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News

This section contains our 2016-2018 news updates. For 2000-2015 news updates, please see our Archive.

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ASIC consults on code of ethics compliance schemes for financial advisers
15 May 2018

ASIC has today released a consultation paper outlining its proposed approach to approving and overseeing compliance schemes for financial advisers.

Incoming training and education requirements for financial advisers include obligations to comply with a code of ethics that is being developed by the Financial Adviser Standards and Ethics Authority (FASEA). Under the new legislative regime for adviser professional standards, compliance with this code of ethics will be enforced by ASIC-approved compliance schemes.

The proposals in CP 300 Approval and oversight of compliance schemes for financial advisers include:

  • the process for applying for approval of a compliance scheme;
  • ASIC's expectations for the governance and administration, monitoring and enforcement processes, and ongoing operation of compliance schemes;
  • how ASIC propose to exercise its powers to revoke the approval of a compliance scheme and to impose or vary conditions on the approval;
  • ASIC's proposal to modify the law to ensure that monitoring bodies can gather the information from Australian Financial Services (AFS) licensees and authorised representatives that they need to carry out proactive monitoring activities; and
  • draft guidance about the notifications that monitoring bodies must make to ASIC.

Submissions are due 28 June 2018 and ASIC plans to release a regulatory guide setting out its final policy by the end of September 2018.

For further information refer to ASIC's website.

ASIC releases guidance on AFS licensing exemption for tax and BAS agents
26 April 2018

ASIC has today updated its guidance for accountants who provide services on self-managed superannuation funds to cover the exemption from the Australian Financial Services licensing requirements for tax and BAS agents. The guidance was developed in conjunction with the Tax Practitioners Board and is being released as part of updates to Information Sheet 216 AFS licensing requirements for accountants who provide SMSF services (INFO 216).

For further information refer to ASIC's website.

Reform of the Financial Sector (Shareholdings) Act 1998
19 April 2018

The Government today released exposure draft legislation to relax the restriction on ownership of banks and insurers as well as introducing a new streamlined approval path under the Financial Sector (Shareholdings) Act 1998 (FSSA).

Under the new framework, to be legislated this year, the Government will:

  • increase the general FSSA ownership cap from 15 per cent to 20 per cent, in line with the requirements of the Foreign Acquisitions and Takeovers Act 1975; and
  • allow owners of domestically incorporated companies to hold more than 20 per cent of an institution's shares as long as:
    • the owners are 'fit and proper'; and
    • if applying to become an authorised deposit-taking institution (ADI: broadly, banks; credit unions; and building societies) or a life insurer, or licensed as such for fewer than five years, the entity has assets of less than $200 million; or
    • if applying to become a general insurance company, or licensed as such for fewer than five years, the entity has assets of less than $50 million.

Submissions are due by 4 May 2018.

For further information (including to see a copy of the exposure draft legislation) refer to Treasury's website.

Australian Government response to the ASIC Enforcement Review Taskforce Report
16 April 2018

In December 2017, the ASIC Enforcement Review Taskforce reported to the Government on its review of ASIC's enforcement regime. The Taskforce made 50 recommendations.

The Government response to the Taskforce report stated that it agrees, or agrees-in-principle, to all of the Taskforce's recommendations.

For further information refer to Treasury's website and our Focus: ASIC's Sanctions and Powers to be strengthened.

ASIC releases updated guidance on client money
4 April 2018

ASIC has today released updated guidance for AFS licensees that hold client money for trading in over-the-counter (OTC) derivatives.

The guidance coincides with the start of ASIC's Client Money Reporting Rules 2017 (client money reporting rules) and other client money reforms on 4 April 2018 enacted under the Treasury Laws Amendment (2016 Measures No. 1) Act 2017 and the Corporations Amendment (Client Money) Regulations 2017.

ASIC Regulatory Guide 212 Client money relating to dealing in OTC derivatives has been updated to reflect the changes to the law as a result of these reforms.

The changes mean that the circumstances in which an AFS licensee may use 'derivative retail client money', within the meaning of the Corporations Act, have been significantly restricted. In particular, AFS licensees can no longer withdraw derivative retail client money from the client money account and use it for a wide range of purposes, including as the licensee's own working capital.

The reforms also impose new record-keeping, reconciliation and reporting requirements on AFS licensees that hold derivative retail client money (unless the client money relates to a derivative that is traded on a fully licensed domestic market, such as ASX 24).

For further information refer to ASIC's website.

ASIC consults on updated guidance for its oversight of the Australian Financial Complaints Authority
5 March 2018

ASIC today released draft updated Regulatory Guide 139, Oversight of Australian Financial Complaints Authority (AFCA) for public consultation.

The Bill to establish AFCA passed on 14 February 2018, and Minister for Financial Services, the Hon. Kelly O'Dwyer has announced that AFCA will commence operations no later than 1 November 2018. There are a number of transitional steps that need to take place before AFCA commences, including that:

  • the Minister will authorise AFCA; and
  • the AFCA Board will consult on the scheme's terms of reference.

ASIC will finalise this guidance to coincide with AFCA commencement (that is, no later than 1 November 2018).

Submissions are due 6 April 2018.

For further information (including to see a copy of the consultation paper and draft regulatory guide) refer to ASIC's website. For background information refer to our Breaking News for 26 July 2017 and 14 February 2018.

Asia Region Funds Passport 2018
19 February 2018

The Government has today announced that it is seeking submissions on a draft of the Asia Region Funds Passport Bill and related explanatory material. The exposure draft includes revisions from the December consultation.

Closing date for submissions is 5 March 2018.

For further information (including to access copies of the exposure draft and explanatory materials) refer to the Treasury website. For background information refer to our Breaking News for 21 December 2017.

ASIC welcomes establishment of the Australian Financial Complaints Authority
14 February 2018

ASIC has today welcomed the passage through Parliament of the Bill to establish the Australian Financial Complaints Authority (AFCA).

ASIC will work with Government and other interested parties to transition to AFCA as smoothly as possible. In the interim, ASIC will continue to oversee the two ASIC-approved schemes – the Financial Ombudsman Service and the Credit and Investments Ombudsman. Separate arrangements are in place for the Superannuation Complaints Tribunal to enable it to deal with existing complaints.

For further information refer to ASIC's website. For background information refer to our Breaking News for 26 July 2017.

Information on new professional standards for financial advisers now available on ASIC website
13 February 2018

ASIC has created a new section on its website to help financial advisers navigate the incoming professional standards requirements.

The new requirements are aimed at lifting the education, training and ethical standards in the financial advice sector.

ASIC's website now provides an overview of the new requirements, as well as related information on:

  • the scope of the reforms;
  • the obligations on advisers;
  • the commencement dates of the reforms;
  • the Financial Adviser Standards and Ethics Authority;
  • compliance schemes for the Code of Ethics, and
  • updates to the Financial Advisers Register.

For further information refer to ASIC's website.

ASIC reports on how large financial institutions manage conflicts of interest in financial advice
24 January 2018

ASIC today released Report 562 Financial advice: Vertically integrated institutions and conflicts of interest (REP 562) covering ASIC’s recent review of financial advice provided by the five biggest vertically integrated financial institutions.

The review looked at the products that ANZ, CBA, NAB, Westpac and AMP financial advice licensees were recommending and at the quality of the advice provided on in-house products. REP 562 outlines the results of this review and identifies areas where improvements are needed to the management of conflicts of interest.

For further information refer to ASIC's website.

Consultation – Asia Region Funds Passport
21 December 2017

The Government today released the draft Asia Region Funds Passport (Passport) Bill and related explanatory materials.

The Passport is a common framework of coordinated regulatory oversight to facilitate cross border issuing of managed investment funds. Australia, Japan, Korea, New Zealand and Thailand are signatories to the Passport’s Memorandum of Cooperation, which took effect on 30 June 2016.

Closing date for submissions is 25 January 2018.

For further information refer to the Treasury website.

Consultation – Corporate Collective Investment Vehicle – Tax framework
21 December 2017

The Government today released the draft Corporate Collective Investment Vehicle (CCIV) Bill and explanatory materials (tax framework). The draft Bill proposes the new tax framework that will give effect to the CCIV. The policy intent of the CCIV is to establish a new form of passive investment vehicle, providing broad alignment with the attribution tax regime for managed investment trusts.

Closing date for submissions is 2 February 2018.

For further information refer to the Treasury website.

ASIC releases guidance on sell-side research
21 December 2017

ASIC today released regulatory guidance on managing conflicts of interest and handling inside information by Australian financial services (AFS) licensees that provide sell-side research.

Regulatory Guide 264 Sell-side research (RG 264) looks at the key stages of a capital raising transaction and provides specific guidelines on how an AFS licensee should appropriately manage conflicts of interest during each of these stages, including the preparation and production of investor education reports. RG 264 also provides general guidance for AFS licensees on the identification and handling of inside information by research analysts, and about the structure and funding of sell-side research teams.

The guidance addresses uneven market practice that has developed since the publication of Regulatory Guide 79 Research report providers: Improving the quality of investment research (RG 79) in 2004. It also responds to industry requests for more detailed guidance on sell-side research and supplements guidance in RG 79.

While RG 264 does not extend the regulatory framework in RG 79, ASIC will give industry six months to 1 July 2018 to make sure their compliance measures conform to the expectations set out in the this guide.

For further information refer to ASIC's website.

