ASIC CLASS ORDER [CO 12/1712]
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 12/1712] 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 2012.
2. Purpose of the class order
ASIC Class Order [CO 12/1712], 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 2013 but before 30 June 2014. This extension will enable the Government to consider how the issues raised by GPBs can be addressed by amendments to the Corporations Regulations 2001, and 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 2013’ in place of ‘31 December 2012’ and substituting '30 June 2014' in place of '31 December 2013’ in subparagraphs 10(f)(i) and (ii), respectively. This means that on or after 30 June 2013, 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 2014.
4. Statement of Compatibility with Human Rights
This statement is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
This class order is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 because it does not engage any of the applicable rights or freedoms.
5. Consultation
ASIC did not undertake consultation with respect to [CO 12/1712] 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 ASIC Class Order [CO 12/1712] was enacted in 2012 under the authority of the Corporations Act 2001, aiming to address transitional compliance issues for group purchasing bodies (GPBs) that organise risk management products, such as insurance, on a non-commercial basis for third parties. This class order, introduced by the Australian Securities and Investments Commission (ASIC), extends the transitional period for GPBs to comply with breach reporting conditions, providing them with additional time to adjust to regulatory requirements while the government considers potential legislative amendments. The purpose of this class order is to facilitate a smoother transition for GPBs and to allow the government to consult with stakeholders effectively in developing any necessary regulatory changes. The transitional extension is set to last until the first acquisition, renewal, or renegotiation of risk management products by these bodies between 30 June 2013 and 30 June 2014.
Scope and Application
ASIC Class Order [CO 12/1712] applies to a specific class of persons, namely group purchasing bodies (GPBs) that arrange or hold risk management products, such as insurance, for the benefit of third parties. These GPBs, often including sporting and other not-for-profit organisations, benefit from conditional relief from the Australian financial services (AFS) licensing regime and specific provisions in Chapter 5C of the Corporations Act 2001. The class order extends the transitional period for compliance with breach reporting conditions set out in ASIC Class Order [CO 08/1], providing these GPBs with additional time to comply until the first acquisition, renewal, or renegotiation of a risk management product between 30 June 2013 and 30 June 2014. The geographic and jurisdictional reach of this class order is national, operating under the Commonwealth authority of the Australian Securities and Investments Commission (ASIC) as per the Corporations Act 2001. There are no stated exclusions, exemptions, or thresholds beyond the specified transitional period for compliance with breach reporting conditions. The application of this class order can be further extended or modified through subordinate instruments issued by ASIC under the Act.
Key Provisions
ASIC Class Order [CO 12/1712] is a legislative measure that extends the transitional period for compliance with the breach reporting conditions in ASIC Class Order [CO 08/1]. This extension is crucial as it gives the government additional time to consider how to address the issues raised by group purchasing bodies (GPBs) and to consult with stakeholders in developing potential amendments to the Corporations Regulations 2001. Specifically, paragraph 4 of the amending class order modifies the original transitional period set out in [CO 08/1]. It changes the end date for compliance with the breach reporting conditions from 31 December 2012 to 30 June 2014. This means that GPBs relying on the relief provided by [CO 08/1] must report any breaches of its conditions to ASIC by no later than 30 June 2014, but only for risk management products acquired, renewed, or renegotiated between 30 June 2013 and 30 June 2014.
Under this class order, GPBs are required to comply with certain reporting obligations to ASIC. Specifically, they must report any breaches of the conditions in [CO 08/1], which is the principal class order providing relief to a limited class of GPBs that arrange insurance on a non-commercial basis. This reporting requirement ensures that ASIC is kept informed about any potential non-compliance by GPBs, allowing for oversight and potential enforcement actions if necessary.
In terms of consequences for non-compliance, the class order itself does not specify particular offences, penalties, or civil or criminal consequences for breaching its provisions. However, any breach of the conditions set out in [CO 08/1], which the class order extends, could result in enforcement actions by ASIC. Such actions might include administrative penalties, public reprimands, or even legal proceedings under the Corporations Act 2001. The specific penalties for breaching the conditions of [CO 08/1] would depend on the nature and severity of the breach, and would be determined in accordance with the relevant provisions of the Act.