ASIC CLASS ORDER [CO 07/447]

EXPLANATORY STATEMENT

Prepared by the Australian Securities and Investments Commission

Corporations Act 2001

The Australian Securities and Investments Commission (ASIC) makes Class Order [CO 07/447] Temporary extension of time for SOA delivery under s951B(1)(a) of the Corporations Act 2001 (the Act). 

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

1. Background

The Government’s Tax Laws Amendment (Simplified Superannuation) Act 2007 and related legislation (Simpler Super reforms) introduce some important and far-reaching changes to the superannuation regime with effect from 1 July 2007.  Some of these changes have resulted in unusually high demand for financial advice in the period leading up to 1 July 2007.  This has placed pressure on providing entities (ie financial advisers) delivering Statements of Advice (SOAs) to clients within the statutory timeframes.

Section 946C of the Act provides that SOAs must be given when, or as soon as practicable after, personal advice is given and in any event before the providing entity (ie the adviser) provides the client with any further financial service that arises out of or is connected with that advice (eg implementing the advice by applying for or acquiring a particular financial product).  In time critical cases (where the client expressly instructs the adviser that they want the service immediately or by a specified time), the providing entity is permitted to give the SOA later.  However, it must be given within five business days or, if the relevant financial product is subject to a cooling off period under s1019B of the Act, before the cooling off period commences.

2. Purpose of the class order

[CO 07/447] is intended to facilitate the advice-giving process during this unusually busy period by giving providing entities additional time to provide SOAs.

3. Operation of the class order

Paragraphs 4 and 5 of [CO 07/447] exempt providing entities (eg financial advisers) from the obligation to give an SOA within the normal statutory timeframe in the following circumstances:

(a)   the advice is about a superannuation product;

(b)   the client expressly requests advice immediately or before 1 July 2007 and the advice is actually given before 1 July 2007; and

(c)   where the advice relates to a financial product that is subject to a cooling off period – the providing entity gives the client a written statement explaining the nature of the cooling off rights and that the client may not receive the SOA until after the cooling off rights have expired.  This written warning should generally be given at the time of the advice, and in any event must be given within 5 days of the advice if the adviser is to rely on [CO 07/447].

[CO 07/447] is subject to the condition (set out in paragraph 6 of [CO 07/447]) that the SOA is given as soon as practicable.  However, under paragraph 4 of [CO 07/447], the SOA must be given within 30 days from when the personal advice was provided.

4 Consultation

ASIC consulted with stakeholders (representing the funds management and advice industry) that approached ASIC about this issue on an urgent basis.  ASIC did not undertake any specific consultation with other stakeholders before [CO 07/447] was made because of its urgent nature.