ASIC CLASS ORDER [CO 11/617]

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 11/617] under paragraph 1020F(1)(c) of the Corporations Act 2001 (the Act).

Paragraph 1020F(1)(c) of the Act provides that ASIC may declare that Part 7.9 of the Act applies in relation to a person or a financial product, or a class of persons or financial products, as if specified provisions were omitted, modified or varied as specified in the declaration. 

1. Background

The Corporations Amendment Regulations 2010 (No. 5) established a new shorter Product Disclosure Statement (PDS) regime under Subdivision 4.2B (for superannuation products) and Subdivision 4.2C (for simple managed investment schemes) of Division 4 of Part 7.9 of the Corporations Regulations 2001.

The new shorter PDS regime requires a PDS to be a maximum of 8 pages in length and to comply with prescriptive headings and content requirements.

The Corporations Amendment Regulations 2010 (No. 5) provide for a transition period so that the obligation to prepare a shorter PDS will commence on:

(a)   22 June 2011 for any new PDSs which had not previously been issued (supplementary PDSs are not permitted to be issued after this date); and

(b)   22 June 2012 for all PDSs.

On 8 June 2011, following discussions with industry, the Assistant Treasurer and Minister for Financial Services and Superannuation  announced refinements to the shorter PDS regime to provide more time for providers to put processes in place, and flexibility for others who are well advanced. These changes will allow providers of these regulated products:

(a)   To remain in the old regime until 22 June 2012;

(b)   To continue to issue supplementary PDSs until 22 June 2012;

(c)   To opt into the new regime from 22 June 2011 if they are ready to.

Regulations to give effect to these proposed refinements were not able to be made by 22 June 2011.

Consequently, ASIC made Class Order [CO 11/576] (the principal class order) to give effect to these proposed refinements.     

The principal class order modified the operation of the transitional arrangements to provide that:

(a)   the shorter PDS regime does not apply unless and until the issuer opts in to the new regime; and

(a)   in order to opt in, the PDS for the product must contain a statement that it is prepared in accordance with the shorter PDS regime.

The principal class order has effect until the earlier of commencement of any amendments to the Act or the Corporations Regulations 2001 that have the same or similar effect to the changes contained in the principal class order and 22 June 2012.

2. Purpose and operation of the class order

The purpose of Class Order [CO 11/617] is to provide an additional means by which a PDS issuer can opt in to the new shorter PDS regime, namely by giving a written or electronic notification to ASIC to that effect. This purpose is implemented by amending the principal class order. 

3. Consultation

Before making the principal class order, ASIC consulted with the Financial Services Council (FSC) and the Association of Superannuation Funds of Australia (ASFA). ASIC also consulted with the Department of the Treasury.

ASIC amended the principal class order following further submissions from ASFA, the Law Council of Australia, and a number of trustees.