ASIC Class Order [CO 09/340]

Overview

ASIC Class Order [CO 09/340], enacted in 2009, was introduced under the Corporations Act 2001 to address the need for a reliable and efficient external dispute resolution (EDR) mechanism in the financial services sector. This legislative instrument was prepared by the Australian Securities and Investments Commission (ASIC) to ensure that consumers and businesses have access to fair and effective dispute resolution processes when dealing with financial products and services. The policy objective behind this class order is to provide consumers with a straightforward and accessible means to resolve disputes with financial institutions, thereby fostering confidence and trust in the financial system. The order was designed to comply with specific provisions of the Corporations Act 2001, specifically subparagraphs 912A(2)(b)(i) and 1017G(2)(b)(i), which mandate the approval of EDR schemes by ASIC.

Scope and Application

ASIC Class Order [CO 09/340] is an instrument made by the Australian Securities and Investments Commission (ASIC) under subparagraphs 912A(2)(b)(i) and 1017G(2)(b)(i) of the Corporations Act 2001, which provides for the approval of certain external dispute resolution (EDR) schemes. This Class Order applies to the schemes operated by Financial Ombudsman Service Limited and Credit Ombudsman Service Limited, which cover the members of these entities. The purpose of this legislation is to ensure that the EDR schemes comply with the requirements set out in the Corporations Act, thereby providing an effective and efficient means for resolving disputes between financial service providers and their clients. The Class Order applies nationally across Australia and is subject to amendments through subordinate instruments, as evidenced by the updates in the table of amendments and instruments. The exclusions and exemptions from this Class Order are not explicitly stated within the provided text, but it is understood that the scope is limited to the approved EDR schemes and their respective members.

Key Provisions

The ASIC Class Order [CO 09/340] establishes the framework for external dispute resolution (EDR) schemes under the Corporations Act 2001, specifically through sections 912A(2)(b)(i) and 1017G(2)(b)(i). This class order was prepared by the Australian Securities and Investments Commission (ASIC) and came into effect on 15 May 2009, as recorded on the Federal Register of Legislative Instruments (FRLI). The order was subsequently amended and is currently in its form as of 1 April 2010. It specifically approves the EDR schemes operated by the Financial Ombudsman Service Limited and the Credit Ombudsman Service Limited, which cover the members of these organisations (section 4). The obligations imposed by this class order on the approved EDR schemes include adherence to certain standards and practices set forth by ASIC. These schemes must comply with the requirements outlined in the class order to ensure they provide a fair, efficient, and effective means of resolving disputes between financial service providers and their clients. This includes maintaining appropriate levels of transparency, impartiality, and accessibility in their operations. The approved EDR schemes are also required to report to ASIC on their activities and performance, ensuring ongoing compliance and effectiveness in dispute resolution. Breaching the provisions of this class order can lead to significant consequences. ASIC has the authority to take enforcement actions against entities that fail to comply with the requirements set forth in the class order. These actions can include issuing compliance orders, imposing fines, and in severe cases, revoking the approval of the EDR scheme. The penalties for non-compliance can be substantial, reflecting the importance of maintaining high standards in the resolution of financial disputes. The exact penalties are not specified in the class order itself but are determined in accordance with the broader legislative framework under which ASIC operates.