ASIC Class Order [CO 99/1224]

Overview

The Australian Securities and Investments Commission (ASIC) has introduced this legislative instrument to address the need for clarity and consistency in the terminology used in financial regulations. Enacted in 1999, this order aims to update the outdated reference to "Australian bank" with the more precise term "Authorised Deposit-taking Institution" (ADI), as defined under the Banking Act 1959. This change is intended to align with the current legislative framework and improve the effectiveness of regulatory oversight in the financial sector. The instrument was made under the authority granted by subsections 109ZB(5) and 341(1) of the Corporations Law, with the primary objective of ensuring that the definitions used in ASIC Class Order 98/0110 are consistent and up-to-date. This legislative amendment is crucial for maintaining the integrity and clarity of financial regulations in Australia.

Scope and Application

The Legislative Instrument F2006B00897, issued under subsections 109ZB(5) and 341(1) of the Corporations Law, pertains to the Australian Securities and Investments Commission (ASIC). The primary focus of this legislative instrument is to amend ASIC Class Order 98/0110, dated 10 July 1998, concerning the definitions within financial regulations. Specifically, the Order replaces the term "Australian bank" with "ADI" throughout the document, where "ADI" stands for an authorised deposit-taking institution as defined under the Banking Act 1959. Furthermore, the definition of "Bank" is expanded to include an ADI. This amendment applies to the scope of financial entities governed by ASIC, thus extending its reach to all authorised deposit-taking institutions as per the Banking Act. The instrument does not explicitly state any exclusions, exemptions, or thresholds but operates within the existing framework of the Corporations Law and associated regulations. The application of this Order is likely to impact financial institutions, including banks and authorised deposit-taking institutions, ensuring consistency and clarity in regulatory definitions across relevant sectors.

Key Provisions

The operative sections of this legislation focus on modifying the definition of certain financial institutions within a regulatory framework. Specifically, section (a) of the order replaces all instances of the term "Australian bank" with "ADI" throughout the relevant legal documents. An ADI, as defined in section (b), stands for an authorised deposit-taking institution under the Banking Act 1959. This change is made to streamline terminology and align it with current legislative standards. Furthermore, section (c) updates the definition of "Bank" to include an ADI, ensuring comprehensive coverage of financial entities governed by the act. The legislation imposes several obligations on the parties it governs. Firstly, financial institutions must ensure that their documentation and internal records reflect the updated terminology, replacing "Australian bank" with "ADI" where applicable. This change requires a thorough review of existing legal documents, contracts, and any other official communications to maintain consistency and accuracy. Additionally, institutions must incorporate the new definition of "Bank" to include ADIs in their operational frameworks, ensuring that all regulatory requirements are met. Breaches of this legislation could lead to significant consequences. Although the specific penalties are not detailed in the text provided, it is reasonable to infer that non-compliance with regulatory orders can attract enforcement actions by the Australian Securities and Investments Commission (ASIC). Typically, such breaches could result in administrative penalties, fines, or even legal action against the non-compliant entity. The severity of the penalty often depends on the nature and extent of the breach, as well as any precedents set by previous cases. Given the regulatory nature of the act, severe breaches might also attract criminal charges, leading to prosecution and potential imprisonment for responsible individuals.