ASIC issues guidance for limited AFS licensees
22 November 2017

ASIC has today released a new webpage guidance and information sheets to help limited AFS licensees and their representatives understand their key obligations.

The material released includes:

  • Information Sheet 227 What can limited AFS licensees do? (INFO 227);
  • Information Sheet 228 Limited AFS licensees: Advice conduct and disclosure obligations when providing advice under a limited AFS licence (INFO 228);
  • Information Sheet 229 Limited AFS licensees: Complying with your licensing obligations (INFO 229); and
  • Quick guide: Key obligations when giving advice under a limited AFS licence, available on the ASIC website.

For further information refer to ASIC's website. For background information refer to our Breaking News for 23 June 2012 and 14 June 2013.

ASIC releases guidance for the Financial Services and Credit Panel
16 November 2017

ASIC has today released regulatory guidance on the newly established Financial Services and Credit Panel (FSCP).

Regulatory Guide 263 Financial Services and Credit Panel (RG 263) sets out the principles and processes of the FSCP. It covers the types of matters to be referred to sitting panels of the FSCP and the hearing procedures and decisions of these panels.

The role of the FSCP will be to decide whether ASIC makes banning orders against individuals for misconduct in the course of providing retail financial services and/or engaging in credit activities where the matter is appropriate for peer review because of its significance, complexity or novelty.

For further information refer to ASIC's website. For background information refer to our Breaking News for 11 April 2017.

ASIC confirms restricted use of 'independently owned' in financial services
14 November 2017

ASIC has today updated regulatory guidance to confirm restrictions, that were announced in June 2017, on the use of terminology that implies independence.

ASIC has updated Regulatory Guide 175 Licensing: Financial product advisers – conduct and disclosure (RG 175), to include guidance that terms such as 'independently owned', 'non-aligned' and 'non-institutionally owned' are restricted under the Corporations Act. Financial services providers can only use these terms if they meet the requirements set out in s923A of the Act, including that they do not receive commissions, volume-based payments, or other gifts or benefits, and operate without any conflicts of interest. The six month facilitative compliance period will come to an end on 31 December 2017.

The update to RG 175 also reflects the introduction of s923C into the Corporations Act by the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017, to restrict the use of the titles 'financial adviser' and 'financial planner'. This restriction commences on 1 January 2019 for new advisers, while existing advisers have until at least 1 January 2021 to satisfy the first of their training requirements.

ASIC has also made minor changes to RG 175 to reflect the changes that will be made to Regulatory Guide 90 Example Statement of Advice: Scaled advice for a new client (RG 90). As explained in Consultation Paper 284: Example Statement of Advice for life insurance: Update to RG 90, ASIC is going to replace the example Statement of Advice (SOA) in RG 90 with a new example SOA. The updated RG 90 will be released shortly.

For further information refer to ASIC's website. For background information refer to our Breaking News for 27 June 2017.

ASIC updates work on fee transparency for super and managed investment schemes
1 November 2017

ASIC has today announced that it has extended beyond 30 September its facilitative compliance approach to fee and cost disclosure and will work with an external expert to conduct a review of the fees and costs disclosure under RG 97 to ensure that it is best meeting in practice the objective of greater transparency for consumers.

ASIC is undertaking these actions in response to feedback from across the industry around challenges with the practical implementation of RG 97.

For further information refer to ASIC's website

ASIC overhauls funds management guidance
26 October 2017

ASIC has today released for consultation a suite of six new and updated regulatory guides for the funds management industry.

The regulatory guides have been developed in advance of the upcoming new Asia Region Funds Passport and corporate collective investment vehicle (CCIV) legislation, taking into account these new areas as well as bringing ASIC's funds management policy up to date across the board.

ASIC proposes to consolidate its core guidance for the funds management industry into six regulatory guides covering topics:

  • establishing and registering a fund;
  • constitutions;
  • compliance and oversight;
  • asset holding;
  • how ASIC may exercise its exemption or modification powers and common forms of relief ASIC may grant; and
  • entry and ongoing requirements for foreign passport funds.

The guidance will reflect ASIC's current views on these topics, and apply to managed investment schemes, CCIVs, Australian passport funds and certain other AFS licensees involved in funds management.

ASIC will develop an information sheet on funds management governance considerations and make a range of less substantive amendments to other regulatory guides. These amendments will reflect the consequential amendments that will be made to the Corporations Act to accommodate the new regimes.

For further information (including to see a copy of the consultation paper 296 and draft regulatory guides) refer to ASICs website.

ASIC's client money reporting rules finalised
10 October 2017

ASIC has today released the finalised ASIC Client Money Reporting Rules 2017 (client money rules) which, from 4 April 2018, will impose record-keeping, reconciliation and reporting obligations on Australian financial services (AFS) licensees that hold 'derivative retail client money' within the meaning of the Corporations Act, unless the client money relates to a derivative that is traded on a fully licensed domestic market, such as ASX 24.

ASIC has also today released Information Sheet 226 Complying with the ASIC Client Money Reporting Rules 2017 (INFO 226) to assist AFS licensees comply with their obligations under the client money rules.

The release of the client money rules follows the passage of Treasury Laws Amendment (2016 Measures No. 1) Bill 2016 and the Corporations Amendment (Client Money) Regulations 2017. These reforms will prevent AFS licensees from withdrawing client money provided by retail derivative clients, and using it for the wide range of purposes currently permitted under the Corporations Act, including as the AFS licensee's own working capital.

The client money rules will commence on 4 April 2018, at the same time the other client money reforms take effect. This gives AFS licensees a six month transition period to ensure they have the necessary systems, policies and procedures for complying with the client money rules.

For further information refer to ASIC's website. For background information refer to our Breaking News for 11 July 2017.

ASIC remakes 'sunsetting' class order providing licensing relief for trustees of wholesale equity schemes
29 October 2017

ASIC has today remade Class Order [CO 07/74] Wholesale equity schemes: Licensing relief for trustees, which provides relief, in specific circumstances, to trustees of wholesale equity schemes from the requirement to obtain an Australian financial services (AFS) licence. The Class Order was due to expire on 1 October 2017.

The new instrument, ASIC Corporations (Wholesale Equity Scheme Trustees) Instrument 2017/849 has been updated to take into account financial and custody requirements imposed in 2013 under Class Order [CO 13/760] Financial requirements for responsible entities and operators of investor directed portfolio services, Class Order [CO 13/761] Financial requirements for custodial and depository services and Class Order [CO 13/1410] Holding assets: Standards for providers of custodial and depository services.

ASIC has also issued ASIC Corporations (Amendment and Repeal) Instrument 2017/848, which repeals [CO 07/74] and amends [CO 13/760] and [CO 13/761] as they apply to managers of wholesale equity schemes so that they are consistent with the requirements in the new instrument.

For further information refer to ASIC's website.

ASIC remakes relief for financial counselling agencies providing advice or credit assistance
27 September 2017

ASIC has today made two new legislative instruments relating to financial counselling agencies to continue the relief provided by class orders that were due to expire (‘sunset’):

  • Class Order [CO 03/1063] Licensing relief for financial counselling agencies has been remade in ASIC Corporations (Financial Counselling Agencies) Instrument 2017/792; and
  • Class Order [CO 11/926] Credit licensing exemptions for NGOs (non-government organisations) providing credit assistance to consumers and ASIC Credit (Financial Counselling Agencies) Instrument 2015/992 have been remade in ASIC Credit (Financial Counselling Agencies) Instrument 2017/793.

The relief was made without substantive changes.

For further information refer to ASIC's website.

ASIC facilitates crowd-sourced funding by public companies
21 September 2017

ASIC has today released guidance for public companies and intermediaries to support them in using the new crowd-sourced funding (CSF) regime, which commences on 29 September 2017.

ASIC has released two new regulatory guides:

  • Regulatory Guide 261 Crowd-sourced funding: Guide for public companies (RG 261), with a template CSF offer document to help companies prepare their CSF offers; and
  • Regulatory Guide 262 Crowd-sourced funding: Guide for intermediaries (RG 262).

ASIC has also:

  • updated ASIC Corporations (Consents to Statements) Instrument 2016/72 to reduce the compliance burden associated with obtaining consent for statements in CSF offer documents;
  • issued ASIC Corporations (Financial Requirements for CSF Intermediaries) Instrument 2017/339, which outlines specific minimum requirements for CSF intermediaries; and
  • amended ASIC class orders [CO 13/762], [CO 13/763] and ASIC Corporations (Nominee and Custody Services) Instrument 2016/1156; and
  • Report 544 Response to submissions on CP 288 and CP 289 on crowd-sourced funding (REP 544).

For further information see ASIC's website.

Applications for crowd-funding licences open 29 September 2017
12 September 2017

ASIC has today released further details of its approach to the assessment of CSF intermediaries, and the information required for both new licence and variation applications seeking CSF service authorisation.

From 29 September 2017, the new crowd-sourced funding (CSF) regime will come into effect and ASIC will begin accepting licence applications from CSF intermediaries.

Under the CSF regime, eligible public companies will be able to make offers of fully paid ordinary shares to a large number of investors via the online platform of a licensed intermediary. Generally, the CSF regime reduces the regulatory requirements for public fundraising and the intermediaries will play an important oversight role in this process.

For companies to access the benefits of the new CSF regime, ASIC must first license suitable intermediaries to provide crowd-funding services. Providers of CSF services must hold an Australian financial services (AFS) licence. From 29 September 2017 ASIC will begin accepting applications from potential CSF intermediaries for AFS licence authorisations to provide a crowd-funding service.

