ASIC Corporations (Amendment) Instrument 2020/885

Administered by Department of the Treasury

Legislation au F2020L01235 Not in force Legislative Instrument

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Explanatory Statement

 

ASIC Corporations (Amendment) Instrument 2020/885

This is the Explanatory Statement for ASIC Corporations (Amendment) Instrument 2020/885.

The Explanatory Statement is approved by the Australian Securities and Investments Commission (ASIC).

Summary

  1. ASIC Corporations (COVID-19 – Distribution of Debit Cards) Instrument 2020/401 (the Principal instrument) provides exemptions and modifications in relation to the hawking and product disclosure requirements in the Corporations Act 2001 (the Act) in relation to issuing basic deposit products, linked non-cash payment facilities and debit cards due to adverse implications on consumers without debit cards – including vulnerable and elderly consumers – due to COVID-19.
  2. The ASIC Corporations (Amendment) Instrument 2020/885 (the Amending instrument) extends the relief provided by the Principal instrument until 31 December 2020.

Purpose of the instrument

3.             The purpose of the Amending instrument is to extend the relief given by the Principal instrument until 31 December 2020.

4.             Lockdown restrictions in response to COVID-19 may affect cohorts of consumers who rely on cash to make purchases for goods and services. This includes difficulties with accessing bank branches to withdraw funds – particularly for consumers who are required to self-isolate or where bank branches may be closed. Additionally, there is reduced acceptance of cash by merchants for public health reasons.

5.             The Principal instrument intended to address these challenges by facilitating ADIs providing their existing customer bases with debit cards. Debit cards will allow these consumers to:

  1. access their deposits otherwise than by withdrawing cash; and
  2. complete contactless purchases in stores, as well as card-not-present purchases (e.g. online or telephone-based transactions).

6.             Lockdown restrictions in response to COVID-19 have continued in some jurisdictions. Extending the cessation date of the relief will allow ADIs who have yet to take advantage of the principal relief to complete their distributions of debit card before the end of 2020 and to continue to support this cohort of customers.

Consultation

7.             ASIC did not undertake a formal consultation process on extending the operation of the Principal instrument, as the extension is a transitional measure of a minor and machinery nature. ASIC discussed the creation of the Amending instrument with relevant industry stakeholders.

8.             The Prime Minister has granted an exemption from the need to complete regulatory impact analysis in the form of Regulation Impact Statements for all Australian Government measures made in response to COVID-19.

Operation of the instrument

9.             The Amending instrument amends section 3 of the Principal instrument to replace the original cessation date of that instrument (30 September 2020) with a new cessation date (1 January 2021). As a result, the Principal instrument will operate for an additional three months, until the end of 31 December 2020.             

Legislative instrument and primary legislation 

10.         The subject matter and policy implemented by the Amending instrument is more appropriate for a legislative instrument rather than primary legislation. The Amending instrument uses powers given by Parliament to ASIC, which allow ASIC to affect the operation of Chapter 7, and specifically Parts 7.8 and 7.9, of the Act to respond quickly and temporarily to issues in connection with or arising from COVID-19 which may prevent consumers without debit cards from accessing their deposits.

Legislative authority

11.         The Amending instrument is made under subsection 992B(1) and 1020F(1)(c) of the Act.

12.         Subsection 992B(1) provides that ASIC may declare that Part 7.8 of the Act applies in relation to a person or a financial product, or a class of persons or financial products, as if specified provisions from this Part were omitted, modified or varied as specified in the declaration.

13.         Paragraph 1020F(1)(c) provides that ASIC may declare that Part 7.9 of the Act applies in relation to a person or a financial product, or a class of persons or financial products, as if specified provisions from this Part were omitted, modified or varied as specified in the declaration.

14.            Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make any instrument, the power is to be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to amend any such instrument.

15.         This Instrument is a disallowable legislative instrument.

Statement of Compatibility with Human Rights 

16.         The Explanatory Statement for a disallowable legislative instrument must contain a Statement of Compatibility with Human Rights under subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011. A Statement of Compatibility with Human Rights is in the Attachment.


Attachment

Statement of Compatibility with Human Rights

This Statement of Compatibility with Human Rights is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.  

 ASIC Corporations (Amendment) Instrument 2020/885

Overview

The purpose of the legislative instrument is to amend ASIC Corporations (COVID-19 Distribution of Debit Cards) Instrument 2020/401 (the Principal instrument).

The Principal instrument provides exemptions and modifications in relation to the hawking and product disclosure provisions of the Corporations Act 2001 to facilitate timely distribution of debit cards banks’ existing customers who are reliant on cash. The Principal instrument was due to cease on 30 September 2020. The Principal instrument allows for unsolicited offers to issue debit cards to existing customers without those cards in certain circumstances, as well as allowing for product disclosure information to be provided at a later time with the debit card.

