ASIC CLASS ORDER [CO 11/261]
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 11/261] for the purposes of s926A(2)(c) of the Corporations Act (the Act).
This paragraph of the Act enables ASIC to declare that certain parts of the Act, and regulations made under it, apply in relation to a class of persons, as if specified provisions were omitted, modified or varied as specified in the declaration.
1. Background
Trustee companies providing traditional trustee company services (traditional services) who are listed at Schedule 8AA to the Corporations Regulations 2001 (Corporations Regulations), must have a compliant dispute resolution system from 1 May 2011 for s912A(1)(g) of the Act.
The dispute resolution system must consist of:
(a) internal dispute resolution (IDR) procedures that meet ASIC’s approved standards and requirements; and
(b) membership of an external dispute resolution (EDR) scheme approved by ASIC.
2. Purpose of the class order
The purpose of this class order is to defer the date by which trustee companies providing traditional services must have a compliant dispute resolution system for their retail clients.
The date has been deferred until 1 January 2012.
ASIC has deferred the start date for the following reasons:
- to enable EDR schemes to recruit specialist teams and make the necessary changes to their complaints handling processes and procedures, including their Terms of Reference or Rules; and
- to allow industry sufficient time to adjust to the changes, whether those who are yet to obtain an Australian Financial Services (AFS) licence consolidate their traditional trustee company business or become a new AFS licensee themself.
Consumers will not be significantly disadvantaged by a deferral of the start of the dispute resolution requirements because consumers will still be able to lodge a complaint with an EDR scheme on or after 1 January 2012 with respect to trustee company conduct that occurred before this time.
3. Operation of the class order
This class order declares that the trustee companies providing traditional trustee company services listed at Schedule 8AA of the Corporations Regulations do not have to have a dispute resolution system for handling retail clients complaints (i.e. IDR procedures and membership of an ASIC-approved EDR scheme) until 1 January 2012.
4. Consultation
ASIC consulted with the EDR schemes, the Superannuation Complaints Tribunal, industry (the Trustee Company Association of Australia) and consumer representatives about the policy underlying this class order.
Overview
The Australian Securities and Investments Commission (ASIC) enacted ASIC Class Order [CO 11/261] under section 926A(2)(c) of the Corporations Act 2001. This legislation was introduced to address the need for a compliant dispute resolution system for trustee companies providing traditional services, as outlined in Schedule 8AA of the Corporations Regulations 2001. The primary objective of this class order was to provide a temporary deferral for the implementation of these requirements, allowing trustee companies and external dispute resolution (EDR) schemes more time to prepare for the changes. The deferral was intended to benefit industry and consumers alike, ensuring that EDR schemes could adequately adjust their procedures and that consumers could still lodge complaints regarding conduct that occurred before the new system was implemented. ASIC sought input from relevant parties including EDR schemes, industry associations, and consumer representatives in developing the policy for this class order.
Scope and Application
ASIC Class Order [CO 11/261] applies to trustee companies that provide traditional trustee company services and are listed at Schedule 8AA to the Corporations Regulations 2001. The purpose of this class order is to defer the implementation date for a compliant dispute resolution system for retail clients from 1 May 2011 to 1 January 2012, allowing EDR schemes and industry sufficient time to adjust to the changes. The class order modifies the Corporations Act 2001 and Corporations Regulations 2001 to defer the requirement for these trustee companies to have an internal dispute resolution system and to be members of an ASIC-approved external dispute resolution scheme. This deferral is applicable nationally as it is a Commonwealth regulation under the Corporations Act. There are no specific exclusions or exemptions mentioned in the explanatory statement, but the class order extends or restricts application by specifying the class of persons affected and the timeframe for compliance.
Key Provisions
The main sections of ASIC Class Order [CO 11/261] address the deferral of compliance dates for trustee companies providing traditional services, as stipulated in sections 912A(1)(g) and 926A(2)(c) of the Corporations Act 2001. Specifically, section 912A(1)(g) mandates that these companies must have a compliant dispute resolution system for their retail clients, while section 926A(2)(c) allows ASIC to make declarations that modify the application of the Act to certain classes of persons. The class order defers the compliance date for these requirements until 1 January 2012, providing additional time for trustee companies to establish their dispute resolution systems.
The obligations imposed by this class order primarily concern trustee companies that are listed at Schedule 8AA of the Corporations Regulations 2001. These companies are required to implement internal dispute resolution (IDR) procedures that meet ASIC's approved standards and requirements, and they must be members of an external dispute resolution (EDR) scheme approved by ASIC. The IDR procedures should ensure that complaints from retail clients are handled effectively, while membership in an EDR scheme provides an additional layer of resolution for unresolved disputes. These obligations aim to protect consumers by ensuring that their complaints are managed in a timely and fair manner.
The Explanatory Statement for ASIC Class Order [CO 11/261] outlines the rationale behind the deferral, which includes allowing EDR schemes to recruit specialist teams and adjust their complaints handling processes. It also provides industry with sufficient time to adapt to the new requirements, whether they consolidate their businesses or become new Australian Financial Services (AFS) licensees. The deferral is intended to be beneficial for consumers, as it does not significantly disadvantage them, since they can still lodge complaints with EDR schemes regarding conduct that occurred before the compliance date.
In terms of consequences for non-compliance, the Explanatory Statement does not explicitly detail specific penalties or legal consequences for breaching the provisions of the class order. However, under the Corporations Act, failure to comply with ASIC’s orders or regulations can lead to civil or criminal penalties. These penalties can include substantial fines, both for individuals and corporations, and in severe cases, criminal charges. The maximum penalties can vary depending on the nature and severity of the breach, but they are designed to enforce compliance and protect consumers' interests.