To facilitate implementation of this regime as soon as possible, ASIC’s Licensing team will consider applications from CSF intermediaries as a matter of priority.

These arrangements relate only to applications for AFS licence authorisations and do not apply in connection with applications for Australian Market Licences. ASIC says that CSF intermediaries or other entities seeking to offer secondary trading would typically require an Australian Market Licence: see ASIC's draft revised Regulatory Guide 172 Financial markets: Domestic and overseas operators. For background information, refer to our Breaking News for 20 July 2017.

ASIC has also released an update to ASIC Form 206 which can be used to convert an existing company so that it is eligible to use the new CSF regime. ASIC will now accept lodgement of ASIC Form 206.

For further information refer to ASIC's website.

Professional indemnity insurance review completed
29 August 2017

A targeted review of professional indemnity (PI) insurance by ASIC has found that most small companies holding Australian financial services (AFS) licences had PI insurance that met regulatory requirements. ASIC found, generally, the small AFS licensees that ASIC reviewed had policies with an overall indemnity limit that complied with requirements.

The review focused on the adequacy of cover for defence (legal) costs, and fraud and dishonesty, in the policies offered by two insurance companies to small AFS licensees. It followed on from ASIC's Report 459 Professional indemnity insurance market for AFS licensees providing financial product advice, December 2015 (REP 459), which highlighted these as areas of concern.

ASIC has revised Regulatory Guide 126 Compensation and insurance arrangements for AFS licensees to clarify that fraud cover is not required by licensees that are single person companies.

For further information refer to ASIC's website.

Overhauling the dispute resolution framework
26 July 2017

The Government has today announced it has established a transition team to bring the Australian Financial Complaints Authority (AFCA) into being. AFCA is designed to provide a 'one-stop-shop' for external dispute resolution, as recommended both by the Ramsay Review and the report of the Small Business and Family Enterprise Ombudsman.

The transition team has been tasked with ensuring that AFCA is operational by 1 July 2018. The transition team will advise the Government on AFCA’s terms of reference, governance and funding arrangements. It will also make recommendations on the authorisation process for AFCA and the transitional arrangements required to appropriately settle the cases currently before the three existing schemes.

For further information refer to the Treasury website.

ASIC consults on revised licence regime for domestic and overseas market operators
20 July 2017

ASIC has today released a consultation paper on proposals to refine and update ASIC’s regulatory guidance on the licensing regime for financial markets.

Consultation Paper 293 Revising the market licence regime for domestic and overseas operators (CP 293) proposes introducing a two-tiered market licence regime, based on a risk-based assessment. The second tier of licence will be able to facilitate a range of market venues, including specialised and emerging market venues. The consultation paper also:

  • proposes updating and clarifying the guidance about how licensees may comply with specific licence obligations;
  • proposes consolidating Regulatory Guide 177 (overseas market licensees) into the updated Regulatory Guide 172;
  • sets out the relevance of the proposals for secondary trading in shares of eligible crowd sourced funding companies; and
  • addresses implementation and transition matters.

The proposals follow the passage of the Corporations Amendment (Crowd-sourced Funding) Act 2017 (Crowd Sourced Funding Act), which amended Chapter 7 of the Corporations Act 2001 relating to the market licence regime.

Submissions are due by 31 August 2017.

For further information refer to ASIC's website.

Government to review Investment Manager Regime and amend AMIT rules
19 July 2017

The Government has today announced that it would consult on whether a legislative amendment is required to the Investment Manager Regime (IMR) to ensure that the engagement of an Australian independent fund manager will not cause a fund that is legitimately established and controlled offshore to be an Australian resident. Any legislative amendment would be retrospective to apply from the start of the IMR regime in 2015.

The Government will also make a number of amendments to clarify the operation of the new tax system for managed investment trusts (MITs).

For further information refer to Treasury's website.

ASIC's cost recovery framework has been finalised
14 July 2017

ASIC’s cost recovery framework has been finalised, incorporating changes made after broad industry consultation. The framework, outlined in Report 535 ASIC cost recovery arrangements: 2017–18, identifies industry sectors and provides a methodology for how the levies will be calculated.

As a result of legislation passed on 15 June 2017, industry funding will see regulated entities share the costs of ASIC’s regulatory services for their sector. The first invoices will be issued in January 2019 and will recover costs for regulatory services for the 2017–18 financial year.

For further information refer to ASIC's website.

ASIC remakes 'sunsetting' class order on credit union member shares
11 July 2017

ASIC has today remade Class Order [CO 02/1176] Credit union member shares in ASIC Corporations (Credit Union Member Shares) Instrument 2017/616. [CO 02/1176] was due to expire (‘sunset’) on 1 April 2018.

The new instrument continues relief from:

  • financial services licensing and disclosure requirements for the provision of financial product advice in relation to the issue of 'member shares'; and
  • the requirement to give information to members confirming the issue or redemption of these kinds of shares.

The relief was remade following public consultation via Consultation Paper 283 Remaking ASIC class order on credit union member shares: [CO 02/1176] (CP 283), issued in May 2017.

For further information refer to ASIC's website.

ASIC consults on new client money reporting rules
11 July 2017

ASIC has today released a consultation paper proposing to make new client money reporting rules (client money rules) for Australian financial services (AFS) licensees that hold 'derivative retail client money' within the meaning of the Corporations Act.

The client money rules will impose record keeping, reconciliation and reporting requirements on AFS licensees that hold derivative retail client money. ASIC is proposing that the client money rules should apply to all derivative retail client money received by an AFS licensee, unless the client money relates to a derivative that is traded on a fully licensed domestic market, such as the ASX 24.

Consultation Paper 291 Reporting rules: Derivative retail client money (CP 291) seeks feedback on the proposed client money rules.

The proposals follow the passage of Treasury Laws Amendment (2016 Measures No. 1) Bill 2016 and the Corporations Amendment (Client Money) Regulations 2017. These reforms will prevent AFS licensees from withdrawing client money provided by retail derivative clients, and using it for the wide range of purposes currently permitted under the Corporations Act, including as the AFS licensee's own working capital.

The reforms also give ASIC the power to make new client money reporting rules to ensure greater transparency in relation to an AFS licensee's receipt and use of derivative retail client money.

The client money rules are proposed to commence on 4 April 2018, which is when the other client money reforms will take effect.

Submissions are due by Tuesday, 8 August 2017.

For further information (including to see a copy of the consultation paper) refer to ASIC's website.

ASIC remakes 'sunsetting' class orders relating to registered schemes
5 July 2017

ASIC has remade four class orders relating to registered managed investment schemes, which were due to expire ('sunset') in 2017 and 2018.

A new instrument, ASIC Corporations (Chapter 5C – Miscellaneous Provisions) Instrument 2017/125, replaces the following class orders:

  • Class Order [CO 98/50] Incorporating parts of other compliance plans, which was due to sunset on 1 April 2018;
  • Class Order [CO 98/1806] Related bodies corporate and external members of compliance committee, which was due to sunset on 1 October 2017; and
  • Class Order [CO 98/1808] Allowing constitutions to use Appendix 15A of the ASX Listing Rules, which was due to sunset on 1 October 2017.

Class Order [CO 98/60] Protecting class rights in a managed investment scheme, which was due to expire on 1 April 2018, has been remade as an amendment to existing Class Order [CO 09/552] Changing scheme constitutions: see ASIC Corporations (Amendment and Repeal) Instrument 2017/545.

The class orders were remade following public consultation under Consultation Paper 270 Remaking ASIC class orders on registered schemes.

For further information refer to ASIC's website. For background information, refer to our Breaking News for 14 October 2016.

ASIC commences consultation on proposed guidance on sell-side research
30 June 2017

ASIC has today released a consultation paper proposing guidance on managing conflicts of interest and handling material, non-public information by Australian financial services (AFS) licensees that provide sell-side research (CP 290).

The proposed guidance looks at the key stages of a capital raising transaction and provides specific guidelines on what AFS licensees should do to appropriately manage conflicts of interest at each stage of the process. It also sets out general guidelines for AFS licensees in the identification and handling of material, non-public information and for the structure and funding of research teams.

ASIC is seeking the views of users and providers of sell-side research such as market participants, investment banks, independent corporate advisers, buy-side investors and other interested parties.

Specifically, feedback is sought on proposals related to:

  • the identification and handling of material, non-public information;
  • the management of research conflicts during the capital raising process, including the preparation and production of investor education reports; and
  • the structure and funding of research departments.

Submissions are due by 31 August 2017.

For further information refer to ASIC's website.

ASIC extends relief excluding multifunds, superannuation platforms and hedge funds from the shorter PDS regime
29 June 2017

ASIC has today extended Class Order [CO 12/749] Relief from the Shorter PDS regime for one year. The class order relief was due to expire on 30 June 2017.

The class order provides interim relief, until 30 June 2018, to exclude multifunds, superannuation platforms and hedge funds from the disclosure requirements of the shorter Product Disclosure Statement (PDS) regime under Part 7.9 of the Corporations Regulations 2001.

For further information refer to ASIC's website.

ASIC clarifies its position on the use of 'independently owned' under s923A
27 June 2017

ASIC has today clarified its position on the use of restricted terms relating to the independence of financial advisers after seeking external legal advice on whether phrases such as 'independently owned' are restricted terms under s923A of the Corporations Act.

