ASIC Class Order [CO 05/740]

Administered by Department of the Treasury

Legislation au F2005L03619 Not in force Legislative Instrument

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ASIC CLASS ORDER [05/740]

EXPLANATORY STATEMENT

Prepared by the Australian Securities and Investments Commission

Corporations Act 2001

Paragraphs 911A(2)(l), 926A(2)(a), 951B(1)(a), 992B(1)(a) and 1020F(1)(a) —Exemptions

Section 911A(2)(l) of the Corporations Act 2001 (the Act) provides that a person is exempt from the requirement to hold an Australian financial services licence for a financial service they provide if the provision of the service is covered by an exemption specified by the Australian Securities and Investments Commission (ASIC) in writing and published in the Gazette.

Section 926A(2)(a) of the Act provides that ASIC may exempt a person or class of persons from all or specified provisions of Part 7.6 of the Act (other than Divisions 4 and 8).

Section 951B(1)(a) of the Act provides that ASIC may exempt a person or class of persons from all or specified provisions of Part 7.7 of the Act.

Section 992B(1)(a) of the Act provides that ASIC may exempt a person or class of persons from all or specified provisions of Part 7.8 of the Act.

Section 1020F(1)(a) provides that ASIC may exempt a person or a class of persons from all or specified provisions of Part 7.9 of the Act.

1. Background

Section 763D of the Act provides that a person makes non-cash payments if they make payments, or cause payments to be made, otherwise than through the physical delivery of Australian or foreign currency in the form of notes and/or coins. The facility through which, or through the acquisition of which, a person makes such payments is a financial product: s763A(1)(c).

This means that if a person carries on a financial services business involving dealing in, or providing financial product advice on, a non-cash payment (NCP) facility in Australia, the person must hold an Australian financial services licence unless an exemption applies. Parts 7.7, 7.8 and 7.9 of the Act impose conduct and disclosure obligations on persons who provide financial product advice on or deal in a financial product. The Act also prohibits the hawking of financial products to retail clients.

ASIC issued its Policy proposal paper Non-cash payment facilities (Non-cash payment facilities PPP) in December 2004. The Non-cash payment facilities PPP set out how ASIC proposed to regulate non-cash payment facilities and sought feedback from interested parties. (The Non-cash payment facilities PPP may be accessed at http://www.asic.gov.au.)

The Australian Government released its proposals paper Refinements to Financial Services Regulation on 2 May 2005. The proposals paper noted there is ‘[u]ncertainty as to whether loyalty schemes, retailer gift vouchers and certain low-value non-cash payment facilities are intended to be regulated under the financial services regime’. (This paper may be accessed at http://www.treasury.gov.au.) In response, ASIC announced it would issue guidance and/or relief to deal with the unintended application of the non-cash payment facility definition to certain kinds of facilities as part of its project on the regulation of non-cash payment facilities (see Information Release [IR 05-22] ASIC provides details on financial services refinement projects (12 May 2005), which can be accessed at http://www.asic.gov.au).

Prepaid mobile facilities are a specific type of NCP facility that enable clients of mobile telecommunications operators to, among other things, pay for services provided by other parties.

2. Purpose of the class order

The purpose of Class Order [CO 05/740] is to ensure that persons providing financial services in relation to prepaid mobile facilities are not subject to unnecessary and inappropriate regulation under the financial services regulatory regime. Prepaid mobile facilities are currently not intended to be used primarily for making non-cash payments to persons other than the issuer of the prepaid mobile facility and their provision is generally not a significant part of the business of the person providing services in relation to the prepaid mobile facility. An alternative regulatory regime also governs their supply (i.e. the Telecommunications Act 1997).

3. The class order

[CO 05/740] provides unconditional relief for prepaid mobile facilities constituting NCP facilities where:

(a) the facility is a part of an arrangement for the supply of a public mobile telecommunication service under which the service may be used to the extent it is covered by an amount paid in advance, which remains unused under the arrangement;

(b) the non-cash payments made under the facility are debited against the prepaid amount; and

This means that the financial services licensing, conduct and disclosure requirements (including the ongoing disclosure obligations and advertising provisions), as well as the anti-hawking provision of the Act, will not apply to these products.

4. Consultation

In response to the Non-cash payment facilities PPP, we received 27 submissions, four of which directly addressed issues confronting prepaid mobile phone providers. These submissions were taken into account in the development of [CO 04/740]. ASIC also met with the Australian Mobile Telecommunications Authority (and affected member representatives) and took into account the verbal submissions made.

