ASIC Class Order [CO 05/835]

Overview

The ASIC Class Order [CO 05/835], enacted in 2005, was introduced to address the need for clear guidelines concerning the advertising of financial products, particularly in relation to the provision of financial advice through such advertisements. This legislative instrument operates under sections 911A(2)(l) and 951B(1)(a) of the Corporations Act 2001, and is administered by the Australian Securities and Investments Commission (ASIC). The primary policy objective behind this class order is to ensure that financial product advertisements provide consumers with sufficient information to make informed decisions, without imposing unnecessary regulatory burdens on issuers. The class order exempts certain issuers from holding an Australian financial services licence when providing general financial product advice through advertisements, provided the advice is appropriately disclosed and consumers are directed to consider the suitability of the products for their needs.

Scope and Application

The ASIC Class Order [CO 05/835] pertains to the Corporations Act 2001, and it outlines specific exemptions from the requirement for an Australian Financial Services Licence (AFS Licence) when providing general financial product advice through advertising. This class order applies to issuers of financial products or securities who may not need to hold an AFS Licence to provide general advice in certain advertising contexts. It is designed to apply nationally, affecting all issuers operating within Australia. The exemptions apply when the advice is strictly general, is delivered via billboards, posters, or media, and explicitly indicates that individuals should assess the suitability of the financial product or securities for themselves. The class order may also require compliance with other provisions of the Act, such as those related to securities or disclosure documents. Any amendments or further clarifications to this class order are reflected in subsequent instruments, such as [CO 05/1195], which provide saving, transitional, or application provisions as necessary.

Key Provisions

ASIC Class Order [CO 05/835], which comes into effect under sections 911A(2)(l) and 951B(1)(a) of the Corporations Act 2001, sets out specific exemptions for entities providing financial product advice in advertisements. This Class Order, compiled on 29 August 2013, includes amendments up to [CO 05/1195]. It was prepared by the Australian Securities and Investments Commission (ASIC) to provide guidance on the legal requirements for financial product advertising. The primary sections of this Class Order outline the circumstances under which issuers of financial products may provide general financial product advice without holding an Australian financial services licence. Specifically, Section 4 exempts issuers from needing a licence when they provide general advice in the form of advertising that is displayed on billboards, posters, or in the media. This exemption applies provided that the advertisement advises potential clients to consider whether the financial product is appropriate for them. Additionally, Section 5 exempts financial services licensees from certain obligations when advertising offers or intended offers of securities on billboards, posters, or in the media, so long as the advertisement indicates that the recipient should assess the suitability of the securities for themselves. Entities governed by this Class Order must adhere to several obligations to comply with the exemptions. For instance, issuers must ensure that any advertising of financial products, whether they hold a licence or not, meets the conditions outlined in Section 4. This includes clearly advising potential clients to evaluate the appropriateness of the products for themselves. Furthermore, financial services licensees advertising securities must also adhere to the conditions specified in Section 5, ensuring that their advertisements include the necessary suitability assessments and comply with additional legislative requirements. Failure to comply with the provisions of ASIC Class Order [CO 05/835] can result in significant consequences. The Act provides for both civil and criminal penalties for non-compliance. Civil penalties can include fines and other monetary penalties, as well as potential court orders that may compel entities to rectify their non-compliance. Additionally, individuals found to be in breach of the Act's provisions may face criminal penalties, including imprisonment, depending on the severity of the breach. The exact penalties depend on the specific nature of the breach and are subject to the broader provisions of the Corporations Act 2001.