ASIC Corporations (Amendment) Instrument 2018/1098

Administered by Department of the Treasury

Legislation au F2018L01667 Not in force Legislative Instrument

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EXPLANATORY STATEMENT for
ASIC Corporations (Amendment) Instrument 2018/1098

Prepared by the Australian Securities and Investments Commission

Corporations Act 2001

The Australian Securities and Investments Commission (ASIC) makes ASIC Corporations (Amendment) Instrument 2018/1098 (Amending Instrument) under subsections 601QA(1), 926A(2), 951B(1) and 992B(1) of the Corporations Act 2001 (Corporations Act).

Paragraph 601QA(1)(a) provides that ASIC may exempt a person from a provision of Chapter 5C of the Act. Paragraph 601QA(2)(b) provides that the exemption may apply to all persons, specified persons, or a specified class of persons.

Paragraph 926A(2)(a) provides that ASIC may exempt a person or class of persons from all or specified provisions of Part 7.6 of the Act other than Divisions 4 and 8.

Paragraph 951B(1)(a) provides that ASIC may exempt a person or a class of persons from all or specified provisions of Part 7.7 of the Act.

Paragraph 992B(1)(a) provides that ASIC may exempt a person or class of persons from all of specified provisions of Part 7.8 of the Act.

The Amending Instrument amends ASIC Corporations (Group Purchasing Bodies) Instrument 2018/751 (Principal Instrument).

Under subsection 33(3) of the Acts Interpretation Act 1901 (as in force as at 1 January 2005 and as applicable to the relevant powers because of section 5C of the Act), where an Act confers a power to make, grant or issue any instrument (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.

Background

Chapter 7 (“Financial services and markets”) of the Corporations Act prescribes a licensing regime for persons who provide financial services, and regimes for financial services disclosure and other conduct obligations. Chapter 5C (“Managed investment schemes”) of the Corporations Act prescribes a regime for the regulation of managed investment schemes.

Group purchasing bodies are persons who arrange or hold cover under risk management products (for example, insurance products) for other persons but neither issue such products nor provide any financial product advice.

The activities of group purchasing bodies may constitute providing financial services under Chapter 7 of the Corporations Act (through providing a custodial or depository service or arranging for persons to acquire a risk management product, and providing certain general information– which may constitute financial product advice). The arrangements that group purchasing bodies enter may also in some cases constitute a managed investment scheme under Chapter 5C (because some of the contributions they receive from persons to obtain cover are pooled or used in a common enterprise to produce financial benefits for contributors, in the form of access to cheaper or better cover).

The Principal Instrument gives exemptions to eligible group purchasing bodies from the obligations to hold an Australian financial services (AFS) licence for these limited financial services and to register a risk management scheme as a managed investment scheme. For group purchasing bodies that are AFS licensees (other than licensees that provide ‘limited financial services’ as referred to in regulation 7.8.12A of the Corporations Regulations 2001), or authorised representatives, the exemptions are limited to where the body provides the relevant services to its officers, employees or their relatives. The exemptions are more limited in this scenario to reduce the risk of the exemptions being used to establish an unlicensed financial services business other than as contemplated by the exemptions.

ASIC provided the exemptions in the Principal Instrument (and its predecessor, Class Order [CO 08/1] Group purchasing bodies) because it considers compliance with Chapters 5C and 7 of the Corporations Act is disproportionately burdensome for eligible group purchasing bodies, which are acting more in the nature of a purchaser of risk cover than a seller.

Section 7 of the Principal Instrument provides that a group purchasing body cannot rely on the exemptions if ASIC has given a notice to the body stating that the body cannot rely on the instrument and ASIC has not withdrawn the notice. The notice may be given by sending it to the body’s address last known to ASIC. But for the Amending Instrument, a decision made by ASIC under section 7 would not have been subject to merits review by the Administrative Appeals Tribunal (AAT).

2. Purpose of the instrument

The purpose of the Amending Instrument is to amend the Principal Instrument so that a decision made by ASIC under section 7 of the Principal Instrument to give a notice and also a decision made by ASIC not to withdraw a notice given under section 7 is subject to merits review by the AAT.

3. Operation of the instrument

The Amending Instrument inserts a new section 9 to expressly permit an ‘affected person’ in relation to a group purchasing body to apply to the AAT for:

review of a decision made by ASIC to give a notice under section 7 of the Principal Instrument; and

review of a decision made by ASIC not to withdraw a notice given under section 7.

‘Affected person’ in relation to a group purchasing body is defined in the Amending Instrument to refer to the group purchasing body (for incorporated bodies) and, in the case of unincorporated bodies, the body and each office bearer and employee of the body whose interests are affected by the decision.

The Amending Instrument also requires ASIC, if, on application by an affected person, it makes a decision not to withdraw a notice given under section 7, to take such steps as are reasonable in the circumstances to give the affected person notice in writing or otherwise of the making of the decision. For such decisions not to withdraw a notice, and also decisions to give a notice in the first place under section 7, ASIC must take such steps as are reasonable in the circumstances to give the affected person notice in writing or otherwise of the right to have the decision reviewed by the AAT.

