EXPLANATORY STATEMENT for
ASIC Corporations (Repeal) Instrument 2016/212
Prepared by the Australian Securities and Investments Commission
Corporations Act 2001
The Australian Securities and Investments Commission (ASIC) makes the ASIC Corporations (Repeal) Instrument 2016/212 under subsections 765A(2) and 1020F(1) and paragraphs 601QA(1)(a), 911A(2)(l), 926A(2)(a), 951B(1)(a) and 992B(1)(a) of the Corporations Act 2001 (the Act).
Paragraph 601QA(1)(a) of the Act provides that ASIC may exempt a person from a provision of Chapter 5C of the Act.
Subsection 765A(2) of the Act provides that ASIC may declare that a specified facility, interest or other thing is not a financial product for the purposes of Chapter 7 of the Act.
Paragraph 911A(2)(l) of the Act provides that ASIC may exempt a person from the requirement to hold an Australian financial services licence for a financial service they provide. This is done by granting an exemption in writing and publishing it in the Gazette.
Paragraph 926A(2)(a) of the Act provides that ASIC may exempt a person or a financial product or class of persons or financial products from all or specified provisions of Part 7.6 of the Act (other than Divisions 4 and 8).
Paragraph 951B(1)(a) of the Act provides that ASIC may exempt a person or a financial product or class of persons or financial products from all or specified provisions of Part 7.7 of the Act.
Subsection 992B(1)(a) of the Act provides that ASIC may exempt a person or a financial product or class of persons or financial products from all or specified provisions of Part 7.8 of the Act.
Subsection 1020F(1) of the Act provides that ASIC may exempt a person or a financial product or class of persons or financial products from all or specified provisions of Part 7.9 of the Act and may declare that Part 7.9 of the Act applies in relation to a person or a class of persons as if specified provisions were omitted, modified or varied.
- Background
Under the Legislation Act 2003 (Legislation Act), legislative instruments cease automatically, or ‘sunset’, after 10 years, unless action is taken to exempt or preserve them. To preserve its effect, a legislative instrument must be remade before its sunset date.
ASIC had made seven legislative instruments that related to non-cash payment facilities (a type of financial product through which, or through the acquisition of which, a person makes a payment otherwise than by physical delivery of notes or coins). These legislative instruments were:
- Class Order [CO 02/1075] ([CO 02/1075]) Travellers’ cheques and confirmation of transactions - which provides that travellers’ cheques are exempt from the requirements to confirm transactions under s1017F of the Act;
- Class Order [CO 03/705] ([CO 03/705]) Non-cash payment facilities – licensing exemption – which provided that a financial services business could advise on, and help their clients deal in, certain payments products without needing a specific licence authorisation that relates to non-cash payments;
- Class Order [CO 05/736] ([CO 05/736]) Low value non-cash payment facilities – which contained a tailored regulatory regime for ‘low value’ products;
- Class Order [CO 05/737] ([CO 05/737]) Loyalty schemes – which declared that loyalty schemes are not financial products;
- Class Order [CO 05/738] ([CO 05/738]) Gift facilities - which exempted non-reloadable payment products marketed as gift facilities from the licensing, conduct and disclosure obligations in the Act;
- Class Order [CO 05/739] ([CO 05/739]) Road toll facilities– which declared that facilities solely used for paying road tolls are not financial products; and
- Class Order [CO 05/740] ([CO 05/740]) Prepaid mobile facilities – which exempted prepaid mobile phone accounts from the licensing, conduct and disclosure obligations in the Act.
The 2014 Financial System Inquiry recommended changes to the regulation of payments products, including the non-cash payment facilities covered by ASIC’s legislative instruments. The Government, Treasury and the relevant regulators are still considering how to give effect to the FSI’s recommendation that payments regulation be made clearer and more graduated.
Five of these ASIC’s legislative instruments ([CO 05/736], [CO 05/737], [CO 05/738], [CO 05/739] and [CO 05/740]) were due to sunset on 1 April 2016, before the consideration of the FSI recommendation would be completed.
In order to provide certainty while the final policy settings for payments regulation as established, ASIC remade [CO 02/1075], [CO 03/705], [CO 05/736], [CO 05/737], [CO 05/738], [CO 05/739] and [CO 05/740] without substantive changes as the ASIC Corporations (Non-cash Payment Facilities Relief) Instrument 2016/211 for three years.
We anticipate that by the end of this period, the Government will have decided upon the policy settings non-cash payment facilities. At this time ASIC will consider whether changes made by the Government have removed the need for some or all of the existing relief.
2. Purpose of the instrument
The purpose of the ASIC Corporations (Repeal) Instrument 2016/212 is to repeal [CO 02/1075], [CO 03/705], [CO 05/736], [CO 05/737], [CO 05/738], [CO 05/739] and [CO 05/740] now that a new legislative instrument preserving their effect has been made.
3. Operation of the instrument
Clause 4 provides that each of the instruments set out in Schedule 1 are amended or repealed as set out in that Schedule. Schedule 1 provides that [CO 02/1075], [CO 03/705], [CO 05/736], [CO 05/737], [CO 05/738], [CO 05/739] and [CO 05/740] are repealed in full.
4. Consultation
ASIC consulted with industry stakeholders on its proposal to remake [CO 02/1075], [CO 03/705], [CO 05/736], [CO 05/737], [CO 05/738], [CO 05/739] and [CO 05/740] for a period of 3 years while the final policy settings for payments regulation are determined and the FSI recommendation is implemented. We received four responses, each of which broadly approved of the way in which we have remade our non-cash payments relief. One response included suggested changes to the policy settings for low value payments products; ASIC will consider these suggestions in the context of the implementation of the FSI recommendation.
Once the policy uncertainty associated with payments regulation is resolved, ASIC will review the ASIC Corporations (Non-cash Payment Facilities Relief) Instrument 2016/211. At this time we will consult publically on any changes that we propose to make.