ASIC Class Order [CO 11/576]

Overview

The ASIC Class Order [CO 11/576], introduced in 2011 under the Corporations Act 2001, was created to streamline the disclosure requirements for certain financial products, specifically superannuation products and simple managed investment schemes. This legislative instrument was enacted by the Australian Securities and Investments Commission (ASIC) to address the need for a more efficient and simplified disclosure process without compromising the quality of information provided to consumers. The order modifies the existing regulations to allow for abbreviated Product Disclosure Statements (PDS) for these specified products, reducing administrative burdens while maintaining transparency and consumer protection. The policy objective of this class order is to facilitate easier compliance for financial product issuers, thereby encouraging broader participation in the financial market without diluting the protections afforded to consumers under the Corporations Act.

Scope and Application

ASIC Class Order [CO 11/576], operating under section 1020F(1)(c) of the Corporations Act 2001, establishes a shorter Product Disclosure Statement (PDS) regime for superannuation products and simple managed investment schemes. This legislative instrument applies to all persons and entities involved in preparing and providing PDS for these financial products. The instrument's jurisdictional reach is nationwide, as it is issued under the Commonwealth authority of the Australian Securities and Investments Commission (ASIC). It modifies the existing PDS requirements by exempting certain superannuation and simple managed investment schemes from the full disclosure obligations, provided the PDS is prepared in accordance with the specified regulatory provisions. This amendment streamlines the disclosure process for these specific financial products, thereby reducing compliance burdens for financial institutions. The instrument came into effect on the later of its registration under the Legislative Instruments Act 2003 or 22 June 2011, and it will cease to apply once any amendments to the Act or the Corporations Regulations 2001 that achieve similar effects come into force, or by 22 June 2012, whichever is earlier.

Key Provisions

The ASIC Class Order [CO 11/576] primarily modifies the regulatory framework for Product Disclosure Statements (PDS) in relation to superannuation products and simple managed investment schemes. This legislative instrument amends the Corporations Amendment Regulations 2010 (No. 5) by omitting certain subregulations and introducing new provisions. Specifically, subregulations 4(1) to (5) are omitted and substituted to exclude the application of certain amendments to PDS for superannuation products and simple managed investment schemes until a specified condition is met. The condition is that a PDS must either be provided or a statement must be made to ASIC that a PDS has been prepared in accordance with the relevant subdivisions of the Corporations Regulations 2001, after 21 June 2011. Additionally, the PDS may contain a statement indicating compliance with the relevant regulatory subdivisions. This Act imposes several obligations on entities issuing PDS for superannuation products and simple managed investment schemes. Firstly, these entities must ensure that their PDS either contains a specific statement of compliance or that a statement is provided to ASIC indicating that a PDS has been prepared in accordance with the relevant regulatory provisions. This must occur after 21 June 2011. Furthermore, the PDS may include a statement advising the reader that it has been prepared in accordance with the relevant regulatory provisions, which must be included after the specified date. Failure to comply with the requirements set out in this Act may result in civil or criminal penalties. While the specific penalties are not detailed within this Class Order, under the Corporations Act 2001, breaches of legislative requirements can lead to significant fines for both individuals and corporations. For corporations, the penalties can be substantial, up to several million Australian dollars, depending on the severity and frequency of the breach. For individuals, the penalties can include fines and, in more severe cases, imprisonment. The exact penalties are determined by the courts and depend on the specific circumstances of each case.