ASIC CLASS ORDER [CO 11/519]
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 11/519] 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], 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 30 June 2011.
Treasury has indicated to ASIC that it may be appropriate for the regulation of GPBs and the terms of any exemption to be addressed by regulation. Treasury is still consulting on the issue.
2. Purpose of the class order
ASIC Class Order [CO 11/519], an amending class order, extends the transitional period for compliance with the breach reporting conditions in [CO 08/1] by another 6 months while Treasury consults on 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 31 December 2011 but before 31 December 2012.
3. Operation of the class order
Paragraph 4 of the amending class order amends [CO 08/1] by substituting ‘31 December 2011’ in place of ‘30 June 2011’ and substituting '31 December 2012' in place of '30 June 2012' in subparagraphs 10(f)(i) and (ii), respectively. This means that on or after 31 December 2011, 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 31 December 2012.
4. Consultation
In preparing [CO 11/519] ASIC has taken account of Treasury's consultation process.
Overview
The Australian Securities and Investments Commission (ASIC) introduced ASIC Class Order [CO 11/519] under the Corporations Act 2001 to address the transitional period for compliance with the breach reporting conditions for certain group purchasing bodies (GPBs) that organise insurance on a non-commercial basis. The original class order, ASIC Class Order [CO 08/1], provided conditional relief from the Australian financial services licensing regime and Chapter 5C of the Act for these GPBs. However, Treasury indicated that it may be appropriate for the regulation of GPBs and the terms of any exemption to be addressed by regulation, and ASIC Class Order [CO 11/519] was introduced to extend the transitional period for compliance with the breach reporting conditions in [CO 08/1] by another 6 months while Treasury consults on the issue. The purpose of this amending class order is to provide additional time for GPBs to comply with the conditions of [CO 08/1] before they are required to report any breaches to ASIC.
The Australian Securities and Investments Commission, acting under the authority of the Corporations Act 2001, issued ASIC Class Order [CO 11/519] to extend the transitional period for compliance with the breach reporting conditions in ASIC Class Order [CO 08/1]. This order was introduced in response to Treasury's indication that it may be appropriate for the regulation of GPBs and the terms of any exemption to be addressed by regulation. The policy objective of this class order is to provide GPBs with an additional 6 months to comply with the conditions of [CO 08/1] before they are required to report any breaches to ASIC, while Treasury consults on the issue. The order provides relief to a limited class of GPBs that organise insurance on a non-commercial basis, including sporting and other not-for-profit organisations which arrange insurance for third parties.
Scope and Application
ASIC Class Order [CO 11/519] applies to group purchasing bodies (GPBs) that are not-for-profit organisations, including sporting organisations, which arrange or hold risk management products such as insurance for the benefit of third parties such as players or volunteers. The order is an amending class order that extends the transitional period for compliance with the breach reporting conditions in the principal class order, [CO 08/1], by another 6 months to allow for ongoing consultation by Treasury. This means that GPBs relying on relief under [CO 08/1] will need to report any breaches of the conditions of [CO 08/1] to ASIC by no later than 31 December 2012. The order applies on a national level in Australia as it is made by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001. There are no stated exclusions or exemptions in the order, and it extends or restricts application through subordinate instruments by amending [CO 08/1] to change the dates for compliance with the breach reporting conditions.
Key Provisions
ASIC Class Order [CO 11/519], made under the Corporations Act 2001, primarily extends the transitional period for compliance with certain conditions related to breach reporting for group purchasing bodies (GPBs). Specifically, section 4 of the order modifies subparagraphs 10(f)(i) and (ii) of the principal class order [CO 08/1], changing the deadline for compliance from 30 June 2011 to 31 December 2011 for the acquisition, renewal, or renegotiation of risk management products, and further extends the reporting deadline to 31 December 2012. This amendment is intended to provide additional time for GPBs to meet the reporting requirements while Treasury continues to consult on the broader regulation of GPBs.
The obligations imposed by this class order are primarily on GPBs that arrange or hold risk management products such as insurance for the benefit of third parties. These entities must ensure that they comply with the conditions of [CO 08/1], including reporting any breaches to ASIC by the specified deadlines. The obligations include maintaining records of compliance and ensuring that any changes to the risk management products are reported within the extended timeframes provided by [CO 11/519].
Failure to comply with the conditions of [CO 08/1] and the reporting requirements stipulated in [CO 11/519] may lead to regulatory consequences. While the explanatory statement does not detail specific offences or penalties, the general provisions of the Corporations Act 2001 imply that non-compliance could result in enforcement actions by ASIC. These actions might include fines, public reprimands, or further regulatory sanctions. The exact penalties would depend on the nature and severity of the breach, as well as any additional provisions under the Corporations Act that apply to the specific circumstances.