations, and the importance of seeking professional advice. The relief applies nationally and is part of the broader initiative to refine financial services regulation, aimed at promoting the use of basic online calculators to enhance consumer understanding without classifying them as personal advice. This class order revokes the previous Class Order [CO 05/611], which had provided similar relief specifically for superannuation calculators.

Key Provisions

The ASIC Class Order [05/1122] primarily targets the relief for providers of generic financial calculators under sections 926A(2)(a) and 951B(1)(a) of the Corporations Act 2001. This order exempts such providers from the necessity to hold an Australian financial services licence or, if they already hold one, from the conduct and disclosure requirements stipulated in Parts 7.6 and 7.7 of the Act. These provisions allow ASIC to exempt a class of individuals or entities from specific sections of the Act. The class order applies to generic financial calculators, which are tools used for numerical calculations related to financial products without promoting specific financial products. They typically help users estimate future values of superannuation, savings, or investments and the necessary contributions to meet financial goals. Providers of these calculators must adhere to certain conditions to avail themselves of the relief. For electronic calculators, users must have the ability to alter all default assumptions, except for certain fixed factors like tax rates, and perform calculations with the modified assumptions. The default assumptions must be reasonable, and the calculator must display clear and prominent statements about its purpose, limitations, the reasonableness of the assumptions, significant limitations, whether the estimates account for changes in the cost of living, and a disclaimer stating that the calculator is not meant to replace professional financial advice. Additionally, the calculator must allow users to print or electronically store the results, and the provider must retain a copy for seven years from when it was first made available. Failure to comply with the conditions outlined in the class order may result in serious consequences. The Corporations Act 2001 includes provisions for civil and criminal penalties for breaches, although the specific penalties are not detailed in the Explanatory Statement. Non-compliance could potentially lead to enforcement actions by ASIC, including fines, legal proceedings, and possibly revocation of the exemption, which would necessitate compliance with the financial services licensing and conduct requirements. The class order also revokes the earlier Class Order [05/611], which provided relief specifically for superannuation calculators. Providers of generic superannuation calculators can now rely on the broader provisions of [05/1122]. ASIC prepared a Regulatory Impact Statement to evaluate the potential effects of the class order, which was considered along with industry feedback during the development of the order. This thorough consultation process aimed to ensure that the relief provided is both effective and balanced, promoting the responsible use of generic financial calculators without unduly burdening their providers.