ASIC CLASS ORDER [CO 10/246]
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 10/246] for the purposes of subparagraphs 912A(2)(b)(i) and 1017G(2)(b)(i) of the Corporations Act 2001 (the Act).
1. Background
Subparagraphs 912A(2)(b)(i) and 1017G(2)(b)(i) of the Act 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 scheme 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.
ASIC Class Order [CO 09/340] specifies the external dispute resolution schemes that have been approved by ASIC.
2. Purpose of the class order
The purpose of the class order is to revoke the approval of the Financial Co-Operative Dispute Resolution Scheme as it has voluntarily ceased operations.
3. Operation of the class order
This class order varies ASIC Class Order [CO 09/340] by removing the name of the Financial Co-Operative Dispute Resolution Scheme.
4. Consultation
ASIC did not engage in consultation before making this class order as it is of a minor and machinery nature.
Before making ASIC Class Order [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 Regulation Impact Statement for the policy underlying [CO 09/340], which was approved by the Office of Best Practice Regulation.
Overview
The Australian Securities and Investments Commission (ASIC) has enacted ASIC Class Order [CO 10/246] under the Corporations Act 2001 to address the specific issue of revoking the approval of the Financial Co-Operative Dispute Resolution Scheme, which has voluntarily ceased operations. This legislative measure was introduced to ensure that Australian financial services (AFS) licensees, unlicensed secondary sellers, and unlicensed product issuers continue to be associated with external dispute resolution schemes that are actively approved and operational, thereby maintaining the integrity and effectiveness of the dispute resolution framework for retail clients. ASIC did not engage in consultation for this class order, considering it to be of a minor and machinery nature, although prior consultation was conducted when establishing the original approval requirements for such schemes. The policy objective is to uphold the regulatory standards for dispute resolution in the financial services sector.
Scope and Application
ASIC Class Order [CO 10/246] applies to Australian financial service (AFS) licensees, unlicensed secondary sellers, and unlicensed product issuers as defined under the Corporations Act 2001. These entities are required to be members of one or more external dispute resolution schemes approved by ASIC, which cover complaints from retail clients regarding the financial services provided. The scope of the Act extends to ensuring that these financial entities comply with the mandate to join approved schemes for effective dispute resolution. The class order specifically revokes the approval of the Financial Co-Operative Dispute Resolution Scheme due to its voluntary cessation of operations, thereby removing it from the list of approved schemes specified in ASIC Class Order [CO 09/340]. ASIC did not engage in consultation for this particular class order, as it was deemed minor and procedural, although prior consultation had occurred during the development of the approval requirements for external dispute resolution schemes.
Key Provisions
ASIC Class Order [CO 10/246] is an amendment to existing regulations under the Corporations Act 2001. It specifically addresses the membership requirements of approved external dispute resolution (EDR) schemes for Australian financial services (AFS) licensees, unlicensed secondary sellers, and unlicensed product issuers (sections 912A(2)(b)(i) and 1017G(2)(b)(i)). The order revokes the approval of the Financial Co-Operative Dispute Resolution Scheme (section 4), which has ceased operations.
ASIC Class Order [CO 10/246] imposes obligations on AFS licensees, unlicensed secondary sellers, and unlicensed product issuers to be members of one or more approved EDR schemes. These schemes must be approved by ASIC and cover complaints from retail clients regarding financial services provided. This requirement ensures that there are mechanisms in place for resolving disputes effectively and fairly. The order specifies the removal of the Financial Co-Operative Dispute Resolution Scheme from the list of approved EDR schemes, impacting those entities previously relying on it for dispute resolution (section 4).
Entities governed by the Act must ensure they are members of an approved EDR scheme as specified in ASIC Class Order [CO 09/340], and any changes in the list of approved schemes must be adhered to. This includes updating memberships to reflect the removal of the Financial Co-Operative Dispute Resolution Scheme. Failure to comply with the membership requirement could result in non-compliance with the Act and potential enforcement actions by ASIC.
There are no direct offences, penalties, or civil/criminal consequences specified in the class order itself. However, non-compliance with the Corporations Act 2001, including failure to be a member of an approved EDR scheme, could result in enforcement actions by ASIC. These actions might include fines, legal proceedings, or other regulatory sanctions. The specific penalties for non-compliance would depend on the nature and severity of the breach, as outlined in the Act.