Section 923A provides that financial service providers can only use certain restricted words and expressions if they do not receive commissions, volume-based payments, or other gifts or benefits, and operate without any conflicts of interest. While words such as 'independent', 'impartial', and 'unbiased' are specified as restricted words in s923A, there was some uncertainty about whether words such as 'independently owned' were also restricted.

ASIC's position is that words such as 'independently owned', 'non-aligned' and 'non-institutionally owned', and other similar words or expressions, can be used only if a financial adviser satisfies the conditions set out in s923A. This means that if a financial adviser does not receive any commissions or volume-based payments, or other gifts or benefits and has no conflicts of interest or influence from any product issuer, then they can describe themselves as being 'independently owned'. However, if the financial adviser does receive commissions or operates with conflicts of interest, then they will not be permitted to use the term 'independently owned' or other like words or expressions.

ASIC will provide a facilitative compliance period of six months so that advice firms that do not satisfy the conditions in s923A can change websites and documents to remove terms such as 'independently owned', 'non-aligned' or 'non-institutionally owned'.

The facilitative compliance period will not extend to contraventions of s923A where the specified restricted terms 'independent', 'impartial', and 'unbiased' are used as ASIC considers that there has been no uncertainty about how s923A applies to them and ASIC will continue to take action against financial service providers for using these terms in breach of s923A.

ASIC will also update Regulatory Guide 175 Licensing: Financial product advisers – conduct and disclosure (RG 175) to give further guidance on how to comply with s923A.

For further information refer to ASIC's website.

ASIC seeks better compliance with asset-holding requirements in funds management and custodial services
22 June 2017

ASIC today released a report entitled 'Review of compliance with asset holding requirements' (REP 531). The report outlines ASIC's findings following an extensive review of compliance by custodians and responsible entities of managed investment schemes with the asset holding requirements imposed by ASIC Regulatory Guide 133 Managed investments and custodial or depository services: Holding assets (RG 133).

For further information refer to ASIC's website.

ASIC reports on conduct in funds management and makes recommendations for improved compliance
13 June 2017

ASIC has today released Report 528 Responsible entities' compliance with obligations: Findings from 2016 proactive surveillance program (REP 528). The report details the findings of ASIC's surveillance of responsible entities' compliance with their legal obligations. ASIC has made recommendations to improve responsible entities' compliance in line with a model ASIC has developed.

For further information refer to ASIC's website.

Amendments to ASIC Corporations (Recognised Accountants: Exempt Services) Instrument 2016/1151
30 May 2017

ASIC has today amended ASIC Corporations (Recognised Accountants: Exempt Services) Instrument 2016/1151 to address a clear regulatory anomaly.

These amendments mean that full AFS licensees are not disadvantaged in relation to advice on taxation issues compared to limited licensees (ie, those who are licensed to provide a limited range of financial services relevant to self-managed superannuation funds) or those without any AFS licence.

ASIC has also updated Information Sheet 216 AFS licensing requirements for accountants who provide SMSF services (INFO 216) to reflect the amended instrument.

For further information refer to ASIC's website.

ASIC Corporations (Amendment) Instrument 2017/0464
26 May 2017

The ASIC Corporations (Amendment) Instrument 2017/0464 was registered today on the FRLI. It amends the ASIC Corporations (Recognised Accountants: Exempt Services) Instrument 2016/1151 to enable full AFS licensees (and authorised representatives) with limited authorisations to provide exempt advice under reg 7.1.29(4) of the Corporations Regulations to retail clients on the tax implications of financial products which are not covered by an authorisation in their licence.

ASIC provides guidance on common issues in registration of managed investment schemes
24 May 2017

ASIC has today published Information Sheet 220 Managed investment schemes: Common registration issues (INFO 220) to better assist scheme operators in the preparation of scheme constitutions.

INFO 220 explains the common issues ASIC identifies in the content of managed investment scheme constitutions during the registration process, and discusses how ASIC addresses them. It covers issues with:

  • the definition of a scheme member;
  • fees and expenses;
  • member withdrawal from the scheme;
  • timeframes for withdrawal payment; and
  • independent final audit when the scheme is wound up.

For further information refer to ASIC's website.

ASIC consults on ‘sunsetting’ class orders about licensing relief for financial counselling agencies and rural financial counselling service providers
17 May 2017

ASIC today released Consultation Paper 282 Remaking ASIC class orders on financial counselling licensing relief (CP 282) proposing to remake three ASIC instruments relating to financial counsellors, which are due to expire between 1 October 2017 and April 2026.

ASIC proposes to:

  • remake, without significant changes, Class Order [CO 03/1063] Licensing relief for financial counselling agencies; and
  • remake as a single new instrument, without significant changes, Class Order [CO 11/926] Credit licensing exemptions for NGOs (non-government organisations) providing credit assistance to consumers and ASIC Credit (Financial Counselling Agencies) Instrument 2015/992.

CP 282 outlines the minor changes ASIC is proposing to make to ensure the relief applies in the intended way, in particular, clarifying the restrictions on the persons that may not receive payments.

For further information refer to ASIC's website.

External dispute resolution and complaints framework - draft legislation released
17 May 2017

The Government today released exposure draft legislation to give effect to the Ramsay Review recommendation to overhaul the financial system's external dispute resolution and complaints framework. These recommendations include the establishment of a one-stop shop for all financial disputes, including superannuation disputes. Submissions are due by 14 June 2017.

For further information (including to access copies of the draft legislation) refer to the Treasury website.

ASIC remakes 'sunsetting' class order on reporting requirements for Australian financial services licensees who are natural persons
26 April 2017

ASIC has today remade Class Order [CO 03/748] Reporting requirements under s989B in ASIC Corporations (Financial Reporting: Natural Person Licensees) Instrument 2017/307. [CO 03/748] was due to expire ('sunset') on 1 October 2017.

The new instrument continues relief for Australian financial services licensees who are natural persons from the requirement to include, in a profit and loss statement, any revenues and expenses that do not relate to the financial services business carried on by the licensee.

The relief contained in [CO 03/748] was remade without substantive changes following public consultation via Consultation Paper 278 Remaking ASIC class order on reporting requirements for AFS licensees who are natural persons (CP 278), issued in February 2017. ASIC did not receive any submissions in response to CP 278.

For further information refer to ASIC's website.

Self reporting of contraventions by financial services and credit licensees
11 April 2017

The Government has today released a positions paper on Self-reporting of contraventions by financial services and credit licensees by the ASIC Enforcement Review Taskforce.

The paper includes proposals:

  • intended to reduce ambiguity around whether a breach is significant and must be reported to ASIC by introducing an objective ‘reasonableness’ test;
  • intended to enhance accountability for licensees, and their employees and representatives, by expanding the class of reports that must be made to expressly include misconduct by individual advisers and employees;
  • to introduce new and heightened penalties for non-reporting, giving ASIC greater flexibility to impose a range of penalties in response to a failure to report;
  • to require ASIC to publish data on breach reports for major licensees; and
  • to introduce an equivalent reporting regime for credit licensees (who are currently subject only to annual compliance reporting).

Submissions are due by 12 May 2017. For further information refer to the Treasury website.

ASIC consults on establishing a Financial Services Panel
11 April 2017

ASIC has today released a consultation paper on its proposal to develop and implement a Financial Services Panel.

ASIC is proposing that the panel would be responsible for determining whether ASIC should ban individuals from the financial services and credit industries for misconduct. ASIC would select matters and refer them to the panel where they are significant, complex or novel. Over time, the range of matters on which the panel will make decisions may be expanded.

Submissions are due by 23 May 2017. For further information refer to the ASIC's website.

ASIC extends the relief provided for foreign collective investment schemes for two years
3 April 2017

ASIC has today extended Class Order [CO 04/526] Foreign collective investment schemes ([CO 04/526]) for two years. This class order was due to expire ('sunset') on 1 April 2017.

[CO 04/526] provides relief for collective investment schemes from the requirement to register as a managed investment scheme or obtain an Australian financial services licence where the relevant overseas regulatory regime delivers regulatory outcomes sufficiently equivalent to our own regulatory regime.

ASIC Corporations (Repeal and Transitional) Instrument 2017/271 extends the relief in [CO 04/526] in the same form for two years.

ASIC has extended this relief for two years so that it can review and consult on the policy settings of its relief in light of other regulatory developments, such as the Government’s announcement of the introduction of new collective investment vehicles, and implementation of the Asia Region Funds Passport regime.

ASIC will consult publicly on its relief for foreign collective investment schemes before 1 April 2019.

For further information refer to the ASIC's website.

ASIC repeals ‘sunsetting’ class order on FSG exemption for market-making services on a licensed market and makes other minor amendments
30 March 2017

ASIC has today made a new legislative instrument, ASIC Corporations (Amendment and Repeal) Instrument 2017/65, which repeals Class Order [CO 03/578] Financial Services Guide exemption for market-making services on a licensed market and makes minor amendments to other ASIC instruments.

CO 03/578 was due to expire (’sunset’) on 1 April 2017. ASIC have reconsidered the basis for the relief provided by CO 03/578 and whether the Corporations Act requires a market maker on a licensed market to be given an FSG in the absence of relief. ASIC has repealed CO 03/578 because ASIC has come to the view that the class order is not legally necessary.

For further information refer to the ASIC's website.

