ASIC CLASS ORDER [CO 10/45]
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 10/45] 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 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 only to a limited class of GPBs who organise insurance on a non-commercial basis. Industry have 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 enable consideration of industry’s request for clarification the transitional period for compliance with the breach reporting requirements in [CO 08/1] was extended and is scheduled to end on 31 January 2010.
2. Purpose of the class order
ASIC Class Order [CO 10/45] extends the transitional period for compliance with the breach reporting condition in [CO 08/1] by one month to enable ASIC to resolve a number of additional issues and make necessary amendments to [CO 08/1] and RG 195 to clarify how the existing eligibility tests in the relief operate.
3. Operation of the class order
Paragraph 4 amends [CO 08/1] by substituting ‘28 February 2010’ in place of ‘31 January 2010’ in subparagraph 10(f). This means that from 1 March 2010 GPBs relying on relief under [CO 08/1] will need to report any breaches of the conditions of [CO 08/1] to ASIC as specified under subparagraph 10(f). It is ASIC’s intention to amend subparagraph 10(f) to incorporate a further transitional period for compliance with the breach reporting requirement in [CO 08/1] to permit stakeholders time to understand any clarifications made to [CO 08/1] and RG 195 as a result of this process.
4. Consultation
In preparing [CO 09/728] which extended the original transitional period ASIC has taken account of concerns articulated by the National Insurance Brokers Association of Australia (NIBA). ASIC did not undertake further consultation with respect to [CO 10/45] as it is of a minor and machinery nature.
Overview
The Australian Securities and Investments Commission (ASIC) has enacted ASIC Class Order [CO 10/45] under sections 601QA and 911A(2)(l) of the Corporations Act 2001 to address gaps in the regulatory framework concerning group purchasing bodies (GPBs) that arrange or hold risk management products, such as insurance, for third parties. This class order extends the transitional period for compliance with breach reporting conditions in the previous ASIC Class Order [CO 08/1], which provided conditional relief from the Australian Financial Services (AFS) licensing regime and Chapter 5C of the Corporations Act for certain GPBs. The purpose of this extension is to allow ASIC to resolve additional issues and make necessary amendments to [CO 08/1] and related Regulatory Guide 195 (RG 195) to clarify the eligibility tests for the relief provided. The order reflects ASIC's intention to provide stakeholders with sufficient time to understand any clarifications made to the relief conditions, thereby ensuring a smoother transition and compliance with the updated requirements.
Scope and Application
The ASIC Class Order [CO 10/45] is a legislative instrument under the Corporations Act 2001, specifically crafted to extend the transitional period for compliance with certain breach reporting requirements set out in ASIC Class Order [CO 08/1]. This order applies to group purchasing bodies (GPBs) that arrange or hold risk management products, such as insurance, for the benefit of third parties, and who qualify for conditional relief from the Australian Financial Services licensing regime and certain provisions under the Act. These GPBs include not-for-profit entities like sporting organisations that organise insurance for third parties. The order is designed to provide additional time for these entities to comply with breach reporting conditions, ensuring they have sufficient opportunity to understand and adjust to any clarifications or amendments to the relief criteria. The jurisdictional reach of this order is national, applying across Australia as per the Corporations Act 2001. While the order primarily serves to extend a transitional period, it also aims to incorporate further clarifications and amendments to [CO 08/1] and related guidance, such as Regulatory Guide 195, to ensure that the relief provided is clear and effectively implemented.
Key Provisions
ASIC Class Order [CO 10/45], issued under sections 601QA(1)(a) and 911A(2)(l) of the Corporations Act 2001, extends the transitional period for compliance with the breach reporting requirements in ASIC Class Order [CO 08/1] for group purchasing bodies (GPBs) by one month, from 31 January 2010 to 28 February 2010. This order provides conditional relief from the AFS licensing regime and Chapter 5C of the Act for certain GPBs who arrange or hold risk management products, such as insurance, for the benefit of third parties. The relief applies to GPBs that organise insurance on a non-commercial basis, such as sporting and other not-for-profit organisations that arrange insurance for players or volunteers.
The primary obligations imposed by this Act are that GPBs must comply with the conditions specified in [CO 08/1] and report any breaches to ASIC. As per paragraph 4 of [CO 10/45], GPBs relying on relief must report any breaches of the conditions in [CO 08/1] to ASIC as specified under subparagraph 10(f). This requirement ensures that ASIC is kept informed of any non-compliance by GPBs and can take appropriate action if necessary. GPBs must also adhere to any clarifications made to [CO 08/1] and Regulatory Guide 195 (RG 195) as a result of ASIC’s process to amend and clarify the eligibility tests for relief.
The Act outlines specific consequences for breach of its provisions. While the explanatory statement does not detail maximum penalties, breaches of the Corporations Act or related class orders can result in civil and criminal penalties. These can include substantial fines for corporations and potential imprisonment for individuals, depending on the severity and nature of the breach. ASIC has the authority to enforce compliance with the Act and can take action against GPBs that fail to report breaches or otherwise contravene the conditions of [CO 08/1]. Such enforcement actions may include imposing fines, issuing compliance orders, or revoking the relief provided by the class order.