The legislative instrument extends this relief to allow ADIs to distribute unsolicited debit cards to existing customers until 31 December 2020.

Assessment of human rights implications

1               This instrument does not engage any of the applicable rights or freedoms.

Conclusion

2               This instrument 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

The ASIC Corporations (Amendment) Instrument 2020/885, issued under the Corporations Act 2001, extends the exemptions and modifications introduced by the ASIC Corporations (COVID-19 – Distribution of Debit Cards) Instrument 2020/401, which initially provided relief until 30 September 2020. This extension was enacted in response to ongoing COVID-19 lockdowns that have hindered consumers’ ability to withdraw cash and access debit card facilities, particularly affecting vulnerable and elderly cohorts. The Australian Securities and Investments Commission (ASIC) authorised this amendment to allow authorised deposit-taking institutions (ADIs) additional time to distribute debit cards to their existing customers who rely on cash, thus facilitating easier access to funds and contactless purchasing options. The policy objective is to mitigate the adverse effects of the pandemic on consumer access to financial services, ensuring that consumers can maintain essential transactions with minimal disruption. The instrument operates by amending the cessation date of the principal instrument to 31 December 2020, thereby providing an additional three months for the distribution of debit cards. ASIC exercised its powers under sections 992B(1) and 1020F(1)(c) of the Corporations Act to make this amendment, ensuring the flexibility needed to address the evolving financial landscape due to the pandemic. The instrument is a disallowable legislative instrument, reflecting its temporary and targeted nature in response to the specific challenges posed by COVID-19. The Statement of Compatibility with Human Rights confirms that the amendment does not engage any applicable rights or freedoms and is compatible with the human rights and freedoms recognised in international instruments.

Scope and Application

The ASIC Corporations (Amendment) Instrument 2020/885 extends the temporary relief provided by the ASIC Corporations (COVID-19 – Distribution of Debit Cards) Instrument 2020/401, which initially aimed to facilitate the distribution of debit cards to consumers reliant on cash, particularly in light of the challenges posed by the COVID-19 pandemic. This relief, which was intended to assist Australian Depository Institutions (ADIs) in distributing debit cards to their existing customers who were particularly vulnerable due to the pandemic, has been extended to operate until 31 December 2020. This extension is to ensure that ADIs have sufficient time to complete the distribution of debit cards and to continue supporting customers who are reliant on cash. The instrument applies to ADIs and their existing customers who are in need of debit cards due to difficulties in accessing cash during the pandemic. It operates across Australia, as it is a legislative instrument made under the authority of the Australian Securities and Investments Commission (ASIC), which has jurisdiction over corporations and financial services across the nation. There are no exclusions or exemptions specified in this instrument; however, it is subject to the broader conditions and limitations outlined in the Corporations Act 2001. The application and effectiveness of this instrument may also be influenced by any subordinate instruments or regulatory guidance issued by ASIC.

Key Provisions

The ASIC Corporations (Amendment) Instrument 2020/885 amends the ASIC Corporations (COVID-19 – Distribution of Debit Cards) Instrument 2020/401 (the Principal Instrument) to extend the relief it provides (sections 1-10). The Principal Instrument provides exemptions and modifications to hawking and product disclosure requirements in the Corporations Act 2001 (the Act) to facilitate the timely distribution of debit cards to existing customers of authorised deposit-taking institutions (ADIs) who rely on cash. This relief was initially set to cease on 30 September 2020 but is now extended until 31 December 2020 (section 9). This extension aims to assist ADIs in distributing debit cards to their existing customer base, particularly those who are vulnerable or elderly and rely on cash due to COVID-19 related restrictions (section 5). The Act imposes certain obligations and requirements on ADIs under the extended relief. ADIs can make unsolicited offers to issue debit cards to existing customers who do not already possess them, and they can provide product disclosure information at a later time, alongside the debit card (section 992B(1) and 1020F(1)(c) of the Act). This allows ADIs to bypass certain regulatory hurdles that would typically apply in the distribution of financial products, facilitating a quicker response to the challenges posed by the pandemic. The Act does not explicitly state penalties for breaches of the provisions extended by the Amending Instrument. However, breaches of the Corporations Act 2001 can result in civil penalties, including fines up to $210,000 for individuals and $1.05 million for corporations, as well as potential criminal penalties. The Act also provides for the possibility of court orders for compensation or redress, depending on the nature and severity of the breach (sections 1317E and 1317G of the Act). The extension of relief is intended to be a temporary measure, and any failure to comply with the underlying requirements of the Corporations Act could result in these penalties, even after the extension period ends.

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