ASIC Class Order [CO 10/1225]

Administered by Department of the Treasury

Legislation au F2010L03247 Not in force Legislative Instrument

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ASIC CLASS ORDER [CO 10/1225]

EXPLANATORY STATEMENT

Prepared by the Australian Securities and Investments Commission

National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009

The Australian Securities and Investments Commission (ASIC) makes ASIC Class Order [CO 10/1225] to amend ASIC Class Order [CO 10/907] Exempted special purpose funding entities – deferral of start date for EDR scheme membership for the purposes of paragraph 41(3)(d) of Schedule 2 to the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (the Transitional Credit Act ).

This paragraph of the Transitional Credit Act enables ASIC to declare that certain parts of that Act, and regulations made under it, apply in relation to a class of persons, as if specified provisions were omitted, modified or varied as specified in the declaration.

1. Background

Certain credit funding vehicles, established to raise or receive funds from investors and acting either as credit providers or lessors (including by way of legal assignment of rights from a credit provider or lessor) are exempt from having to register under the Transitional Credit Act, subject to certain conditions. One of those conditions is that the entity must become a member of an ASIC-approved external dispute resolution scheme (EDR scheme). This exemption is found in regulations 14B and 14C of the National Consumer Credit Protection (Transitional and Consequential Provisions) Regulations 2010.

An equivalent exemption also applies in relation to the requirement to hold an Australian credit licence under the National Consumer Credit Protection Act 2009 (the Credit Act). This exemption is found in regulations 23B and 23C of the National Consumer Credit Protection Regulations 2010.

These exemptions apply to two types of credit funding vehicles, namely:

(a) a fund raising special purpose entity, so long as it becomes and remains a member of an EDR scheme; and

(b) a securitisation entity, so long as it becomes and remains a member of an EDR scheme from 1 October 2010.

A fund raising special purpose entity is a company or trust that:

has the sole purpose of raising funds in order to be a credit provider for a credit contract or a lessor for a consumer lease;
raises the funds from persons other than individuals;
only engages in credit activities as a credit provider under a credit contract or a lessor under a consumer lease;
does not have any employees; and
is not a credit licensee under the Credit Act or a registered person under the Transitional Credit Act.

A securitisation entity is a company or trust that:

raises substantially all of its funds by issuing securitisation products (i.e. debt instruments or an interest in a managed investment scheme), on terms that the funds would be applied to the business it carries on;
carries on a business of managing economic risk associated with assets, liabilities or investments by way of a securitisation transaction (whether the company or trust assumes the risk from another person or creates the risk);
is an insolvency remote special purpose funding entity according to the criteria of an internationally recognised rating agency; and
is a credit provider under a credit contract or a lessor under a consumer lease.

The statutory exemptions from credit registration and credit licensing for fund raising special purpose entities and securitisation entities were introduced following extensive consultations with stakeholders, including industry bodies, EDR schemes, consumer representatives and individuals based on an earlier version of a draft exemption for special purpose funding entities that was released as a package of draft materials for consultation on 20 November 2009 by the Minister for Financial Services, Superannuation and Corporate Law.

The Department of the Treasury introduced the later start date of 1 October 2010 for securitisation entities to become members of an EDR scheme to enable securitisation entities to negotiate changes to the Terms of Reference and/or Rules of the EDR schemes and to reflect the specific differences in their structure and operation, compared with fund raising special purpose entities.

ASIC deferred the start date for becoming a member of an EDR scheme for both kinds of entities until 1 January 2011: see ASIC Class Order [CO 10/907].

2. Purpose of the class order

The purpose of this class order is to further defer the date by which fund raising special purpose entities and securitisation entities must join and continue to be a member of an EDR scheme under the conditions that apply to the statutory exemptions from the credit registration and credit licensing requirements.

The date has been further deferred until 1 April 2011.

ASIC has further deferred the start date for the following reasons:

to enable the schemes to make any necessary changes to their processes and procedures, including their Terms of Reference or Rules;
to allow industry sufficient time to adjust to the changes, including enabling the peak industry association, the Australian Securitisation Forum, to issue guidance to its members; and

to allow entities who are not already members of an EDR scheme to have more time to join an EDR scheme and consider what practical steps they need to take. Consumers will not be significantly disadvantaged by this further deferral of the start date of the condition in relation to membership of an EDR scheme. Consumers will still be able to lodge a complaint with an EDR scheme against the entity on or after 1 April 2011 in respect of conduct that occurred before that time.

3. Operation of the class order

This class order declares that the regulations made under the Transitional Credit Act which provide the statutory exemptions from the credit registration requirements for fund raising special purpose entities and securitisation entities apply as if the specified provisions, which set out the condition relating to membership of an EDR scheme, were modified so that entities seeking to rely on the exemptions must become a member of an EDR scheme by 1 April 2011.

