ASIC Corporations (Recognised Accountants: Exempt Services) Instrument 2016/1151
About this compilation
Compilation No. 1
This is a compilation of ASIC Corporations (Recognised Accountants: Exempt Services) Instrument 2016/1151 as in force on 27 May 2017. It includes any commenced amendment affecting the legislative instrument to that date.
This compilation was prepared by the Australian Securities and Investments Commission.
The notes at the end of this compilation (the endnotes) include information
about amending instruments and the amendment history of each amended provision.
Contents
Part 1—Preliminary
1 Name of legislative instrument
3 Authority
4 Definitions
Part 2—Declaration
5 Exempt service
Endnotes
Endnote 1—Instrument history
Endnote 2—Amendment history
Part 1—Preliminary
1 Name of legislative instrument
This is the ASIC Corporations (Recognised Accountants: Exempt Services) Instrument 2016/1151.
3 Authority
This instrument is made under subsection 926A(2) of the Corporations Act 2001.
4 Definitions
In this instrument:
Act means the Corporations Act 2001.
limited licensee has the meaning given by subsection 912A(4) of the Act (as notionally inserted by subregulation 7.6.01BA(3) of the Regulations).
Regulations means the Corporations Regulations 2001.
Part 2—Declaration
5 Exempt service
Part 7.6 of the Act (other than Divisions 4 and 8) applies in relation to financial services licensees (including limited licensees) as if regulation 7.1.29 of the Regulations was modified or varied as follows:
(a) after paragraph (4)(a) insert:
“(aa) if the person is a financial services licensee (including a limited licensee) or a representative of a licensee—the advice mentioned in paragraph (a):
(i) in relation to the licensee or the representative—is not covered by an authorisation in the licence held by the licensee; or
(ii) in relation to the representative—is not covered by the authorisation given by the licensee to the representative; and”;
(b) omit subparagraph (4)(c)(ii), substitute:
“(ii) the advice constitutes financial product advice to a retail client and it includes, or is accompanied by, a written statement that:
(A) the person providing the advice is not licensed or authorised (as applicable) to provide financial product advice of the kind mentioned in paragraph (a); and
(B) taxation is only one of the matters that must be considered when making a decision on a financial product; and
(C) the client should consider taking advice from the holder of an Australian financial services licence with the appropriate authorisation before making a decision on a financial product.”;
(c) in subregulation (6) insert the following definitions:
“limited financial services has the meaning given by subsection 912A(4) of the Act (as notionally inserted by subregulation 7.6.01BA(3)).
limited licensee has the meaning given by subsection 912A(4) of the Act (as notionally inserted by subregulation 7.6.01BA(3)).”.
Endnotes
Endnote 1—Instrument history
Instrument number | Date of FRL registration | Date of commencement | Application, saving or transitional provisions |
2016/1151 | 6/12/2016 (see F2016L01866) | 7/12/2016 | |
2017/464 | 26/5/2017 (see F2017L00600) | 27/5/2017 | - |
Endnote 2—Amendment history
ad. = added or inserted am. = amended LA = Legislation Act 2003 rep. = repealed rs. = repealed and substituted
Provision affected | How affected |
Section 2 | rep. s48D LA |
Para 5(a) (notional paragraph 7.1.29(4)(aa)) |
rs. 2017/464
|
Para 5(b) (notional sub-subparagraph 7.1.29(4)(c)(ii)(A)) |
rs. 2017/464
|
Para 5(b) (notional sub-subparagraph 7.1.29(4)(c)(ii)(C)) |
am. 2017/464
|
Overview
The ASIC Corporations (Recognised Accountants: Exempt Services) Instrument 2016/1151 was enacted to address a perceived gap in the regulation of financial services provided by recognised accountants. This legislative instrument was made under subsection 926A(2) of the Corporations Act 2001 by the Australian Securities and Investments Commission (ASIC), with the policy objective of ensuring that consumers receive adequate information and protection when receiving financial advice from recognised accountants who are not fully licensed financial product advisers. The instrument came into effect on 7 December 2016 and has been amended since, most notably on 27 May 2017, to refine the exemptions and conditions under which recognised accountants can provide certain financial services without holding a full financial services licence. The instrument aims to enhance transparency and consumer protection in the financial advice market by clarifying the scope of activities that can be performed by recognised accountants and the disclosure requirements for clients receiving advice from these professionals.
Scope and Application
The ASIC Corporations (Recognised Accountants: Exempt Services) Instrument 2016/1151 applies to financial services licensees, including limited licensees, who are subject to the Corporations Act 2001. This legislation specifically modifies the regulations concerning the provision of financial product advice to ensure that certain services provided by recognised accountants are exempt from certain licensing requirements under the Corporations Act. The instrument modifies the scope of regulation 7.1.29 of the Corporations Regulations 2001 to exempt recognised accountants from certain licensing requirements when providing financial product advice, provided that specific conditions are met, such as the provision of a written statement to clients indicating the accountant is not authorised to provide such advice and advising clients to seek advice from a licensed professional. This instrument has a Commonwealth jurisdictional reach and its application is not restricted to specific states or territories. The instrument does not explicitly outline any exclusions, but it does specify conditions under which the exemption applies. The instrument may be further extended or restricted through subordinate instruments, as authorised under subsection 926A(2) of the Corporations Act 2001.
Key Provisions
The ASIC Corporations (Recognised Accountants: Exempt Services) Instrument 2016/1151 (the Instrument) modifies the Corporations Act 2001 (the Act) to exempt certain financial advice services provided by recognised accountants from the scope of financial services licensing under the Corporations Regulations 2001 (the Regulations). This is achieved by modifying regulation 7.1.29 of the Regulations as specified in section 5 of the Instrument (referred to as "Exempt service"). The modification applies Part 7.6 of the Act, excluding Divisions 4 and 8, to financial services licensees, including limited licensees, by adding specific conditions under which certain advice provided by recognised accountants is exempt from licensing requirements.
Under section 5 of the Instrument, financial advice provided by recognised accountants is exempt if it falls into certain categories. Specifically, the advice must either not be covered by the authorisation in the licence held by the licensee or the representative, or it must constitute financial product advice to a retail client and include a written statement clarifying that the person providing the advice is not licensed or authorised to provide such advice, and that taxation is only one of the matters to consider when deciding on a financial product. Additionally, the statement must recommend the client consider seeking advice from a licensed professional before making a decision.
The Instrument imposes several obligations on financial services licensees and their representatives. They must ensure that any advice provided under the exemptions is clearly identified as not being covered by their authorisation and, where applicable, include the required written statement. This ensures that clients are fully informed about the nature and limitations of the advice they are receiving. Furthermore, the Instrument requires that any advice given under the exemptions be accompanied by the necessary written disclosures, ensuring transparency and compliance with the regulatory framework.
Breaches of the requirements outlined in the Instrument may result in civil or criminal consequences. Although the Instrument itself does not specify penalties, breaches of the Corporations Act and the Regulations can lead to substantial penalties. For example, under section 1317E of the Act, individuals can be subject to fines of up to $300,000 and imprisonment for up to five years for serious or repeated breaches. Corporations may face even higher penalties, with fines reaching up to $1.5 million for serious or repeated contraventions. These penalties underscore the importance of compliance with the requirements set out in the Instrument and the broader regulatory environment.