ASIC has also taken into account the Australian Government’s proposals paper Refinements to Financial Services Regulation (2 May 2005).

In addition, a Regulation Impact Statement (RIS) was prepared for ASIC’s proposed Policy Statement 185 Non-cash payment facilities [PS 185] before [CO 05/740] was made. The RIS is attached to this statement.

Overview

The ASIC Class Order [CO 05/740], introduced in 2005, serves to exempt prepaid mobile facilities from the financial services regulatory regime as set out in the Corporations Act 2001. This legislative instrument was enacted by the Australian Securities and Investments Commission (ASIC) to address the unintended application of the non-cash payment facility definition to certain financial services, such as prepaid mobile facilities, which are primarily intended for making payments to the issuer and are governed under a different regulatory regime, specifically the Telecommunications Act 1997. The purpose of this class order is to prevent the unnecessary and inappropriate regulation of entities providing financial services related to prepaid mobile facilities, ensuring that such entities are not subjected to licensing, conduct, disclosure, and anti-hawking requirements that do not apply to their primary business activities. The order was developed in consultation with stakeholders, including responses to ASIC's policy proposal paper and the Australian Government's proposals paper on financial services regulation.

Scope and Application

The ASIC Class Order [CO 05/740] applies to financial services provided in relation to prepaid mobile facilities, ensuring that these services are not subject to unnecessary and inappropriate regulation under the financial services regime. This class order specifically targets the licensing, conduct, disclosure, and advertising requirements set out in the Corporations Act 2001, as well as the prohibition on hawking of financial products, by providing exemptions for prepaid mobile facilities that meet certain criteria. The relief applies to facilities that form part of an arrangement for the supply of a public mobile telecommunications service, where the non-cash payments are debited against the prepaid amount and the facility is not a component of another financial product. The jurisdictional reach of this Act is national, applying across Australia, and it extends to any person or entity providing financial services in relation to prepaid mobile facilities. The order exempts these facilities from the need to hold an Australian financial services licence, ensuring that the financial services licensing and conduct requirements, including ongoing disclosure obligations and advertising provisions, as well as the anti-hawking provision of the Act, do not apply to these products. The class order is developed through consultation with stakeholders, including the Australian Mobile Telecommunications Authority and affected member representatives, and takes into account feedback from the Australian Government's proposals paper on Refinements to Financial Services Regulation.

Key Provisions

The ASIC Class Order [CO 05/740] specifically targets the regulation of prepaid mobile facilities (PMFs) as non-cash payment (NCP) facilities under the Corporations Act 2001. Section 911A(2)(l) of the Act allows a person to be exempt from holding an Australian financial services licence if their financial service falls under an exemption published by ASIC in the Gazette. Similarly, sections 926A(2)(a), 951B(1)(a), 992B(1)(a), and 1020F(1)(a) empower ASIC to exempt persons or classes of persons from various provisions of the Act, including those pertaining to financial product advice, disclosure obligations, and prohibitions on hawking financial products. The Class Order [CO 05/740] provides such an exemption for PMFs under certain conditions. The primary obligation imposed by the Class Order is the exemption of PMFs from the financial services licensing, conduct, and disclosure requirements of the Act, as well as the prohibition on hawking financial products. This exemption applies to PMFs that are part of an arrangement for the supply of a public mobile telecommunications service, where the service is used to the extent covered by an advance payment, the non-cash payments are debited against the prepaid amount, and the facility is not a component of another financial product. This ensures that PMFs are not subject to unnecessary regulation, given their primary use and the existence of an alternative regulatory regime under the Telecommunications Act 1997. The Act imposes no direct penalties for breach of the Class Order [CO 05/740] itself, as it is an exemption from certain regulatory requirements rather than an imposition of new obligations. However, any misuse of the exemption that results in conduct falling outside the scope of the Class Order or the Act's requirements could potentially lead to enforcement actions under the general provisions of the Act. Such actions could include civil penalties, criminal sanctions, or other regulatory consequences, depending on the nature and extent of the breach. The Act does not specify maximum penalties for breaches of the Class Order but follows the general penalty provisions outlined in the Act, which can include fines up to $210,000 for individuals and significantly higher amounts for corporations, along with potential imprisonment for serious offences.

Area of Law: Financial Services Law; Telecommunications Law
Instrument: Class Order
Concepts: Exemptions & Exclusions; Regulatory Standards; Reporting & Disclosure Obligations; Delegated & Subordinate Legislation

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.

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