EXPLANATORY STATEMENT
Select Legislative Instrument 2009 No. 386
Issued by the authority of the Minister for Financial Services, Superannuation and Corporate Law
Corporations Act 2001
Corporations Amendment Regulations 2009 (No. 10)
Subsection 1364(1) of the Corporations Act 2001 (the Act) provides that the Governor‑General may make regulations prescribing matters required or permitted by the Act to be prescribed by regulations or necessary, or convenient to be prescribed by regulations for the carrying out or giving effect to the Act.
The Regulations make a technical amendment to update two references to Australian Standards in the Corporations Regulations 2001 (the Principal Regulations) relating to matters that the Australian Securities and Investments Commission (ASIC) must take into account when considering whether to make or approve standards or requirements relating to internal dispute resolution.
Financial services licensees
Under section 912A of the Act, general obligations on financial services licensees which provide financial services to retail clients include that the licensee is required to have a dispute resolution system in place complying with subsection 912A(2) of the Act. This requirement includes both an internal dispute resolution procedure and membership of an external dispute resolution scheme. The internal dispute resolution procedure must comply with standards and requirements made or approved by ASIC in accordance with the relevant regulations made for the purposes of paragraph 912A(2)(a)(i).
Regulation 7.6.02(1)(a) in the Principal Regulations previously required ASIC to take Australian Standard AS 4269 1995 (known as Complaints Handling) into account when considering whether to make or approve standards or requirements relating to internal dispute resolution.
The Regulations substitute a reference to the new Australian Standard - Australian Standard AS ISO 10002-2006 Customer satisfaction - Guidelines for complaints handling in organizations - which has been issued by Standards Australia.
Product disclosure statements
A comparable amendment has also been made to subregulation 7.9.77(1) in the Principal Regulations, which relates to the internal dispute resolution procedure required of an issuer or regulated person who gives a retail client a Product Disclosure Statement (see section 1017G(2) of the Act).
Subregulation 7.9.77(1) previously required ASIC to take Australian Standard AS 4269 1995 (known as Complaints Handling) into account when considering whether to make or approve standards or requirements relating to internal dispute resolution.
The Regulations substitute a reference to the new Australian Standard referred to above - Australian Standard AS ISO 10002-2006 Customer satisfaction - Guidelines for complaints handling in organizations - which has been issued by Standards Australia.
Further details on the Regulations are set out in the Attachment.
The Regulations were subject to a consultation process in the context of wider consultation undertaken in relation to margin lending disclosure requirements. Public consultation commenced on 22 September 2009 for a four-week period. No submissions were received relating to these amendments.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commenced on the day after they were registered on the Federal register of legislative instruments.
Attachment to explanatory statement
Details of the Corporations Amendment Regulations 2009 (No. 10)
Regulation 1 — Name of Regulations
This regulation provides that the name of the Regulations is the Corporations Amendment Regulations 2009 (No. 10).
Regulation 2 — Commencement
This regulation provides that the Regulations commence on the day after they are registered.
Regulation 3 — Amendment of Corporations Regulations 2001
This regulation provides that the Regulations amend the Corporations Regulations 2001 (the Principal Regulations).
Item [1] – Paragraph 7.6.02 (1) (a)
Item [1] substitutes a new paragraph updating the reference to the new Australian Standard AS ISO 10002-2006.
Item [2] – Paragraph 7.9.77 (1) (a)
Item [2] substitutes a new paragraph updating the reference to the new Australian Standard AS ISO 10002-2006.
Overview
The Corporations Amendment Regulations 2009 (No. 10) were enacted to address the need for updating Australian Standards in the Corporations Regulations 2001 to align with the most current industry practices and standards. This regulation was introduced to ensure that the Australian Securities and Investments Commission (ASIC) considers the most recent standards when making or approving standards or requirements related to internal dispute resolution for financial services licensees and issuers of Product Disclosure Statements. Enacted by the authority of the Minister for Financial Services, Superannuation and Corporate Law, the primary policy objective of these regulations is to ensure that dispute resolution practices within the financial services industry remain up-to-date and effective in addressing client complaints. The regulations update references to Australian Standards from AS 4269:1995 to AS ISO 10002:2006, reflecting the latest guidelines for handling customer complaints in organisations.
Scope and Application
The Corporations Amendment Regulations 2009 (No. 10) pertain to financial services licensees and entities issuing or providing Product Disclosure Statements to retail clients under the Corporations Act 2001. These regulations apply to entities within the Commonwealth jurisdiction, specifically targeting financial services licensees who offer retail financial services and issuers of Product Disclosure Statements. The regulations mandate compliance with updated standards for internal dispute resolution procedures, replacing the outdated Australian Standard AS 4269 1995 with the new Australian Standard AS ISO 10002-2006 Customer satisfaction - Guidelines for complaints handling in organizations. These amendments are intended to modernise the regulatory framework and ensure that dispute resolution procedures meet current standards and requirements as approved by the Australian Securities and Investments Commission (ASIC). The regulations do not explicitly state exclusions or exemptions, but their application is confined to the specified standards referenced in the regulations. The amendments are effective as of the day after their registration and do not introduce new substantive obligations beyond updating the standards to be considered by ASIC.
Key Provisions
The Corporations Amendment Regulations 2009 (No. 10) introduce technical amendments to the Corporations Regulations 2001, updating references to Australian Standards concerning internal dispute resolution procedures for financial services licensees and issuers of Product Disclosure Statements (PDS). Specifically, the regulations update references from the outdated Australian Standard AS 4269:1995 (Complaints Handling) to the more current Australian Standard AS ISO 10002-2006 (Customer satisfaction – Guidelines for complaints handling in organizations) (see Regulation 3, Items [1] and [2]). These amendments ensure that the Australian Securities and Investments Commission (ASIC) considers the most recent standards when developing or approving standards and requirements for internal dispute resolution processes.
Financial services licensees, who offer services to retail clients, are required to maintain a compliant dispute resolution system, encompassing both an internal dispute resolution procedure and membership in an external dispute resolution scheme (see section 912A(2) of the Corporations Act 2001). The internal dispute resolution procedure must adhere to the standards and requirements approved or made by ASIC, which now references the updated Australian Standard AS ISO 10002-2006 (see Regulation 3, Item [1]). Similarly, entities issuing PDS must also ensure their internal dispute resolution procedures align with these updated standards (see Regulation 3, Item [2]).
The obligations imposed on financial services licensees and issuers of PDS include the implementation of internal dispute resolution procedures that meet the latest standards set by ASIC, informed by the updated Australian Standard AS ISO 10002-2006. These standards provide guidelines for handling complaints in organisations effectively. Failure to comply with these updated standards could result in non-compliance with the Corporations Act 2001, potentially leading to regulatory action by ASIC. While the explanatory statement does not detail specific offences, penalties, or civil/criminal consequences, non-compliance with the Act and its regulations can generally lead to enforcement actions, fines, and other sanctions as deemed appropriate by ASIC. The precise penalties would depend on the nature and severity of the breach, as outlined in the Corporations Act 2001 and related regulations.