4. Consultation

ASIC has not consulted publicly on its proposal to include merits review rights in relation to section 7 of the Principal Instrument. Such rights are only enlivened in the event that ASIC gives a notice disentitling a group purchasing body from relying on the relief in the Principal Instrument. Accordingly, the inclusion of such rights is likely to involve only minor and machinery impacts on business, individuals and/or community organisations.

Overview

The ASIC Corporations (Amendment) Instrument 2018/1098 was enacted to amend the ASIC Corporations (Group Purchasing Bodies) Instrument 2018/751, which provides exemptions for eligible group purchasing bodies from certain obligations under the Corporations Act 2001. This amendment was introduced by the Australian Securities and Investments Commission (ASIC) under its powers conferred by the Corporations Act 2001, aiming to ensure that decisions made by ASIC regarding the giving and withdrawal of notices to group purchasing bodies are subject to merits review by the Administrative Appeals Tribunal (AAT). The intent behind this amendment is to provide a safeguard for affected group purchasing bodies, ensuring that any decision by ASIC affecting their exemption status is reviewed on its merits, thereby upholding fairness and procedural justice in the regulatory process. The Corporations Act 2001 sets out comprehensive regulations for financial services and markets, including licensing requirements and conduct obligations for entities providing financial services. Group purchasing bodies, which arrange or hold cover under risk management products for other entities but do not issue such products or provide financial advice, fall under this regulatory framework. Given their specific nature of operation, ASIC previously provided exemptions from certain licensing and registration requirements to alleviate disproportionate burdens on these entities. However, without the ability to appeal decisions made by ASIC under the Principal Instrument, group purchasing bodies lacked a formal avenue for review, a gap this Amending Instrument seeks to address by incorporating merits review rights via the AAT.

Scope and Application

The ASIC Corporations (Amendment) Instrument 2018/1098 pertains to the Corporations Act 2001, specifically targeting group purchasing bodies, which are entities that arrange or hold cover under risk management products for other persons but do not issue such products or provide financial product advice. The instrument amends the ASIC Corporations (Group Purchasing Bodies) Instrument 2018/751, aiming to address the potential burden of compliance with the financial services licensing and managed investment scheme registration requirements on group purchasing bodies. This amendment applies to both incorporated and unincorporated group purchasing bodies across Australia, as the Corporations Act has a national jurisdictional reach. The exemptions provided to group purchasing bodies are limited and conditional, particularly for those that are AFS licensees, to prevent misuse of the exemptions for establishing unlicensed financial services businesses. Importantly, the instrument also ensures that decisions by ASIC to give or not to withdraw a notice that disentitles a group purchasing body from relying on the exemptions are subject to merits review by the Administrative Appeals Tribunal, thus providing a safeguard for affected parties.

Key Provisions

The ASIC Corporations (Amendment) Instrument 2018/1098 introduces changes to the ASIC Corporations (Group Purchasing Bodies) Instrument 2018/751. The main operative sections of the Amending Instrument include the insertion of a new section 9, which allows an 'affected person' in relation to a group purchasing body to apply to the Administrative Appeals Tribunal (AAT) for a review of a decision made by the Australian Securities and Investments Commission (ASIC) to give a notice under section 7 of the Principal Instrument (section 9(1)(a)). Additionally, it permits a review of a decision made by ASIC not to withdraw a notice given under section 7 (section 9(1)(b)). The term 'affected person' is defined to include the group purchasing body itself, and in the case of unincorporated bodies, also each office bearer and employee whose interests are affected by the decision (section 9(2)). The Amending Instrument further mandates that ASIC must take reasonable steps to notify the affected person of their right to have the decision reviewed by the AAT (section 9(3)). The obligations imposed by the Amending Instrument on the parties it governs include ensuring that ASIC provides notices to affected persons regarding decisions made under section 7 of the Principal Instrument. Specifically, if ASIC decides not to withdraw a notice given under section 7, it must take reasonable steps to inform the affected person in writing or otherwise of this decision (section 9(3)(a)). Similarly, for decisions to give a notice under section 7, ASIC must inform the affected person of their right to have the decision reviewed by the AAT (section 9(3)(b)). This requirement ensures transparency and procedural fairness in ASIC’s decision-making process concerning group purchasing bodies. There are no explicit offences, penalties, or civil/criminal consequences mentioned in the Amending Instrument itself. However, the broader legal framework under which ASIC operates, including the Corporations Act 2001, provides for penalties and enforcement actions in the event of non-compliance with its regulations. For example, contraventions of the Act or its regulations can lead to fines and imprisonment, depending on the severity and nature of the breach. ASIC’s enforcement actions can also include civil penalties, court-ordered redress, and public naming and shaming of offenders, which can have significant reputational and financial repercussions for entities found in breach of the Act or its regulations.

Area of Law: Corporate Law & Governance
Instrument: Legislative Instrument
Concepts: Delegated & Subordinate Legislation; Review & Sunset Clauses; Enforcement Powers

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.

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