ASIC Corporations (Law Societies—Fidelity and Indemnity Schemes) Instrument 2022/435

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ASIC Corporations (Law Societies—Fidelity and Indemnity Schemes) Instrument 2022/435

I, Rhys Bollen, delegate of the Australian Securities and Investments Commission, make the following notifiable instrument.

 

Date 31 May 2022

 

Rhys Bollen

 

 

 

 

 

 

 

 

 

 

 

Contents

Part 1—Preliminary

1 Name of notifiable instrument

2 Commencement

3 Authority

4 Definitions

Part 2—Exemption

5 Fidelity and Indemnity Schemes

6 Conditions

Part 1—Preliminary

1 Name of notifiable instrument

This is the ASIC Corporations (Law Societies—Fidelity and Indemnity Schemes) Instrument 2022/435.

2 Commencement

This instrument commences on the day after it is registered on the Federal Register of Legislation.

Note: The register may be accessed at www.legislation.gov.au.

3 Authority

This instrument is made under paragraph 601QA(1)(a), 926A(2)(a), 992B(1)(a) and 1020F(1)(a) of the Corporations Act 2001.

4 Definitions

In this instrument:

Act means the Corporations Act 2001.

eligible law society means each of the following:

(a) Queensland Law Society Incorporated;

(b) The Law Society of New South Wales;

(c) The Law Society of South Australia;

(d) The Law Society of the Australian Capital Territory;

(e) The Law Society of Tasmania;

(f) The Law Society of Western Australia Inc.;

(g) Law Institute of Victoria Limited ACN 075 475 731.

eligible legal body means each of the following:

(a) an eligible law society;

(b) the Legal Contribution Trust established by section 5 of the Legal Contribution Trust Act 1967 (WA) and continued in existence by Division 5 of Part 12 of the Legal Profession Act 2008 (WA);

(c) SMIF Management Pty Ltd ACN 003 326 618.

fidelity or indemnity scheme means each of the following:

(a) the Solicitors’ Fidelity Fund of the Australian Capital Territory established by section 320 of the Legal Profession Act 2006 (ACT);

(b) professional indemnity insurance arrangements under Part 3.3 of the Legal Profession Act 2006 (ACT);

(c) the Legal Practitioners Fidelity Fund under Part 9 of the Legal Profession Uniform Law Application Act 2014 (NSW);

(d) insurance arrangements made under Division 1 of Part 8 of the Legal Profession Uniform Law Application Act 2014 (NSW);

(e) the Legal Practitioners’ Fidelity Guarantee Fund established by section 12 of the Queensland Law Society Act 1952 (Qld) and continued in existence by section 359 of the Legal Profession Act 2007 (Qld);

(f) the Law Claims Levy Fund established by rule 8 of the Queensland Law Society (Indemnity) Amendment Rule (No. 1) 1996 and continued in existence by rule 17 of the Queensland Law Society  Indemnity Rule 2005;

(g) professional indemnity insurance arrangements under the Queensland Law Society Indemnity Rule;

(h) the Legal Practitioners Fidelity Fund (formerly known as the legal practitioners’ guarantee fund) required to be maintained by section 57 of the Legal Practitioners Act 1981 (SA);

(i) the scheme providing professional indemnity insurance established under section 52 of the Legal Practitioners Act 1981 (SA);

(j) professional indemnity insurance arrangements under Part 6 of the Rules of Practice 1994 made by The Law Society of Tasmania under section 221 of the Legal Profession Act 2007 (Tas.);

(k) the Solicitors’ Guarantee Fund established under section 16 of the Legal Contribution Trust Act 1967 (WA) and continued in existence by section 336 of the Legal Profession Act 2008 (WA);

(l) insurance arrangements made under regulation 84 of the Legal Profession Regulations 2009 (WA), and the associated mutual funds;

(m) professional indemnity insurance arrangements under Part 7 of the Legal Profession Uniform Law Application Act 2014 (Vic.);

(n) the Legal Practitioners Fidelity Fund required to be maintained by section 121(1) of the Legal Profession Uniform Law Application Act 2014 (Vic.).

Queensland Law Society Indemnity Rule means the Queensland Law Society Indemnity Rule 2005 made by the Council of the Queensland Law Society Council under sections 226(2)(l) and 227 of the Legal Profession Act 2004 (Qld)  and the replacement of those provisions by sections 231 and 232 of the Legal Profession Act 2007 (Qld).

relevant eligible law society in relation to a fidelity or indemnity scheme, means the eligible law society that is the primary body representing legal practitioners in the State or Territory under the laws of which the scheme is established or regulated.

responsible: an eligible legal body is responsible for a fidelity or indemnity scheme if:

(a) the body or the governing council of the body (however described) is conferred with functions in relation to the scheme by or under the law of a State or Territory; or

(b) the body has established the scheme under its rules (however described) made under the law of a State or Territory.