The corresponding regulations made under the Credit Act which provide equivalent statutory exemptions from the credit licensing requirements have not been modified because the prohibition to which those exemptions relate does not commence until 1 July 2011.

4. Consultation

ASIC consulted with the EDR schemes, industry (the Australian Securitisation Forum) and consumer representatives about the policy underlying this class order.

Overview

The National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 was enacted to address transitional and consequential issues arising from the implementation of the National Consumer Credit Protection Act 2009. This Act was designed to provide a comprehensive regulatory framework for consumer credit, including the establishment of a national licensing system for credit providers and the creation of an external dispute resolution (EDR) scheme. The Australian Securities and Investments Commission (ASIC) makes the ASIC Class Order [CO 10/1225] under the authority granted by the Transitional Credit Act to further defer the start date for certain credit funding entities to join an EDR scheme. This class order modifies the conditions for fund raising special purpose entities and securitisation entities, extending the membership requirement of an EDR scheme to 1 April 2011. The primary purpose of this class order is to allow additional time for EDR schemes to adjust their processes and for industry to familiarise itself with the new requirements, thereby ensuring a smoother transition and better consumer protection.

Scope and Application

The ASIC Class Order [CO 10/1225], made under the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009, amends the ASIC Class Order [CO 10/907] to extend the deadline for fund raising special purpose entities and securitisation entities to join an ASIC-approved external dispute resolution scheme. This class order applies to entities that are exempt from credit registration and credit licensing requirements under the specified conditions. These entities include fund raising special purpose entities and securitisation entities that must become and remain members of an EDR scheme by 1 April 2011. The order modifies the start date for membership from the previously deferred date of 1 January 2011 to 1 April 2011, providing additional time for entities to adjust to the changes and for EDR schemes to update their processes and procedures. The class order has a national reach, applying across Australia as it is issued by the Australian Securities and Investments Commission, a Commonwealth authority. No specific exclusions or thresholds are mentioned in the explanatory statement, but the exemptions themselves have specific conditions that entities must meet to qualify. The application of the class order can be further extended or restricted through subordinate instruments, although none are mentioned in the provided text.

Key Provisions

The main operative sections of the ASIC Class Order [CO 10/1225], which is made under the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009, modify the conditions under which certain credit funding vehicles can remain exempt from credit registration and licensing. Specifically, section 1 of the order modifies the start date for when fund raising special purpose entities and securitisation entities must become members of an ASIC-approved external dispute resolution (EDR) scheme. Under the original conditions, these entities were required to join an EDR scheme by 1 January 2011, as stipulated in ASIC Class Order [CO 10/907]. However, this new order defers that requirement until 1 April 2011. These modifications are made pursuant to the authority granted by paragraph 41(3)(d) of Schedule 2 of the Transitional Credit Act, which allows ASIC to adjust the application of certain provisions of the Act and related regulations. The obligations imposed by this class order on the relevant credit funding entities are clear and straightforward. Fund raising special purpose entities and securitisation entities that seek to rely on the statutory exemptions from credit registration and licensing must now join an EDR scheme by 1 April 2011. This requirement ensures that consumers have access to an external dispute resolution mechanism to address any complaints they may have about the credit activities conducted by these entities. By joining an EDR scheme, the entities acknowledge their commitment to providing a fair and transparent process for resolving disputes, thereby enhancing consumer protection. In terms of potential breaches and consequences, the class order itself does not directly outline specific offences or penalties. However, failure to comply with the modified conditions could result in the entities losing their exemptions from credit registration and licensing. This could mean that these entities would need to register under the Transitional Credit Act and potentially obtain an Australian credit licence under the National Consumer Credit Protection Act 2009, which entails additional regulatory requirements and compliance obligations. Additionally, entities that fail to join an EDR scheme by the specified date may face reputational risks and potential consumer dissatisfaction, which could indirectly lead to regulatory scrutiny or enforcement actions by ASIC. Given that the class order modifies the regulatory framework rather than introducing new criminal or civil offences, the primary consequence of non-compliance lies in the loss of the statutory exemptions, thereby increasing the regulatory burden on the entities. The Transitional Credit Act and the National Consumer Credit Protection Act 2009, however, do contain provisions for penalties and enforcement actions in the event of broader non-compliance with credit regulation, which could include fines and other civil or criminal penalties as prescribed by those Acts.

Area of Law: Consumer Law
Instrument: Regulation
Concepts: Regulatory Standards; Reporting & Disclosure Obligations; Licensing & Registration

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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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