ASIC CLASS ORDER [CO 09/393]
EXPLANATORY STATEMENT
Prepared by the Australian Securities and Investments Commission
Corporations Act 2001
The Australian Securities and Investments Commission (ASIC) makes ASIC Class Order [CO 09/393] under subparagraphs 912A(2)(b)(i) and 1017G(2)(b)(i) of the Corporations Act 2001 (the Act).
Subparagraphs 912A(2)(b)(i) and 1017G(2)(b)(i) provides that ASIC may approve an external dispute resolution scheme.
1. Background
Subparagraphs 912A(2)(b)(i) and 1017G(2)(b)(i) require an Australian financial service (AFS) licensee, unlicensed secondary seller and unlicensed product issuer to be a member of one or more external dispute resolution schemes that:
(a) is, or are, approved by ASIC; and
(b) covers complaints made by retail clients against the AFS licensee, unlicensed secondary seller or unlicensed product issuer in relation to the financial services provided.
2. Purpose of the class order
The purpose of this class order is to vary ASIC Class Order [CO 09/340] External dispute resolution schemes to approve Financial Ombudsman Service Limited ACN 131 124 448.
3. Operation of the class order
This class order varies ASIC Class Order [CO 09/340] by removing the approval of FOS Services Pty Ltd ACN 114 322 468 and substituting it for the approval of Financial Ombudsman Service Limited ACN 131 124 448.
4. Documents incorporated by reference
No documents are incorporated by reference.
5. Consultation
Before making [CO 09/340], ASIC consulted with relevant industry stakeholders on ASICs approval requirements for external dispute resolution schemes. The consultation process included the publication of Consultation Paper 102 Dispute resolution – review of RG 139 and RG 165 in November 2008, which outlined ASICs proposals for our approval requirements of external dispute resolution schemes. Consultation Paper 102 sought comments from stakeholders.
ASIC prepared a RIS for the policy underlying this class order, which was approved by OBPR.
Overview
ASIC Class Order [CO 09/393], enacted in 2009, was introduced to address the need for an approved external dispute resolution (EDR) scheme for Australian financial services (AFS) licensees, unlicensed secondary sellers and unlicensed product issuers to handle complaints from retail clients. This class order was made by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001. The primary objective of this class order is to modify the existing ASIC Class Order [CO 09/340] by replacing the approval of FOS Services Pty Ltd with that of Financial Ombudsman Service Limited, thereby ensuring that the approved EDR scheme is adequately equipped to manage and resolve disputes concerning financial services provided by these entities. ASIC undertook a consultation process with relevant stakeholders, including the publication of Consultation Paper 102, to gather feedback on the proposed changes to the EDR scheme approval requirements.
Scope and Application
ASIC Class Order [CO 09/393] applies to Australian financial service (AFS) licensees, unlicensed secondary sellers, and unlicensed product issuers. These entities must be members of an external dispute resolution scheme that is approved by the Australian Securities and Investments Commission (ASIC) and covers complaints made by retail clients regarding the financial services provided. This order falls within the Commonwealth jurisdiction, given its reliance on the Corporations Act 2001, and it impacts financial services providers across Australia. The order specifically removes the approval of FOS Services Pty Ltd and substitutes it with the approval of Financial Ombudsman Service Limited, thereby extending or restricting the application of the approved dispute resolution schemes through the class order mechanism. No exclusions, exemptions, or thresholds are explicitly mentioned in the explanatory statement, and no additional documents are incorporated by reference.
Key Provisions
The main operative sections of ASIC Class Order [CO 09/393] revolve around the approval of an external dispute resolution scheme for Australian financial service (AFS) licensees, unlicensed secondary sellers, and unlicensed product issuers. Specifically, sections 912A(2)(b)(i) and 1017G(2)(b)(i) of the Corporations Act 2001 mandate that these entities must join schemes approved by ASIC that handle complaints from retail clients. This class order modifies ASIC Class Order [CO 09/340] by replacing the previously approved scheme, FOS Services Pty Ltd, with Financial Ombudsman Service Limited. The objective is to ensure that the approved scheme is capable of effectively managing complaints related to financial services provided by these entities.
The obligations imposed by this class order on AFS licensees, unlicensed secondary sellers, and unlicensed product issuers include the mandatory membership in an approved external dispute resolution scheme. This requirement ensures that these entities have a structured process to handle and resolve complaints from retail clients. By joining an approved scheme, these entities are obliged to comply with the specific rules and procedures set out by the scheme, thereby ensuring a fair and efficient process for resolving disputes. Additionally, they must ensure that all complaints are handled in accordance with the guidelines and standards set by the approved scheme.
Failure to comply with the provisions of this class order can result in various consequences. While specific offences are not detailed within the explanatory statement, the penalties for breaches of the Corporations Act 2001 can be substantial. For corporations, penalties may include significant fines, and for individuals, the penalties can include imprisonment, fines, or both. The exact penalties depend on the nature and severity of the breach, but the overarching intent is to enforce compliance and maintain the integrity of the financial services sector. Additionally, breaches of the class order can also lead to civil consequences, including compensation orders, which aim to restore any losses incurred by the affected parties.