ASIC Class Order [CO 05/346]

Overview

The Australian Securities and Investments Commission (ASIC) enacted the ASIC Class Order [CO 05/346] in 2005 under the Corporations Act 2001 to address the need for a further extension of the application of s1012IA of the Act to superannuation products. This order was necessitated by the need for additional time to resolve technical issues and practical problems related to compliance with the section, and to allow the superannuation industry to transition smoothly to compliance with the statutory requirements and ASIC's policy. The order extends the previously set deferral until 30 June 2006, ensuring that stakeholders have adequate time to understand and implement the necessary changes. ASIC did not undertake specific consultation for this Class Order as it was deemed minor and of a machinery nature, but it did engage in broader consultation regarding the application of s1012IA as part of its policy development process.

Scope and Application

The ASIC Class Order [CO 05/346] applies to entities within the financial services sector, particularly those involved in the provision of superannuation products, as it pertains to the deferred application of section 1012IA of the Corporations Act 2001. This class order extends the deferral period of compliance with section 1012IA, which mandates the provision of a Product Disclosure Statement for certain financial products, to ensure that both the Australian Securities and Investments Commission (ASIC) and the superannuation industry have adequate time to transition to compliance. The geographic reach of this order is nationwide, aligning with the overarching jurisdiction of the Corporations Act. Notably, the order does not apply to other financial products outside the scope of superannuation, and it is subject to further amendments or extensions through subsequent subordinate instruments issued by ASIC.

Key Provisions

The main operative sections of ASIC Class Order [CO 05/346] extend the deferred application of section 1012IA of the Corporations Act 2001 until 30 June 2006, allowing extra time for the Australian Securities and Investments Commission (ASIC) to finalise its policy on compliance with this section and for the superannuation industry to transition to compliance (section 1). This extension builds on previous delays and conditions set by earlier class orders, ensuring that clients are informed about where they can obtain a Product Disclosure Statement (section 1). ASIC did not conduct specific consultations for this order, as it is considered minor and related to administrative processes, but did consult on the broader policy of section 1012IA's application to superannuation products (section 2). The obligations and requirements imposed by the Act on the parties governed by this class order include the need for clients to be informed about where they can obtain a Product Disclosure Statement for any underlying products, as mandated by the conditions of the extended deferral (section 1). ASIC is required to finalise its policy on compliance with section 1012IA and ensure that this policy is communicated effectively to the superannuation industry (section 1). The superannuation industry must transition to full compliance with section 1012IA and ASIC's finalised policy within the extended timeframe (section 1). The explanatory statement does not detail specific offences, penalties, or civil/criminal consequences for breaches of this class order. However, given the nature of ASIC's regulatory role and the Corporations Act, any failure to comply with the conditions of this order could potentially lead to enforcement actions by ASIC, including fines, corrective measures, or further regulatory interventions. The penalties for non-compliance with related sections of the Corporations Act can be significant, depending on the severity and impact of the breach.