ASIC remakes 'sunsetting' class order providing relief to foreign financial services providers with a limited connection to Australia
29 March 2017

Following public consultation, ASIC has today temporarily remade Class Order [CO 03/824] Licensing relief for foreign entities with limited connection to Australian wholesale clients in the ASIC Corporations (Foreign Financial Services Providers – Limited Connection) Instrument 2017/182. The new instrument continues to provide licensing relief for foreign financial service providers with limited connection to Australia providing financial services to wholesale clients, for a period of 18 months. Class Order [CO 03/824] was due to expire ('sunset') on 1 April 2017.

The instrument has been remade following public consultation: see Consultation Paper 268 Licensing relief for foreign financial services providers with a limited connection to Australia (CP 268), released in September 2016. Allens made submissions in favour of continuing the exemption.

For further information refer to the ASIC's website.

ASIC establishes Financial Advisers Consultative Committee
29 March 2017

ASIC today announced the establishment of the Financial Advisers Consultative Committee (FACC). FACC will supplement ASIC's existing engagement with the financial advice industry by:

  • contributing to ASIC's understanding of issues in the financial advice industry, including those directly impacting on practising advisers;
  • improving ASIC's capacity to identify, assess and respond to emerging trends in the financial advice industry.

The members of the FACC are practising financial advisers with a range of skills drawn from the following areas:

  • investment;
  • insurance;
  • superannuation;
  • self-managed superannuation funds; and
  • digital financial advice.

The FACC will provide ASIC with views on a broad range of issues relating to the financial advice industry.

For further information refer to the ASIC's website.

ASIC releases guidance on risk management systems of responsible entities
27 March 2017

ASIC today released Regulatory Guide RG 259 Risk Management systems of responsible entities to provide additional guidance to responsible entities on ASIC's expectations for compliance with their existing obligation under the Corporations Act to maintain adequate risk management systems.

The guide is aimed at ensuring that the risk management systems of responsible entities, including minimum procedures and practices, are adaptable to changing market conditions and remain effective in identifying and managing risks on an ongoing basis.

For further information refer to ASIC's website.

Stapled Structures
24 March 2017

The Government has today released a consultation paper seeking stakeholder views on potential policy options in relation to stapled structures, the taxation of real property investments and the re-characterisation of trading income.

Closing date for submissions is Thursday, 20 April 2017.

For further information (including to see a copy of the consultation paper) see the Treasury website.

ASIC updates its guidance on conduct and disclosure obligations for financial advisers
22 March 2017

ASIC has updated Regulatory Guide 175 Licensing: Financial product advisers conduct and disclosure (RG 175) to reflect regulatory and legislative changes, including revisions to the Future of Financial Advice (FOFA) reforms.

As well as some minor changes to remove outdated references, RG 175 has been updated to reflect:

  • technical amendments to the FOFA reforms since the previous version of RG 175 was released;
  • recent amendments to clarify financial advisers’ record-keeping obligations in Class Order [CO 14/923] Record-keeping obligations for Australian financial services licensees when giving personal advice;
  • the application of the tax agent services regime in the Tax Agent Services Act 2009 to financial advisers who provide tax (financial) advice services from 1 July 2014; and
  • the relief available under ASIC Corporations (Facilitating Electronic Delivery of Financial Services Disclosure) Instrument 2015/647 to facilitate the delivery of disclosures by making the disclosure available digitally and notifying the client.

RG 175 has also been updated to state that while the best interests duty and the appropriate advice requirement introduced as part of the FOFA reforms are separate obligations, it is unlikely that advice which fails to meet the best interests duty will be appropriate. ASIC has included two examples to illustrate the process it applies in determining whether the best interests duty has been satisfied.

ASIC states that the updates to RG 175 are generally technical in nature and do not represent substantive policy changes.

For further information refer to ASIC's website.

ASIC consults on 'sunsetting' class order about licensing relief for trustees of wholesale equity schemes
15 March 2017

ASIC today released Consultation Paper 280 ASIC class order on wholesale equity schemes: Licensing relief for trustees – [CO 07/74] (CP 280) proposing to either remake or repeal ASIC Class Order [CO 07/74] Wholesale equity schemes: Licensing relief for trustees. This is due to expire (‘sunset’) on 1 October 2017.

This instrument grants relief to trustees of wholesale equity schemes from the requirement to obtain an Australian financial services (AFS) licence in the circumstances specified in the instrument.

Submissions to CP 280 are due by 13 April 2017.

For further information refer to ASIC's website.

ASIC releases new instrument for differential fees
14 March 2017

ASIC has today released a new legislative instrument regarding differential fees, replacing the class order due to expire (‘sunset’) on 1 April 2017.

ASIC has replaced Class Order [CO 03/217] with the new legislative instrument ASIC Corporations (Registered Schemes – Differential Fees) Instrument 2017/40 which:

  • expands the relief where a member acquires an investment under a switching facility that involved a withdrawal from a managed investment scheme operated by the responsible entity to also cover a switching facility that involves a withdrawal from a managed investment scheme operated by a related body corporate of the responsible entity; and
  • removes unnecessary relief where a member carries out transactions in relation to the scheme by electronic means.

Class Order [CO 03/217] has been repealed by ASIC Corporations (Amendment and Repeal) Instrument 2017/41.

Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 (Cth) registered on the FRLI
24 February 2016

The Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 was registered today on the FRLI. It amends the Corporations Act 2001 to require that certain financial advisers meet specified education and training standards and comply with a code of ethics.

ASIC updates its guidance on fee disclosure statements
22 February 2017

ASIC has today released an updated Regulatory Guide 245 Fee disclosure statements (RG 245) to reflect regulatory and legislative changes since the guide was first published, including revisions to the Future of Financial Advice (FOFA) reforms.

The fee disclosure statement (FDS) obligations require advice providers who have an ongoing fee arrangement with a retail client to provide the client with an annual FDS setting out information about:

  • the fees paid by the client;
  • the services provided to the client; and
  • the services that the client was entitled to receive.

This obligation is designed to help clients determine whether the ongoing fees they are paying are proportionate to the services they have received, or were entitled to receive.

As well as some minor changes to remove outdated references, RG 245 has been updated to:

  • reflect technical amendments to the FOFA legislation since the previous version of RG 245 was released; and
  • clarify that the three limited no-action positions that were previously taken by ASIC in respect of the obligations to prepare and give an FDS, are no longer available. These no-action positions were taken to assist the industry to make a smooth transition to meeting the FDS obligations, which have now been in force for some time.

For further information refer to ASIC's website.

ASIC consults on 'sunsetting' class order about reporting requirements for Australian financial services licensees who are natural persons
17 February 2017

ASIC today released a consultation paper proposing to remake ASIC Class Order [CO 03/748] Reporting requirements under s989B. This is due to expire (‘sunset’) on 1 October 2017.

This instrument grants relief to Australian financial services licensees who are natural persons from the requirement to include in a profit and loss statement any revenues and expenses that do not relate to financial services businesses carried on by the licensees.

ASIC has found this class order is operating effectively and efficiently, and continues to form a necessary and useful part of the legislative framework.

Consultation Paper 278 Remaking ASIC class order on reporting requirements for AFS licensees who are natural persons: [CO 03/748] (CP 278) outlines ASIC's rationale for proposing to remake [CO 03/748]. ASIC have published a draft ASIC instrument with CP 278.

Submissions to CP 278 are due by 20 March 2017.

For further information refer to ASIC's website.

ASIC publishes form for superannuation trustees and responsible entities to provide ASIC information on updated fee and cost disclosure requirements
20 December 2016

ASIC has today published the form and instructions for trustees of superannuation funds and responsible entities of managed funds and other managed investment schemes (issuers) to provide ASIC information in order to qualify for the extension to the transition period to comply with updated fee and cost disclosure requirements in relation to product disclosure statements (PDSs) as announced on 29 November 2016.

This applies for issuers that notify ASIC in writing before 1 February 2017 that they intend to take advantage of this extension in relation to a PDS, and provide ASIC, before 1 March 2017, information about the fees and costs that would be required to be included in this PDS had they complied with the updated fees and costs disclosure requirements.

Issuers that do not want to take of advantage of this extension will have to comply with the updated requirements by 1 February 2017. Any issuer that has already adopted the updated requirements or does not have a PDS in use during February 2017 or will not have a PDS on or after 30 September 2017 will not be required to provide ASIC this information.

ASIC is amending ASIC class order 14/1252 Technical modifications to Schedule 10 of the Corporations Regulations [CO 14/1252] to give this extension effect. The class order amendment provides that borrowing costs need not be included in fees and costs for a superannuation product but must be separately disclosed in a PDS from 30 September 2017 and includes some other incidental modifications consistent with existing policy.

The amendments to CO 14/1252 will take effect from when the Instrument made is registered shortly, subject to transitional provisions in the amending instrument. ASIC will also make corresponding amendments to Regulatory Guide 97 Disclosing fees and costs in PDSs and periodic statements (RG 97).

There will be no further extensions of the transitional period.

For further information refer to ASIC's website. For background information, refer to our Breaking News for 29 November 2016.

ASIC releases licensing exemption for fintech businesses
15 December 2016

ASIC has released class waivers to allow eligible financial technology (fintech) businesses to test certain specified services without holding an Australian financial services or credit licence ('fintech licensing exemption').

