ASIC Class Order [CO 05/681]
Transitional relief for deposit product providers — PDSs and periodic statements
This instrument has effect under s1020F(1)(a) of the Corporations Act 2001.
This compilation was prepared on 17 May 2012 taking into account amendments up to [CO 06/476]. See the table at the end of this class order.
Prepared by the Australian Securities and Investments Commission.
Australian Securities and Investments Commission
Corporations Act 2001 — Paragraph 1020F(1)(a) — Exemption
Enabling Legislation
1. The Australian Securities and Investments Commission makes this instrument under paragraph 1020F(1)(a) of the Corporations Act 2001 (the Act).
Title
2. This instrument is ASIC Class Order [CO 05/681].
Commencement
3. This instrument commences on the date it is registered under the Legislative Instruments Act 2003.
Note: An instrument is registered when it is recorded on the Federal Register of Legislative Instruments (FRLI) in electronic form: see Legislative Instrument Act 2003, s 4 (definition of register). The FRLI may be accessed at http://www.frli.gov.au/.
Exemptions
Interest rates in Product Disclosure Statements
4. A regulated person does not have to comply with Division 2 of Part 7.9 of the Act to the extent that a Product Disclosure Statement required to be given under that Part in relation to a deposit product must specify the interest rate for the deposit product (see section 1013C of the Act). This exemption may only be relied on if paragraph 5 is complied with.
5. The responsible person for the relevant PDS must take reasonable steps to:
(a) ensure that the relevant PDS clearly and prominently states how a person may find out the interest rate (the current interest rate) that applies to the deposit product at the time of an inquiry; and
(b) have in place means by which a person may find out the current interest rate, being means that are simple and involve no charge imposed by the responsible person or its associates, and little inconvenience to the person, having regard to the kinds of persons likely to hold or consider acquiring the deposit product.
Termination values in periodic statements
6. An issuer of a deposit product does not have to comply with subsection 1017D(1) of the Act to the extent that a periodic statement required to be given by that subsection must include the termination value of the deposit product in accordance with paragraph 1017D(5)(b) of the Act.
7. [Deleted]
Interpretation
8. In this instrument:
branch [Deleted]
deposit product has the meaning given by section 761A of the Act.
issuer has a meaning affected by section 761E of the Act.
regulated person has the meaning given by section 1011B of the Act.
responsible person has the meaning given by subsection 1013A(3) of the Act.
retail client has the meaning given by section 761G of the Act.
Notes to ASIC Class Order [CO 05/681]
Note 1
ASIC Class Order [CO 05/681] (in force under s1020F(1)(a) of the Corporations Act 2001) as shown in this compilation comprises that Class Order amended as indicated in the tables below.
Table of Instruments
Instrument number | Date of FRLI registration | Date of commencement | Application, saving or transitional provisions |
[CO 05/681] | 28/06/2005 (see F2005L01737) | 28/06/2005 | |
[CO 06/476] | 19/6/2006 (see F2006L01862) | 19/6/2006 | - |
Table of Amendments
ad. = added or inserted am. = amended rep. = repealed rs. = repealed and substituted
Provision affected | How affected |
Para 4........... | am. [CO 06/476] |
Para 6........... | am. [CO 06/476] |
Para 7........... | rep. [CO 06/476] |
Para 8........... | am. [CO 06/476] |
Overview
ASIC Class Order [CO 05/681], introduced in 2005 under the Corporations Act 2001, was enacted by the Australian Securities and Investments Commission (ASIC) to provide transitional relief to deposit product providers regarding Product Disclosure Statements (PDS) and periodic statements. The primary objective of this legislation was to alleviate some of the compliance burdens associated with the disclosure of interest rates and termination values in PDS and periodic statements. ASIC Class Order [CO 05/681] offers exemptions for regulated persons and issuers of deposit products, allowing them to avoid strict compliance with certain sections of the Corporations Act, provided they take reasonable steps to ensure that customers can easily and freely obtain the required interest rate and termination value information. This transitional relief was intended to support the smooth implementation of new disclosure requirements while ensuring that consumers remained adequately informed about their deposit products.
Scope and Application
ASIC Class Order [CO 05/681] applies to regulated persons and issuers of deposit products in Australia, providing transitional relief concerning Product Disclosure Statements (PDSs) and periodic statements. This legislation operates under the Corporations Act 2001, specifically paragraph 1020F(1)(a), and has a national reach throughout Australia. The transitional relief exempts regulated persons from certain compliance requirements related to specifying interest rates in PDSs, provided that the responsible person ensures the PDS clearly states how to obtain the current interest rate and maintains accessible means to do so without charge or significant inconvenience. Similarly, issuers of deposit products are exempt from including termination values in periodic statements, subject to compliance with specified conditions. The scope of the Act is further defined by the meanings assigned to terms such as "deposit product," "issuer," "regulated person," and "responsible person," as per the Corporations Act 2001. The instrument is subject to amendments and updates, as evidenced by its registration and the subsequent class order [CO 06/476].
Key Provisions
The ASIC Class Order [CO 05/681] provides transitional relief for deposit product providers in relation to Product Disclosure Statements (PDS) and periodic statements. Under section 4, regulated persons are exempt from the requirement to specify the interest rate for a deposit product in the PDS, provided they take reasonable steps to ensure that the PDS clearly and prominently states how a person can find out the current interest rate. This includes having simple and cost-free means in place for customers to access the current interest rate. Under section 6, issuers of deposit products are exempt from including the termination value of the deposit product in periodic statements, subject to compliance with the relevant provisions of the Corporations Act 2001.
The Act imposes obligations on regulated persons and issuers of deposit products to provide information on interest rates and termination values. Specifically, regulated persons must take reasonable steps to ensure that the PDS clearly and prominently states how a person can find out the current interest rate for a deposit product, and issuers of deposit products must have simple and cost-free means in place for customers to access the current interest rate. Failure to comply with these obligations may result in legal consequences, including fines and other penalties.
The Act provides for civil and criminal penalties for breach of its provisions. Under section 1317E of the Corporations Act 2001, a person who contravenes a civil penalty provision in the Act is liable for a penalty of up to $210,000 for a corporation and $42,000 for an individual. Additionally, under section 1317G, a person who is found guilty of an offence against the Act may be subject to imprisonment for up to five years, a fine of up to $210,000 for a corporation and $42,000 for an individual, or both. The maximum penalties may be increased where the offence is committed by a person in a position of authority or responsibility, or where the contravention is deliberate, dishonest or reckless.