ASIC CLASS ORDER [CO 10/1257]
EXPLANATORY STATEMENT
Prepared by the Australian Securities and Investments Commission
Corporations Act 2001
The Australian Securities and Investments Commission (ASIC) makes ASIC Class
Order [CO10/1257] under paragraphs 601QA(1)(a) and 911A(2)(l) of the Corporations Act 2001 (the Act).
Paragraph 601QA(1)(a) provides that ASIC may exempt a class of persons from the provisions of Ch 5C of the Act.
Paragraph 911A(2)(l) provides that ASIC may exempt a class of persons from the requirement to hold an Australian Financial Services licence (AFS licence) under Pt 7.6 of the Act.
1. Background
ASIC Class Order [CO 08/1] gives conditional relief from the AFS licensing regime and Ch 5C of the Act for some group purchasing bodies (GPBs) who arrange or hold risk management products (insurance) for the benefit of third parties. GPBs include sporting and other not-for-profit organisations which arrange insurance for third parties (e.g. players or volunteers).
ASIC Class Order [CO 08/1] provides conditional relief to a limited class of
GPBs that organise insurance on a non-commercial basis. The transitional period for compliance with the breach reporting conditions in [CO 08/1] was scheduled to end on 31 December 2010.
Treasury has indicated to ASIC that it may be appropriate for the regulation of GPBs and the terms of any exemption to be addressed by regulations. Treasury proposes consulting in January 2011.
2. Purpose of the class order
ASIC Class Order [CO 10/1257] extends the transitional period for compliance with the breach reporting conditions in [CO 08/1] by 6 months while Treasury consults on the issue. That is, until the first time that the body acquires, renews or renegotiates the terms of, the risk management product on or after 30 June 2011 but before 30 June 2012.
3. Operation of the class order
Paragraph 4 amends [CO 08/1] by substituting ‘30 June 2011’ in place of ‘31 December 2010’ and substituting '30 June 2012' in place of '31 December 2011' in subparagraphs 10(f)(i) and (ii), respectively. This means that on or after 30 June 2011 GPBs relying on relief under [CO 08/1] will need to report any breaches of the conditions of [CO 08/1] to ASIC under subparagraph 10(f) but by no later than 30 June 2012.
5. Consultation
In preparing [CO 10/1257] ASIC has taken account of Treasury's proposed consultation.
Overview
The Australian Securities and Investments Commission (ASIC) Class Order [CO 10/1257] was enacted in 2010 to extend the transitional period for compliance with the breach reporting conditions for certain group purchasing bodies (GPBs) that arrange or hold risk management products, such as insurance, for third parties. This order was made under the authority of the Corporations Act 2001, with the primary objective of providing additional time for these GPBs to comply with the regulatory requirements while the Treasury consults on the regulation of GPBs and the terms of any exemption. The order specifically extends the compliance deadline by six months, from 31 December 2010 to 30 June 2012, to accommodate the proposed consultation process by the Treasury in January 2011. This extension aims to ensure that GPBs, which include sporting and other not-for-profit organisations, have sufficient time to align with the regulatory changes and report any breaches of the conditions stipulated in ASIC Class Order [CO 08/1].
Scope and Application
The ASIC Class Order [CO 10/1257] applies to a specific class of persons, namely group purchasing bodies (GPBs) that arrange or hold risk management products, such as insurance, on a non-commercial basis for the benefit of third parties. This includes not-for-profit organisations, like sporting bodies, that arrange insurance for players or volunteers. The class order extends the transitional period for compliance with breach reporting conditions under ASIC Class Order [CO 08/1] by six months, to 30 June 2012. This extension allows GPBs relying on the relief provided under [CO 08/1] to continue to operate without immediate compliance with the breach reporting conditions, provided they report any breaches by 30 June 2012. The class order operates under the authority of the Corporations Act 2001, specifically under paragraphs 601QA(1)(a) and 911A(2)(l), which allow ASIC to exempt a class of persons from certain provisions of the Act, including the AFS licensing regime and Chapter 5C. The scope of the class order is national, as it is made under the Commonwealth jurisdiction of the Corporations Act 2001. The order does not specify any exclusions, exemptions, or thresholds, but the application may be further refined through subordinate instruments if necessary.
Key Provisions
The ASIC Class Order [CO 10/1257] extends the transitional period for compliance with certain breach reporting conditions for group purchasing bodies (GPBs) that arrange risk management products, such as insurance, on a non-commercial basis. This extension is provided to give Treasury additional time to consult on the regulation of GPBs and the terms of any exemption (section 4). This means that any GPBs that were previously relying on ASIC Class Order [CO 08/1] will now have until 30 June 2012 to comply with the breach reporting conditions. This amendment is made by substituting the dates in subparagraphs 10(f)(i) and (ii) of [CO 08/1] to change the original deadline from 31 December 2010 to 30 June 2011 and from 31 December 2011 to 30 June 2012 (section 5).
GPBs that are subject to this class order must comply with the conditions of [CO 08/1], including the requirement to report any breaches to ASIC. This reporting requirement applies to GPBs that acquire, renew, or renegotiate the terms of a risk management product on or after 30 June 2011 but before 30 June 2012. GPBs must ensure that they are aware of the conditions they are subject to and ensure that they comply with these conditions. Failure to do so may result in the GPB losing the relief provided by [CO 08/1] and being subject to the full requirements of the AFS licensing regime and Ch 5C of the Act.
There are no specific offences or penalties outlined in the class order itself. However, failure to comply with the conditions of [CO 08/1] or to report any breaches to ASIC may result in enforcement action being taken against the GPB. This could include fines, legal proceedings, or other civil or criminal consequences, depending on the nature and severity of the breach. The maximum penalties for breaches of the Act or the AFS licensing regime are set out in the relevant legislation and can be significant.
In summary, ASIC Class Order [CO 10/1257] extends the transitional period for compliance with the breach reporting conditions for certain GPBs from 31 December 2010 to 30 June 2012. GPBs that are subject to this class order must comply with the conditions of [CO 08/1] and report any breaches to ASIC. Failure to do so may result in enforcement action being taken against the GPB. The maximum penalties for breaches of the Act or the AFS licensing regime are set out in the relevant legislation.