Information about the services covered by the fintech licensing exemption is available in ASIC infographics, as well as new Regulatory Guide 257 Testing fintech products and services without holding an AFS or credit licence (RG 257).

Businesses that are not eligible for the fintech licensing exemption are able to seek an individual exemption. ASIC’s policy on exemptions is available in Regulatory Guide 51 Applications for relief (RG 51).

ASIC has also released updated guidance to licensees on satisfying the requirements to maintain organisational competence in Regulatory Guide 105 Licensing: Organisational competence (RG 105) and Regulatory Guide 206 Credit licensing: Competence and training (RG 206).

For further information refer to ASIC's website.

Design and distribution obligations and product intervention power
13 December 2016

Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer, today released a consultation paper seeking feedback on two key proposals from the Financial System Inquiry (FSI).

  • Design and distribution obligations for financial products to ensure that products are targeted at the right people (FSI recommendation 21).
  • A temporary product intervention power for the Australian Securities and Investments Commission when there is a risk of significant consumer detriment (FSI recommendation 22).

This paper seeks feedback on the implementation of these measures.

The closing date for submissions to this consultation is 15 March 2017.

For further information see the Treasury website. See also Allens Client update.

ASIC releases new instrument for non-monetary consideration managed investment schemes
8 December 2016

ASIC has today released a new legislative instrument on interests not for money schemes, replacing three class orders on show schemes, interests not for money schemes and film investment schemes that were due to expire.

ASIC has replaced the following class orders with a new legislative instrument:

  • Class Order [CO 02/210] Interests in film and theatrical ventures, which was due to sunset on 1 April 2017;
  • Class Order [CO 02/211] Managed investment schemes – interest not for money, which was due to sunset on 1 April 2017; and
  • Class Order [CO 02/236] Film investment schemes, which was due to sunset on 1 April 2017.

The relief provided under all three class orders has been combined into a single instrument. The relief provided under the class orders has been remade without any fundamental changes so that the effect of the relief provided by the class orders will be preserved without any disruption to those who rely on them.

ASIC has also updated Regulatory Guide 80 Managed investment schemes: Interests not for money to incorporate Regulatory Guide 19 Film investment schemes (RG 19), as well as reflecting the terms of the new legislative instrument. RG 19 will be revoked.

For further information refer to ASIC's website.

ASIC releases its fourth licensing activity report
7 December 2016

ASIC today published its fourth report on its approach to and assessment of licence applications.

Report 503 Overview of licensing and professional registration applications: Jan to Jun 2016 (REP 503) sets out recent regulatory outcomes achieved by ASIC in relation to Australian financial services applications, Australian credit licence applications, liquidator registration applications, company auditor and approved SMSF auditor registration applications.

For further information refer to ASIC's website.

Review of the financial system external dispute resolution and complaints framework – Interim Report
6 December 2016

The Independent Expert Panel into external dispute resolution bodies in the financial system has today released its Interim Report, which sets out the Panel's draft recommendations for changes to the financial system dispute resolution framework.

Key draft recommendations include:

  • The formation of a single industry ombudsman scheme for financial, credit and investment disputes to replace FOS and CIO.
  • The replacement of the SCT with an industry ombudsman scheme for superannuation disputes, along with the development of a Superannuation Code of Practice.

Other draft recommendations include:

  • Increases to the monetary limits and compensation caps for the new financial, credit and investment disputes scheme, for both consumer and small business disputes.
  • Enhanced accountability and oversight over the two new schemes, including by strengthening the Australian Securities and Investments Commission's powers and more frequent independent reviews.

The closing date for submissions to this consultation is 27 January 2017 and the Panel will deliver its final report to the Government by the end of March 2017.

For further information (including to see a copy of the interim report) see the Treasury website.

ASIC consults on repealing ASIC class order on FSG exemption for market-making services on a licensed market
5 December 2016

ASIC has today released a consultation paper proposing to repeal Class Order [CO 03/578] Financial Services Guide exemption for market-making services on a licensed market, due to expire in 2017.

A reconsideration of the legal basis of [CO 03/578] determined that it was no longer necessary. Regardless of the existence of [CO 03/578], ASIC does not consider that market makers on licensed markets are required to provide an FSG.

Consultation Paper 275 Repealing ASIC class order on FSG exemption for market-making services on a licensed market: [CO 03/578] (CP 275) provides further details of the class order to be repealed and the rationale for repealing it. Submissions on CP 275 are due on 31 January 2017.

For further information refer to ASIC's website.

ASIC extends the transition period for superannuation trustees and responsible entities to comply with updated fee and cost disclosure requirements
29 November 2016

ASIC has today extended the transition period for trustees of superannuation funds and responsible entities of managed funds and other managed investment schemes (Issuers) to comply with updated fee and cost disclosure requirements in relation to product disclosure statements (PDSs).

The transition period will now end by 30 September 2017 for issuers that notify ASIC in writing by 31 January 2017 that they intend to take advantage of this extension in relation to a PDS, and provide ASIC, before 1 March 2017, information about the fees and costs that would be required to be included in this PDS had they complied with the updated fees and costs disclosure requirements.

Issuers that do not want to take of advantage of this extension will have to comply with the updated requirements by 1 February 2017. Any issuer that has already adopted the updated requirements will not be required to provide ASIC this information.

The facilitative approach ASIC published previously (see 'Questions and answers – fees and costs disclosure – superannuation and managed investment products') will apply for those issuers that opt in to comply before 1 October 2017 until that date.

ASIC will be amending ASIC class order 14/1252 Technical modifications to Schedule 10 of the Corporations Regulations [CO 14/1252] to give this extension effect shortly. ASIC will also publish instructions and the forms to provide ASIC with the above information by issuers seeking to take advantage of the extension. Notification that an issuer wants to take advantage of the relief in relation to a PDS must be made in writing to feeandcostdisclosure@asic.gov.au.

The extension of transition does not provide an exemption from the requirements that apply under the Corporations Regulations, unamended by [CO14/1252] or the requirement for the issuers not to make misleading or deceptive statements about their products. The extension does not apply in relation to periodic statements.

For further information refer to ASIC's website. For background information, refer to our Breaking News for 24 November 2015.

ASIC launches new digital toolkit to help Australians navigate financial advice
29 November 2016

ASIC has today released a new online toolkit developed by ASIC's MoneySmart to enable Australians to better understand and navigate the financial advice process.

It provides an overview of the financial advice process and gives impartial guidance on:

  • identifying financial goals and advice needs;
  • tips on choosing an adviser;
  • preparing to meet a financial adviser;
  • understanding your Statement of Advice; and 
  • reviewing your financial situation.

Consumers can use the toolkit to create a customised 'to do' list which they can modify to suit their personal financial needs. The toolkit also includes links to ASIC's Financial Advisers Register where consumers can check a financial adviser's credentials – their licence, authorisations, experience and qualifications, and whether they have ever been banned or disqualified from providing financial services.

ASIC’s MoneySmart Financial Advice Toolkit is available on ASIC’s MoneySmart website.

For further information refer to ASIC's website.

ASIC consults on remaking class orders on application form requirements
25 November 2016

ASIC today released a consultation paper proposing to remake four class orders that are due to expire in 2017 and to incorporate two related class orders into one new instrument.

The class orders proposed to be remade are:

  • Class Order [CO 02/260] Product Disclosure Statements: Application forms created by licensee;
  • Class Order [CO 02/262] Applications to switch managed investments products;
  • Class Order [CO 07/10] Technical disclosure relief for reconstructions and capital reductions (paragraphs 4 and 8); and
  • Class Order [CO 02/437] Eligible applications: Relief from s1016A for managed investment products.

ASIC proposes to remake these class orders because they are operating effectively and efficiently and continue to form a necessary and useful part of the legislative framework. No substantive changes are proposed.

ASIC is also seeking feedback on its proposals to incorporate ASIC Corporations (Options: Bonus Issues) Instrument 2016/77 and Class Order [CO 14/26] Personalised or Australian financial services licensee created application forms into the new instrument.

Consultation Paper 274 Remaking ASIC class orders on application form requirements (CP 274) outlines the class orders proposed to be remade and consolidated into one new instrument and ASIC's rationale for remaking and consolidating them.

Submissions on CP 274 are due on 2 January 2017. For further information refer to ASIC's website.

ASIC remakes 'sunsetting' class orders on financial services disclosure
17 November 2016

ASIC has today remade three class orders relating to specific financial services disclosure requirements that are due to expire in 2017.

Class Order [CO 02/1072] Product Disclosure Statements: Top-up relief for managed investment schemes, Class Order [CO 03/237] Updated information in Product Disclosure Statements, and Class Order [CO 03/1092] Further relief for joint Product Disclosure Statements have been remade into:

  • ASIC Corporations (Top-up Product Disclosure Statements Relief) Instrument 2016/1054;
  • ASIC Corporations (Updated Product Disclosure Statements) Instrument 2016/1055; and
  • ASIC Corporations (Joint Product Disclosure Statements) Instrument 2016/1056.

For further information refer to ASIC's website.

ASIC welcomes 'client money' reforms
8 November 2016

ASIC today welcomed the Government’s decision to proceed with 'client money' reforms in respect of retail over-the-counter (OTC) derivatives.

Importantly, the reforms will remove an exception in the client money regime that allows Australian financial services licensees to withdraw client money provided in relation to retail OTC derivatives from client money trust accounts, and use it for a wide range of purposes, including as working capital. This exception currently places retail derivative client money at greater risk of loss, particularly in the event the licensee becomes insolvent.

