ASIC CLASS ORDER [CO 12/0750]
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 12/0750] 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 30 June 2012.
2. Purpose of the class order
ASIC Class Order [CO 12/0750], 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 31 December 2012 but before 31 December 2013. This extension will enable the Government to consider whether the issues raised by GPBs are better addressed by amendments to the Corporations Regulations 2001, and if so 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 ‘31 December 2012’ in place of ‘30 June 2012’ and substituting '31 December 2013' in place of '30 June 2013’ in subparagraphs 10(f)(i) and (ii), respectively. This means that on or after 31 December 2012, 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 2013.
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
5. Consultation
ASIC did not undertake consultation with respect to [CO 12/0750] 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 12/0750], enacted in 2012, is an amending order that extends the transitional period for compliance with the breach reporting conditions in ASIC Class Order [CO 08/1], which provides conditional relief from the AFS licensing regime and Chapter 5C of the Corporations Act 2001 for certain group purchasing bodies (GPBs). The primary purpose of this amending class order is to provide an additional six months for the government to consider whether the issues raised by GPBs are better addressed by amendments to the Corporations Regulations 2001. By doing so, the government can consult with stakeholders in the development of these regulations. The Australian Securities and Investments Commission (ASIC) made this class order under the Corporations Act 2001, aiming to ensure that GPBs have sufficient time to comply with the relevant reporting requirements. This extension allows for a more thorough examination of the issue at hand and facilitates better-informed decision-making regarding potential legislative changes.
Scope and Application
ASIC Class Order [CO 12/0750] is a regulatory instrument made by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001, which pertains to the conditional relief from the Australian financial services (AFS) licensing regime and certain provisions of Chapter 5C for a specific class of group purchasing bodies (GPBs) that arrange or hold risk management products, such as insurance, on a non-commercial basis for third parties. This class order specifically extends the transitional period for compliance with breach reporting conditions for these GPBs, as originally set out in ASIC Class Order [CO 08/1]. The extension was deemed necessary to provide additional time for the government to consider whether legislative amendments are required to address the issues raised by GPBs and to consult with relevant stakeholders on any potential regulatory changes. The order applies to GPBs that acquire, renew, or renegotiate risk management products between 31 December 2012 and 31 December 2013, requiring them to report any breaches of the conditions to ASIC by 31 December 2013.
Key Provisions
The main operative sections of ASIC Class Order [CO 12/0750] pertain to the extension of the transitional period for compliance with breach reporting conditions for certain group purchasing bodies (GPBs) under ASIC Class Order [CO 08/1] (section 3). Specifically, the transitional period for GPBs to comply with the breach reporting conditions is extended until the first time they acquire, renew, or renegotiate the terms of a risk management product between 31 December 2012 and 31 December 2013 (section 4). This extension allows the government to further consider whether the issues raised by GPBs are best addressed through amendments to the Corporations Regulations 2001 and to consult with stakeholders accordingly. This order also includes a statement of compatibility with human rights under the Human Rights (Parliamentary Scrutiny) Act 2011, indicating that the class order respects human rights and freedoms as recognised or declared in the international instruments (section 4).
ASIC Class Order [CO 12/0750] imposes specific obligations on GPBs that fall under the relief provided by ASIC Class Order [CO 08/1]. These GPBs must now report any breaches of the conditions of [CO 08/1] to ASIC on or after 31 December 2012 but no later than 31 December 2013. This requirement is aimed at ensuring compliance with regulatory standards and providing ASIC with the necessary information to oversee the activities of these GPBs effectively. The obligation to report breaches is a critical component of maintaining the integrity and effectiveness of the regulatory framework governing financial services in Australia.
The class order does not explicitly outline specific offences, penalties, or consequences for breach within its text. However, under the broader regulatory framework provided by the Corporations Act 2001, any failure to comply with the reporting obligations could potentially lead to enforcement actions by ASIC. These actions may include administrative penalties, legal proceedings, or other regulatory sanctions. The penalties for such breaches would be determined in accordance with the provisions of the Corporations Act 2001, which can include substantial fines and, in severe cases, criminal charges for individuals found to be in violation of the regulatory requirements. Given the regulatory nature of the obligations imposed by [CO 12/0750], adherence to the reporting requirements is crucial to avoid any potential legal repercussions.