ASIC CLASS ORDER [CO 13/779]
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 13/779] 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 2013.
2. Purpose of the class order
ASIC Class Order [CO 13/779], an amending class order, extends the transitional period for compliance with the breach reporting conditions in [CO 08/1] by another 12 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 2014 but before 30 June 2015. 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 2014' in place of '30 June 2013' and substituting '30 June 2015' in place of '30 June 2014' in subparagraphs 10(f)(i) and (ii), respectively. This means that on or after 30 June 2014, 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 2015.
4. Consultation
ASIC did not undertake consultation with respect to [CO 13/779] 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].
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
ASIC Class Order [CO 13/779]
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.
Overview of the class order
This class order amends ASIC Class Order [CO 8/1] (the principal class order). The principal class order gives conditional relief from the Australian financial services licensing regime and Chapter 5C of the Corporations Act 2001 to a limited class of group purchasing bodies (GPBs) that organise insurance on a non-commercial basis for the benefit of third parties. GPBs include sporting and other not-for-profit organisations.
The transitional period for compliance with the breach reporting conditions in the principal class order was scheduled to end on 30 June 2013. This class order extends that transitional period by another 12 months while the Government considers the issue.
Human rights implications
This class order does not engage any of the applicable rights or freedoms.
Conclusion
This class order is compatible with human rights as it does not raise any human rights issues.
Overview
The Australian Securities and Investments Commission (ASIC) introduced ASIC Class Order [CO 13/779] under the Corporations Act 2001 to address the transitional issues faced by group purchasing bodies (GPBs) who arrange insurance on a non-commercial basis for the benefit of third parties, such as sporting and not-for-profit organisations. The initial transitional period for compliance with breach reporting conditions in ASIC Class Order [CO 08/1] was set to expire on 30 June 2013. ASIC Class Order [CO 13/779] extends this transitional period by an additional 12 months to 30 June 2015, providing GPBs more time to comply while the government considers appropriate regulatory amendments. This measure ensures that GPBs can continue to operate without immediate compliance pressures, allowing for necessary consultations and regulatory adjustments.
Scope and Application
The ASIC Class Order [CO 13/779] applies to a specific class of persons, namely group purchasing bodies (GPBs) that arrange or hold risk management products, such as insurance, on a non-commercial basis for the benefit of third parties. This includes sporting and other not-for-profit organisations which provide insurance for their members or volunteers. The Act modifies ASIC Class Order [CO 08/1], which initially provided conditional relief from the Australian financial services licensing regime and certain provisions of the Corporations Act 2001 for these GPBs. The jurisdictional reach of the Act is national, as it operates under the authority of the Commonwealth through the Australian Securities and Investments Commission (ASIC). The amending class order does not introduce any exclusions, exemptions, or thresholds beyond those already specified in [CO 08/1], but it does extend the transitional period for compliance with breach reporting conditions. This extension allows GPBs additional time to comply with the reporting obligations until the first time they acquire, renew, or renegotiate the terms of a risk management product between 30 June 2014 and 30 June 2015, providing the government more time to consider legislative amendments and consult with stakeholders.
Key Provisions
ASIC Class Order [CO 13/779] amends the transitional period set out in ASIC Class Order [CO 08/1], extending the timeframe for group purchasing bodies (GPBs) to comply with breach reporting conditions from 30 June 2014 to 30 June 2015. This adjustment is aimed at providing additional time for the government to consider how to address the issues raised by GPBs and to consult with stakeholders in the development of potential regulatory changes (paragraph 4). Under the amended order, GPBs must report any breaches of the conditions in [CO 08/1] to ASIC by 30 June 2015 (subparagraph 10(f)). This extension applies to the acquisition, renewal, or renegotiation of risk management products after 30 June 2014.
ASIC Class Order [CO 13/779] imposes specific obligations on GPBs, particularly those that rely on the relief provided by [CO 08/1]. These GPBs are required to report any breaches of the conditions specified in [CO 08/1] to ASIC by 30 June 2015. This reporting requirement is crucial to ensure transparency and compliance within the transitional period. Failure to report breaches within the stipulated timeframe could result in non-compliance with the regulatory conditions that permit the exemption from the AFS licensing regime and certain provisions of Chapter 5C of the Corporations Act 2001.
The Act does not explicitly state penalties or specific consequences for breaches of the conditions outlined in [CO 13/779]. However, non-compliance with the breach reporting requirements could lead to the revocation of the exemption from the AFS licensing regime and Chapter 5C of the Corporations Act 2001. Such revocation would mean that GPBs would be required to hold an AFS licence and comply with all associated regulatory obligations, which could include financial penalties and other regulatory actions. Additionally, failure to comply with reporting obligations could attract administrative penalties under the Corporations Act 2001, although the exact nature of these penalties is not specified in the class order.