ASIC also welcomed the Government's decision to give ASIC the power to write client money reporting and reconciliation rules.

For further information refer to ASIC's website.

ASIC updates guidance for historical financial information disclosure in prospectuses
3 November 2016

ASIC has today released updated regulatory guidance to assist companies and their advisers to improve the quality and quantity of historical financial information disclosure in prospectuses as part of their disclosure obligations.

ASIC's updated Regulatory Guide 228 Prospectuses: Effective disclosure for retail investors (RG 228) follows consultation launched in May 2016. The updated guidance provides additional clarity on ASIC’s disclosure expectations and describes:

  • the level of disclosure expected for business acquisitions and asset acquisitions;
  • the types of audit and review opinions that are generally considered appropriate;
  • when historical financial information requires updating in a prospectus;
  • when cash flow information should be included in prospectuses; and
  • the circumstances where historical financial information disclosures may not be required.

For business acquisitions ASIC has introduced a 'significance' threshold, similar to that found in a number of other major foreign jurisdictions. RG 228 now provides that where an acquisition is significant (25% of the company), issuers will generally need to disclose audited historical financial information on the acquired business.

For further details (including to access a copy of the regulatory guide), refer to ASIC's website. For background information, refer to our Breaking News for 12 May 2016.

ASIC releases report on the charging of advice fees without providing advice by major financial institutions
27 October 2016

ASIC has today released Report 499 Financial advice: Fees for no service, providing an update on ASIC's work to address financial institutions' and advisers' systemic failures, over a number of years, to provide ongoing advice services to customers who paid fees to receive those services.

The report summarises ASIC’s work to ensure customers are fairly compensated. The report is part of ASIC’s Wealth Management Project which is focusing on the conduct of the largest financial advice firms, including the advice arms of AMP, ANZ, CBA, NAB and Westpac groups.

For further information refer to ASIC's website.

ASIC clarifies record-keeping obligations for financial services licensees
27 October 2016

ASIC has clarified financial advisers' record-keeping obligations by way of an amendment to Class Order [CO 14/923] Record-keeping obligations for Australian financial services licensees when giving personal advice.

The amendments to the record-keeping obligations:

  • place beyond doubt that Australian financial services (AFS) licensees must have access to records for the period of time in which the records are required to be kept, even if a person other than the licensee holds the records; and
  • make explicit that authorised representatives who are advisers must keep records, and give the records to their authorising licensee if the licensee requests the records for the purposes of complying with financial services laws.

ASIC recognises that some advice licensees may need to make changes to their systems as a result of these clarifications to the relief in [CO 14/923]. Therefore, ASIC will take a facilitative compliance approach for the first six months in relation to the obligation on advice licensees to ensure that they have access to records.

ASIC has also released a report summarising the key feedback ASIC received in response to Consultation Paper 247 Client review and remediation programs and update to record-keeping requirements and its response to that feedback.

For further information refer to ASIC's website.

ASIC consults on four ‘sunsetting’ class orders on registered managed investment schemes
14 October 2016

ASIC today released a consultation paper proposing to remake four class orders on registered schemes, which are due to expire (‘sunset') between 1 October 2017 and April 2018.

The instruments that ASIC proposes to remake are:

  • Class Order [CO 98/50] Incorporating parts of other compliance plans;
  • Class Order [CO 98/60] Protecting class rights in a managed investment scheme;
  • Class Order [CO 98/1806] Related bodies corporate and external members of compliance committee; and
  • Class Order [CO 98/1808] Allowing constitutions to use Appendix 15A of the ASX Listing Rules.

The new legislative instrument will continue the relief currently given by the class orders without significant changes, so that the ongoing effect will be preserved without any disruption to the entities that rely on them.

In relation to Class Order [CO 98/1808], it is also proposed that the relief be extended to apply in relation to the listing rules of the Sydney Stock Exchange and may in the future apply in relation to the listing rules of other financial markets that require or allow for the constitution of a registered scheme to contain provisions similar in effect to those in Appendix 15A of the ASX Listing Rules.

Consultation Paper 270 Remaking ASIC class orders on registered schemes (CP 270) outlines ASIC's rationale for proposing to remake the class orders.

Submissions on CP 270 are due by 25 November 2016.

For further information (including to see a copy of the consultation paper) refer to ASIC's website.

ASIC consults on 'sunsetting' class order about managed investment scheme buy-backs and updates to related guidance
12 October 2016

ASIC has today released Consultation Paper 269 Remaking ASIC class order on managed investment scheme buy-backs and updating related guidance (CP 269). CP 269 proposes remaking Class Order [CO 07/422] On-market buy-backs by ASX-listed schemes, which is currently due to expire (‘sunset’) on 1 April 2018.

The new instrument would continue the relief currently given by [CO 07/422] without significant changes, so that the ongoing effect will be preserved without any disruption to the entities that rely on it. However, ASIC is proposing to:

  • expand the relief to cover an ASX-listed scheme that has more than one class of interest; and
  • simplify requirements where a responsible entity or its nominee exercises a discretion.

ASIC also seeks feedback on its proposed updates to Regulatory Guide 101 Managed investment scheme buy-backs.

Submissions are due by 23 November 2016.

For further information (including to see a copy of the consultation paper) refer to ASIC's website.

ASIC remakes instruments that affect financial reporting
30 September 2016

ASIC has today, following public consultation, remade three legislative instruments that affect financial reporting by companies. The relief is set out in the following new legislative instruments:

  • ASIC Corporations (Audit Relief) Instrument 2016/784 (replaces Class Order 98/1417);
  • ASIC Corporations (Wholly owned Companies) Instrument 2016/785 (replaces Class Order 98/1418); and
  • ASIC Corporations (Qualified Accountant) Instrument 2016/786 (replaces Class Order 01/1256).

ASIC remade these instruments without significant changes before they were due to sunset under the Legislation Act 2003.

ASIC has released updated versions of the following documents related to audit relief for certain proprietary companies:

ASIC has also released updated versions of the following documents related to relief for certain wholly owned companies:

In addition, Class Orders [CO 98/106] Financial reports of superannuation funds, approved deposit funds and pooled superannuation trusts and [CO 99/1225] Financial reporting requirements for benefit fund friendly societies have been repealed as ASIC has concluded that they are no longer necessary or useful. [CO 99/1225] ceased to be operative more than ten years ago.

For further information please refer to ASICs website.

ASIC updates regulatory framework for charitable investment fundraisers
28 September 2016

ASIC has issued a revised policy and regulatory framework for charities that raise investment funds. The framework removes regulatory barriers to the issue of financial products while strengthening protection for public investors.

The changes follow an ASIC review of the operation of exemptions available to charities from certain managed investment, debenture, fundraising and licensing provisions of the Corporations Act. The review had identified difficulties in liquidity management by fundraisers and the effectiveness of their disclosure.

Following extensive consultation under Consultation Paper 207 Charitable investment fundraisers (CP 207) and further consultation with industry stakeholders on ASIC's proposals, ASIC has made a number of updates, including:

  • from 1 January 2017, charitable investment fundraisers will not be permitted to issue at-call or investments with a term of less than 31 days to retail investors;
  • from 1 January 2018, charitable investment fundraisers that wish to issue investments to retail investors who are not associated with the charity will no longer be exempted from the requirement to hold for Australian financial services licence from ASIC. Further, additional restrictions apply that are designed to avoid the investments being used for transactional facilities.

The changes have been made in consultation with the Australian Prudential Regulation Authority (APRA) to ensure there are no inappropriate inconsistences in our policy position. ASIC notes that some charitable investment fundraisers are Religious Charitable Development Funds which rely on APRA's exemption from the Banking Act.

In addition, ASIC have applied disclosure, lodgement, breach reporting and financial reporting requirements although these requirements are less stringent than the equivalent provisions in the Corporations Act that apply to regulated entities.

For further information refer to ASIC's website.

ASIC extends foreign financial service provider class orders for two years and consults on related class order
28 September 2016

ASIC has today extended for two years seven class orders giving relief to foreign financial service providers providing financial services to wholesale clients (ASIC Corporations (Repeal and Transitional) Instrument 2016/396). These class orders were due to expire (‘sunset’) between 1 October 2016 and 1 April 2017.

At the same time, ASIC has released Consultation Paper 268 Licensing relief for foreign financial services providers with limited connection to Australia (CP 268). CP 268 outlines a proposal to repeal a related class order for foreign entities with a limited connection to Australia providing services to wholesale clients. This class order is due to sunset on 1 April 2017.

Submissions on CP 268 are due by 2 December 2016.

For further information (including to see a copy of the consultation paper) refer to ASIC's website.

ASIC releases guidance on review and remediation
15 September 2016

ASIC has today released guidance on review and remediation conducted by Australian financial services (AFS) licensees providing personal advice to retail clients - new Regulatory Guide 256 Client review and remediation conducted by licensees.

This follows Consultation Paper 247 Client review and remediation programs and update to record-keeping requirements (CP 247), issued in December 2015.
The key principles set out in the guidance are:

  • review and remediation is likely to be appropriate where a systemic issue has occurred that may have caused loss or detriment to clients;
  • the scope of review and remediation should ensure it covers the right advisers, the right clients and the right timeframe;
  • the process of review and remediation should be comprehensive, timely, fair, and transparent. There should be clearly defined principles to guide the process and an appropriate governance structure;
  • effective, timely and targeted communication is key to ensuring that clients understand the review and remediation and how it will affect them; and
  • clients should have access to an external dispute resolution scheme if they are not satisfied with the remediation decision made.

