EXPLANATORY STATEMENT
Select Legislative Instrument 2010 No. 278
Subject Australian Securities and Investments Commission Act 2001
Australian Securities and Investments Commission Amendment Regulations 2010 (No. 4)
The Australian Securities and Investments Commission Act 2001 (the Act) and the Australian Securities and Investments Commission Regulations 2001 (the Principal Regulations) provide for the establishment of the Australian Securities and Investments Commission as a statutory body to regulate companies and the financial services markets and contains provisions relating to unconscionable conduct and consumer protection.
Subsection 251(1) of the Act provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The Act and the Principal Regulations are amended to reflect changes to the Trade Practices Act 1974 and the implementation of the Australian Consumer Law (ACL), which will apply to all non-financial services transactions from 1 January 2011.
Section 12BEA of the Act provides for a presumption that a person asserts a right to payment, amongst other things, if they send an invoice or other document that seeks payment without complying with requirements prescribed in the regulations.
Paragraphs 12DM(1AA)(b) and 12DMB(2)(b) of the Act prohibit a person from sending an invoice or other document to others seeking payment for unsolicited financial services without complying with requirements prescribed in the regulations.
The Regulations prescribe informational requirements for invoices that, if complied with, would allow a person to avoid the presumption that they have asserted a right to payment. The amendments also provide recipients of requests for payment for unsolicited financial services with information that limits the scope for confusion about obligations to pay other people money in response to documents that assert a right to payment.
For the purpose of section 12BEA and paragraphs 12DM(1AA)(b) and 12DMB(2)(b) of the Act, the Regulations require a statement to include the text ‘This is not a bill. You are not required to pay any money.’. This text must also be the most prominent text in the document.
Under the Corporations Agreement 2002 (the Corporations Agreement), the state and territory (state) governments referred their constitutional powers with respect to corporate regulation to the Commonwealth. Under subclauses 506(1) and 507(1) of the Corporations Agreement, the Commonwealth is required to consult with state ministers of the Ministerial Council for Corporations (the Council) before making a regulation under the national law. The Council has been consulted about the regulations as required by the Corporations Agreement.1 Paragraph 507(1)(f) and subclause 511(2) of the Corporations Agreement provide that approval of the Council and the usual public exposure period are not required for amendments to regulations relating to financial products and services.
The Act does not specify any conditions that need to be satisfied before the power to make the Regulations may be exercised.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commence on 1 January 2011.
Authority: Subsection 251(1) of the Australian Securities and Investments Commission Act 2001
Overview
The Australian Securities and Investments Commission Amendment Regulations 2010 (No. 4), which were enacted under the Australian Securities and Investments Commission Act 2001, address the need to align the regulatory framework with the implementation of the Australian Consumer Law (ACL) from 1 January 2011. These regulations were introduced to ensure that the ASIC Act remains consistent with changes to the Trade Practices Act 1974, and to incorporate the new consumer protection provisions in the ACL. Enacted by the Parliament of Australia, the policy objective of these regulations is to clarify and enhance consumer protection in financial services by setting specific informational requirements for invoices, particularly those that assert a right to payment for unsolicited services. This includes requiring a prominent statement in such documents that clearly indicates, "This is not a bill. You are not required to pay any money," thus preventing potential consumer confusion and ensuring that the assertion of a right to payment complies with the prescribed regulatory standards.
In accordance with the Corporations Agreement 2002, the Commonwealth consulted with the relevant state ministers of the Ministerial Council for Corporations before making these regulations, although the usual approval and public exposure period were not required for amendments relating to financial products and services. These regulations commenced on 1 January 2011, reflecting the national shift towards a unified consumer protection regime.
Scope and Application
The Australian Securities and Investments Commission Amendment Regulations 2010 (No. 4) pertain to the Australian Securities and Investments Commission Act 2001, which establishes the Australian Securities and Investments Commission as a statutory body responsible for regulating companies and financial services markets, including provisions for consumer protection and prohibiting unconscionable conduct. These Regulations primarily aim to align the Act with the Australian Consumer Law (ACL) and to address the issue of unsolicited invoices for financial services. They apply to any person or entity involved in transactions, particularly those that involve invoicing for unsolicited financial services. The Regulations are applicable nationally as they extend across the Commonwealth of Australia, reflecting the jurisdictional reach agreed upon under the Corporations Agreement 2002. Notably, these Regulations require that any document asserting a right to payment for unsolicited financial services must include the statement "This is not a bill. You are not required to pay any money," with this text being the most prominent in the document to prevent any potential confusion or obligation to make payments erroneously. The Regulations came into effect on 1 January 2011 and are intended to streamline compliance and enhance consumer protection within the financial services sector.
Key Provisions
The Australian Securities and Investments Commission Amendment Regulations 2010 (No. 4) primarily address the requirements for invoices related to unsolicited financial services. According to section 12BEA, there is a presumption that a person asserts a right to payment if they send an invoice or other document seeking payment without complying with prescribed regulatory requirements. Furthermore, paragraphs 12DM(1AA)(b) and 12DMB(2)(b) prohibit sending invoices or other documents to others seeking payment for unsolicited financial services without adhering to the regulatory requirements. These regulations prescribe specific informational requirements for invoices that, if met, would help avoid the presumption of an asserted right to payment.
The obligations imposed by these regulations on entities and individuals include ensuring that any invoice or document related to unsolicited financial services includes the statement "This is not a bill. You are not required to pay any money." Moreover, this statement must be the most prominent text in the document. This requirement aims to prevent confusion and potential wrongful payments by clarifying the nature of the document and the obligations of the recipient. Failure to comply with these informational requirements may lead to unintended legal consequences, including the presumption that a right to payment has been asserted.
In the event of non-compliance with these regulations, there may be significant legal consequences. While specific offences, penalties, or consequences are not explicitly detailed in the text, non-compliance with the Australian Securities and Investments Commission Act 2001 and its regulations could lead to enforcement actions by the Australian Securities and Investments Commission (ASIC). These actions may include civil penalties, fines, or other regulatory sanctions. The precise penalties would depend on the specific nature and severity of the breach, as well as any applicable provisions within the broader legislative framework.