ASIC CLASS ORDER [CO 11/1287]
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 11/1287] under paragraphs 601QA(1)(a) and 911A(2)(l) of the Corporations Act 2001 (the Act).
Paragraph 601QA(1)(a) of the Act provides that ASIC may exempt a class of persons from the provisions of Chapter 5C of the Act.
Paragraph 911A(2)(l) of the Act provides that ASIC may exempt a class of persons from the requirement to hold an Australian financial services licence (AFS licence).
1. Background
ASIC Class Order [CO 08/1] Group purchasing bodies, the principal class order, gives conditional relief from the AFS licensing regime and Chapter 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 2011.
2. Purpose of the class order
ASIC Class Order [CO 11/1287],an amending class order, extends the transitional period for compliance with the breach reporting conditions in [CO 08/1] by another 6 months while the Government considers 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 2012 but before 30 June 2013. This extension will enable the Government to consider whether the issues raised by GPBs are better addressed by amendments to the Corporations Regulations 2001, and if so to consult with stakeholders in the development of the regulations.
3. Operation of the class order
Paragraph 4 of the amending class order amends [CO 08/1] by substituting ‘30 June 2012’ in place of ‘31 December 2011’ and substituting '30 June 2013' in place of '31 December 2012' in subparagraphs 10(f)(i) and (ii), respectively. This means that on or after 30 June 2012, 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 2013.
4. Consultation
ASIC did not undertake consultation with respect to [CO 11/1287] as it is a transitional measure of a minor and machinery nature, and was required as a matter of urgency to extend the transitional period in [CO 08/1].
Overview
The Australian Securities and Investments Commission (ASIC) has introduced ASIC Class Order [CO 11/1287] under the Corporations Act 2001 to address a transitional issue arising from the existing regulatory framework for group purchasing bodies (GPBs) that arrange insurance on a non-commercial basis. This class order extends the transitional period for compliance with the breach reporting conditions previously established in ASIC Class Order [CO 08/1]. This extension aims to provide additional time for the Government to consider whether the issues raised by GPBs are better addressed through amendments to the Corporations Regulations 2001, and to allow for stakeholder consultation in the development of these regulations. The order was enacted without consultation due to its urgent and minor nature, and it is designed to ensure that GPBs relying on relief under [CO 08/1] comply with the breach reporting conditions by no later than 30 June 2013.
Scope and Application
ASIC Class Order [CO 11/1287] applies to a specific class of group purchasing bodies (GPBs) that arrange or hold risk management products, such as insurance, for the benefit of third parties, including sporting and other not-for-profit organisations. This class order extends the transitional period for compliance with breach reporting conditions that were initially set out in ASIC Class Order [CO 08/1]. The geographic and jurisdictional reach of this Act is limited to Australia, as it is an instrument made under the Corporations Act 2001, which applies nationally across Australia. The Act does not specify any exclusions or exemptions but provides a temporary relief measure until 30 June 2013 to allow the Government to consider whether regulatory amendments are necessary. The class order does not require consultation as it is a transitional measure designed to extend an existing regime temporarily, reflecting the urgent need to provide additional time for the Government to address potential regulatory concerns raised by the GPBs.
Key Provisions
ASIC Class Order [CO 11/1287] amends the transitional period for compliance with the breach reporting conditions in ASIC Class Order [CO 08/1], extending it until 30 June 2013. This amending class order was made under the Corporations Act 2001 (section 601QA(1)(a) and 911A(2)(l)) to allow the Government time to consider whether the issues raised by group purchasing bodies (GPBs) are better addressed through amendments to the Corporations Regulations 2001. The original class order, [CO 08/1], provided conditional relief from the Australian Financial Services (AFS) licensing regime and certain provisions in Chapter 5C of the Act for GPBs arranging insurance for third parties on a non-commercial basis.
The obligations imposed by ASIC Class Order [CO 11/1287] are primarily concerned with reporting requirements for GPBs. Specifically, GPBs that rely on the relief provided by [CO 08/1] must report any breaches of the conditions of that order to ASIC. This reporting must occur no later than 30 June 2013, as per the amendment made by paragraph 4 of the amending class order. This requirement ensures that ASIC is kept informed of any non-compliance by GPBs during the extended transitional period.
Failure to comply with the reporting requirements under ASIC Class Order [CO 11/1287] may have significant consequences. While the Explanatory Statement does not explicitly outline penalties for non-compliance, breaches of the Corporations Act or related class orders can lead to substantial penalties under the Act. These penalties may include fines for corporations (up to $1.65 million under section 1317E) and, in serious cases, imprisonment for individuals (up to 10 years under section 1301). Additionally, the Australian Securities and Investments Commission (ASIC) has the authority to seek injunctive and other equitable relief to enforce compliance with the Act and related class orders.