ASIC Class Order [CO 10/177]

Administered by Department of the Treasury

Legislation au F2010L01866 Not in force Legislative Instrument

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ASIC CLASS ORDER [CO 10/177]

 

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 10/177] under ss601QA and 911A(2)(l) of the Corporations Act 2001 (the Act).

Section 601QA(1)(a) provides that ASIC may exempt a class of persons from the provisions of Ch 5C of the Act.

Section 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 and disclosure 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. In certain circumstances, GPBs include Australian financial services licensees or authorised representatives of Australian financial services licensees.

 

ASIC Class Order [CO 08/1] limits the relief provided to circumstances where the group purchasing body is most likely to be acting in the interests of the persons to be covered by the risk insurance product, rather than in its own interests or in the interests of anyone else. Given that the role played by certain group purchasing bodies is in many ways more like the buyer of risk management products rather than a seller, ASIC considers that there may be less need for strict compliance with the requirements of Chapters 7 and 5C.

 

ASIC Class Order [CO 08/1] came into effect on 30 September 2008. In 2009, some participants in the insurance industry and some group purchasing bodies asked ASIC to clarify [CO 08/1] and its policy for relief as explained in RG 195 Group purchasing bodies for insurance and other risk management products (RG 195) to remove any possible uncertainty about the conduct of group purchasing bodies that might bring them within the scope of the relief, to give more particular guidance about the practical operation of the eligibility tests for the relief, and to introduce greater flexibility into the notification requirements in the conditions of relief.
 

ASIC Class Order [CO 08/1] was varied by ASIC Class Order [CO 10/116] and [CO/10 177].

2. Purpose of the class order

ASIC Class Order [CO 10/177] clarifies the relief available for eligible group purchasing bodies that are arranging and holding risk management products or operating a risk management scheme.

 

 

3. Operation of the class order

 

Paragraph 4 amends [CO 08/1] by:

  1. Making a minor related technical amendment to subparagraph 4(c) omitting the word "paragraph" and substituting the word "subparagraph".
  2. Clarifying that a body is ineligible to rely on the relief if the body carries on a business of issuing "risk management products" generally. For example, if the body carries on a business of issuing general insurance products, it will be ineligible under subparagraph 5(a). A body may only be eligible for relief under paragraph 5(a) if it carries on a business of issuing interests in the group insurance arrangement and, or, provides financial product advice in relation to the group insurance arrangement.
  3. Clarifying that a body may be eligible for relief under subparagraph 5(aa) if the body is a licensee or an authorised representative, provided the only persons to be covered by the risk management product or issued interests in the risk management scheme, are directors, employees etc of the body.
  4. Clarifying that to be eligible for relief under sub-subparagraph 5(b)(ii), in circumstances where the body receives a payment from a person who is covered by the group insurance arrangement, the body is eligible for relief where the amount of the payment is separately identified from other amounts payable by the person to the body to become or remain a member of the body. 
  5. Amending sub-paragraph 10(b) to clarify that a body will still be required to take reasonable steps to bring to the attention of each relevant person that the product may be cancelled or not renewed, if the body does not expect the cover will apply for the period or the product is likely to be cancelled or not renewed, and the terms of the product require the issuer to give the person notice before cancellation or non-renewal of the product.
  6. Amending sub-subparagraph 10(e)(iii) to clarify that the body does not have to give the person information about any amounts payable by the person to obtain the cover under the product if the amount cannot be separately identified in dollars from any other amounts payable by the person to the body to become or remain a member of the body.
  7. Amending sub-subparagraph 10 (e)(v) so that the relevant condition is subject to the qualification that the body is neither a financial services licensee nor the authorised representative of such a licensee.
  8. Extending the cessation of the transitional period for compliance with the breach reporting requirements from 30 June 2010 until the first time that the group purchasing body acquires, renews or renegotiates the terms of the risk management product on or after 31 December 2010, but in any event no later than 31 December 2011.

 

4. Consultation

In preparing [CO 10/177] ASIC has consulted with the National Insurance Brokers Association of Australia. ASIC did not otherwise undertake consultation with respect to [CO 10/177] as it is of a minor and machinery nature.

 

 

 

Overview

The ASIC Class Order [CO 10/177] was enacted in 2010 under the Corporations Act 2001 by the Australian Securities and Investments Commission (ASIC). This legislative instrument seeks to address the uncertainties and gaps in the existing regulatory framework for group purchasing bodies (GPBs) that arrange and hold risk management products, particularly insurance, for third parties. Building on the conditional relief provided by ASIC Class Order [CO 08/1], which exempts certain GPBs from the Australian Financial Services licensing (AFS) and disclosure regime, CO 10/177 aims to provide further clarity and flexibility in the conditions under which these bodies can operate without needing an AFS licence. The order responds to requests from the insurance industry and GPBs for more precise guidance on eligibility and operational requirements, ensuring that the relief is appropriately targeted to those acting primarily in the interests of the insured parties rather than in their own commercial interests.

Scope and Application

ASIC Class Order [CO 10/177] applies to group purchasing bodies (GPBs) that arrange or hold risk management products, such as insurance, for the benefit of third parties. It provides conditional relief from the Australian Financial Services (AFS) licensing requirements and certain disclosure obligations under the Corporations Act 2001. This relief is contingent upon the GPB primarily acting in the interests of the insured parties rather than in its own interests or those of another party. The class order is designed to exempt GPBs from the stringent regulatory requirements of the AFS licensing regime and disclosure obligations when they function more as buyers rather than sellers of risk management products. The order applies nationally across Australia, as it is a Commonwealth instrument. Notably, the relief does not extend to GPBs that generally issue risk management products or those who are financial services licensees or authorised representatives unless specific conditions are met. Additionally, the order includes clarifications and minor amendments to the previous class order [CO 08/1], enhancing the understanding and operational framework for eligible GPBs. The changes were made following consultations with relevant industry bodies and aim to reduce ambiguity and provide clearer guidelines on eligibility and operational requirements.

Key Provisions

ASIC Class Order [CO 10/177] provides relief to group purchasing bodies (GPBs) from certain provisions of the Corporations Act 2001 (the Act) when they arrange or hold risk management products, such as insurance, for the benefit of third parties. The relief is conditional and applies only where the GPB is most likely acting in the interests of the insured parties rather than its own interests or those of another party (section 4). The order varies ASIC Class Order [CO 08/1], which initially provided this relief, by clarifying eligibility criteria and certain operational requirements (section 3). The order imposes specific obligations on GPBs to ensure they qualify for the relief. For example, a GPB must not generally issue risk management products but may do so if it issues interests in a group insurance arrangement or provides financial product advice related to such an arrangement (section 4(c)). Additionally, if a GPB receives payments from covered persons, the payment related to the risk management product must be separately identifiable from other membership fees (section 4(b)(ii)). GPBs must also take reasonable steps to inform relevant persons if a product may be cancelled or not renewed (section 4(b)(iii)). These obligations are designed to maintain the integrity of the relief by ensuring it is used appropriately. Failure to comply with the conditions of the relief can result in significant consequences. Although specific penalties are not detailed in the explanatory statement, breaches of the Corporations Act can lead to both civil and criminal penalties. Civil penalties can include substantial fines, while criminal penalties can result in imprisonment, reflecting the seriousness with which the Act treats non-compliance. The exact penalties would depend on the nature and severity of the breach, as well as any applicable provisions of the Act.

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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.