 

 

Part 2—Exemption

5 Fidelity and Indemnity Schemes

Exemptions

An eligible legal body does not have to comply with:

(a) subsection 601ED(5) of the Act in relation to the operation of a managed investment scheme that is or arises from a fidelity or indemnity scheme for which the body is responsible; and

(b) Divisions 2 to 5 of Part 7.9 and section 992A of the Act in relation to a financial product that arises from a fidelity or indemnity scheme for which the body is responsible; and

(c) section 911A of the Act for the provision of a financial service where:

(i) the service consists of any or all of the following:

(A) providing financial product advice;

(B) dealing in financial products;

(C) providing custodial or depository services;

(D) claims handling and settling services; and

(ii) the service is only provided to the extent reasonably necessary for the maintenance or operation of a fidelity or indemnity scheme for which the body is responsible.

6 Conditions

The relevant eligible law society must make available on its Internet website in a manner reasonably likely to come to the attention of a person seeking information on the site about the fidelity or indemnity scheme, a prominent notice to the effect that the body is exempt from the requirement to hold an Australian financial services licence under the Act in relation to the operation of the scheme and the scheme is not regulated under the Insurance Act 1973.

 

Overview

The ASIC Corporations (Law Societies—Fidelity and Indemnity Schemes) Instrument 2022/435 was enacted to provide specific exemptions for eligible law societies and legal bodies in relation to their fidelity and indemnity schemes. This notifiable instrument, made by Rhys Bollen as a delegate of the Australian Securities and Investments Commission (ASIC) under the authority of several sections of the Corporations Act 2001, aims to alleviate compliance burdens on these bodies while ensuring that their operations remain within the scope of legal oversight. The policy objective of this instrument is to facilitate the smooth operation of fidelity and indemnity schemes, which are essential for protecting the interests of legal practitioners and their clients, without imposing unnecessary regulatory constraints. This instrument ensures that eligible legal bodies can continue to provide necessary services related to these schemes without the need to hold an Australian financial services licence or be regulated under the Insurance Act 1973, provided they meet certain conditions and disclosure requirements.

Scope and Application

The ASIC Corporations (Law Societies—Fidelity and Indemnity Schemes) Instrument 2022/435 is a notifiable instrument that applies to certain legal bodies responsible for fidelity and indemnity schemes. Specifically, it exempts eligible law societies from certain financial services obligations under the Corporations Act 2001, including the need to hold an Australian financial services licence for the operation of these schemes. This exemption extends to schemes such as the Solicitors’ Fidelity Fund of the Australian Capital Territory, the Legal Practitioners Fidelity Fund under the Legal Profession Uniform Law Application Act 2014 (NSW), and other similar funds established under various state and territory laws. The instrument commences on the day after its registration on the Federal Register of Legislation. The exemptions apply to eligible law societies, which include specific law societies in various Australian states and territories, as well as certain legal bodies specified in the instrument. The exemptions apply to the provision of financial services that are necessary for the maintenance or operation of these fidelity or indemnity schemes, such as providing financial product advice and claims handling. However, the relevant eligible law society must make a prominent notice available on its website, informing the public that it is exempt from holding an Australian financial services licence and that the scheme is not regulated under the Insurance Act 1973. The instrument is made under specific provisions of the Corporations Act 2001 and is subject to the authority of Rhys Bollen, a delegate of the Australian Securities and Investments Commission.

Key Provisions

The ASIC Corporations (Law Societies—Fidelity and Indemnity Schemes) Instrument 2022/435 outlines specific exemptions and obligations for eligible legal bodies responsible for fidelity and indemnity schemes. This instrument exempts eligible legal bodies from certain requirements under the Corporations Act 2001, including the need to comply with specific sections relating to managed investment schemes, financial products, and financial services. More specifically, Section 5 of the Instrument exempts these bodies from subsection 601ED(5) of the Corporations Act, Divisions 2 to 5 of Part 7.9, section 992A, and section 911A, provided that the services rendered are strictly for the maintenance or operation of fidelity or indemnity schemes. The obligations imposed by the Instrument include ensuring that the relevant eligible law society posts a prominent notice on its website stating that it is exempt from holding an Australian financial services licence in relation to the scheme and that the scheme is not regulated under the Insurance Act 1973. This notice must be prominently displayed and reasonably accessible to individuals seeking information about the scheme on the law society's website. The Instrument does not explicitly outline offences, penalties, or consequences for breaches within its text. However, failure to comply with the notice requirement could potentially lead to scrutiny or action from the Australian Securities and Investments Commission (ASIC), which has the authority to enforce compliance with financial services regulations. While specific penalties are not detailed in the Instrument, non-compliance with ASIC regulations could result in enforcement actions, which may include fines, corrective orders, or other legal repercussions as stipulated under the Corporations Act 2001 and other relevant legislation.

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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.