While the guidance is directed at licensees who provide personal advice to retail clients, review and remediation takes place in many other sectors of the financial services industry. The principles set out in the guidance should be applied to other review and remediation where relevant.

ASIC will shortly release an amendment to Class Order [CO 14/923] Record-keeping obligations for Australian financial services licensees when giving personal advice together with a report summarising the key feedback ASIC received in response to CP 247, and our response to that feedback.

For further details (including to access copies of the guidance), refer to ASIC's website. For background information, refer to our Breaking News for 16 December 2015.

Review of the financial system external dispute resolution framework
9 September 2016

On 20 April 2016, the Australian Government announced a review of the financial system’s external dispute resolution and complaints framework. An expert panel comprised of Professor Ian Ramsay, Ms Julie Abramson and Mr Alan Kirkland is undertaking the review.

The review is being conducted to ensure that Australia’s external dispute resolution framework effectively meets the needs of users of the financial system. External dispute resolution provides an avenue for people to resolve their disputes without going through the formal legal system.

The closing date for submissions is 7 October 2016.

For further information refer to Treasury's website.

ASIC releases guidance on regulating digital advice
30 August 2016

ASIC has today released its guidance on providing digital financial product advice for retail investors: Regulatory Guide 255 Providing digital financial product advice to retail clients (RG 255).

The guide brings together some of the issues that digital advice providers need to consider when operating in Australia – from the licensing stage through to the actual provision of advice.

RG 255 also includes guidance on some issues that are unique to digital advice, such as how the organisational competence obligation applies to digital advice licensees and the ways in which digital advice licensees should monitor and test their algorithms.

For further information refer to ASIC's website.

ASIC remakes instruments that affect financial reporting
26 August 2016

Following public consultation, ASIC has remade five legislative instruments that affect financial reporting by disclosing entities and entities generally. The relief is set out in the following new legislative instruments:

  • ASIC Corporations (Uncontactable Members) Instrument 2016/187 (replaces Class Order 98/101);
  • ASIC Corporations (Directors' Report Relief) Instrument 2016/188 (replaces Class Order 98/2395);
  • ASIC Corporations (Synchronisation of Financial Years) Instrument 2016/189 (replaces Class Order 98/96);
  • ASIC Corporations (Disclosing Entities) Instrument 2016/190 (replaces Class Orders 98/2016 and 08/15); and
  • ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 (replaces Class Order 98/100).

ASIC remade these instruments without significant changes.
The instruments:

  • relieve entities of the obligation to send a hard copy of the directors' report, financial report and auditor's report to members who are uncontactable;
  • allow entities to transfer some information from the directors' report to the financial report or to a separate document accompanying both the directors' report and financial report;
  • allow entities to synchronise their financial year with that of a foreign parent where that foreign parent has an obligation under a foreign law to synchronise the financial years of controlled entities with its own;
  • relieve entities from reporting as disclosing entities if they cease to be disclosing entities before the reporting deadline for a financial year;
  • relieve disclosing entities which have a first financial year of eight months or less from preparing a half-year financial report and directors' report during that financial year; and
  • allow entities to round amounts disclosed in the directors' report and financial report.
For further information refer to ASIC's website

ASIC repeals 'sunsetting' class order on managed investment schemes
19 August 2016

ASIC has repealed ASIC Class Order [CO 02/226] Managed investment schemes: no issue required disclosure that is due to expire on 1 April 2017. The repeal of the class order follows ASIC consultation in May 2016 (Consultation Paper 259 Repealing ASIC class order on managed investment schemes: no issue required disclosure [CO 02/226]). No submissions were received. For further information refer to ASIC's website.

Non-monetary consideration managed investment schemes: ASIC consultation
10 August 2016

ASIC today released a consultation paper (Consultation Paper 266 Remaking ASIC class order on managed investment schemes: Not for money (CP 266) ) proposing to remake its class orders on non-monetary consideration managed investment schemes, currently due to expire on 1 April 2017.

ASIC said the following class orders are operating effectively and proposes that they be combined into a new single legislative instrument:

  • Class Order [CO 02/210] Interests in film and theatrical ventures;
  • Class Order [CO 02/211] Managed investment schemes – interest not for money; and
  • Class Order [CO 02/236] Film investment schemes.

The proposed new instrument will continue the relief currently given by the class orders without significant changes, so that the ongoing effect will be preserved without any disruption to the entities that rely on it.

Submissions on CP 266 are due by 9 September 2016.

For further information refer to ASIC's website.

ASIC consults on proposed guidance on risk management
21 July 2016

ASIC today released a consultation paper and proposed regulatory guidance on risk management practices for responsible entities in the managed funds sector.

Consultation Paper 263 Risk management systems of responsible entities: Further proposals (CP 263) and the proposed guidance builds on the proposals in Consultation Paper 204 Risk management systems of responsible entities (CP 204).

The proposed guidance does not impose new obligations on responsible entities but gives more detailed guidance on how they may comply with their current obligations under s912(1)(h) of the Corporations Act to maintain adequate risk management systems.

It outlines ASIC's expectations for responsible entities to have:

  • overarching risk management systems in place;
  • processes for identifying and assessing risks; and
  • processes for managing risks.

Submissions in response to CP 263 are due by 1 September 2016.

For more information refer to ASIC's website.

ASIC consults on 'sunsetting' class order about nominee and custody services and proposed changes to platforms policy
21 July 2016

ASIC today released Consultation Paper 264 Remaking ASIC class order on nominee and custody services and proposed changes to platforms policy (CP 264) proposing to remake its class order on nominee and custody services, which is currently due to expire on 1 April 2017, and proposed changes to platforms policy.

ASIC proposes to remake the class order with changes.

The new instrument would continue the relief currently given by Class Order [CO 02/295] Nominee and custody services with changes. ASIC is proposing:

  • to remove unnecessary Chapter 5C relief as a nominee and custody service is generally not considered to be a registered managed investment scheme;
  • to make it clear that relief applies to AFS licensees; and
  • to align the relief for nominee and custody services with the equivalent requirements for platforms.

ASIC also seeks feedback on its proposed changes to the relief currently given in Class Order [CO 13/763] Investor directed portfolio services and Class Order [CO 13/762] Investor directed portfolio services provided through a registered managed investment scheme. ASIC is proposing:

  • for issues or sales after 30 June 2017 – to require that clients of platform and nominee and custody services have access to a product issuer’s internal and external dispute resolution system when they have concerns about investments made through the platform or nominee and custody service, as if they were a direct investor in the product; and
  • to update the definition of an 'IDPS' and an 'IDPS-like scheme' to clarify what is covered by these definitions.

Submissions on CP 264 are due by 1 September 2016.

For more information refer to ASIC's website.

ASIC remakes and repeals 'sunsetting' class orders on trustee company common funds
20 July 2016

ASIC has today finalised an Instrument to maintain relief concerning the entities to which client money can be deposited under s981B of the Corporations Act.

The Instrument replaces ASIC Class Order [CO 04/1063] Section 981B money in cash common funds due to sunset on 1 April 2017. ASIC made [CO 04/1063] to address doubt as to whether s981B of the Corporations Act and reg 7.8.1 allowed client money to be paid into a registered cash common fund operated by a trustee company.

ASIC Corporations (Client money-Cash common funds) Instrument 2016/671 enables client money received by an Australian financial service licensee to be deposited into a cash common fund, provided the fund is also a registered scheme. It is intended to provide flexibility to licensees in dealing with client money while retaining the consumer protections provided by s981B of the Corporations Act.

ASIC has also repealed Class Order [CO 00/199] Trustee companies' common funds which modified provisions of Ch 5C of the Corporations Act.

For more information refer to ASIC's website.

Transition period for recognised accountants providing SMSF related financial product advice has ended
30 June 2016

On 30 June 2016, the transitional period for recognised accountants who provide self-managed super fund (SMSF) related financial advice ended. From 1 July 2016, accountants intending to make recommendations to acquire or dispose of an interest in an SMSF must hold a limited AFS licence (or full AFS licence) or become an Authorised Representative of an AFS licensee.

For further information refer to ASIC's website.

ASIC remakes 'sunsetting' class order on financial product advice – exempt documents
24 June 2016

ASIC today made a new legislative instrument to replace Class Order [CO 03/606] Financial product advice – exempt documents that was due to expire on 1 April 2017. ASIC has remade the class order following public consultation.

The new legislative instrument is ASIC Corporations (Financial Product Advice – Exempt Documents) Instrument 2016/356. The instrument has the same effect as [CO 03/606].

For further information refer to ASIC's website.

ASIC finalises relief to assist transition for responsible entities to implement new tax system for managed investment trusts
21 June 2016

The ASIC Corporations (Attribution Managed Investment Trusts) Instrument 2016-489 was registered today on the FRLI. It commences tomorrow and provides relief to assist responsible entities of registered schemes to allow them to make changes to their constitutions without holding a members’ meeting to help them implement the new tax system for managed investment trusts should they choose to do so.

ASIC has also granted relief from the duty to treat members equally where responsible entities attribute a determined trust component to a member under the new tax system.

For further information refer to ASIC's website.

Limited AFS licensing regime: Transitional arrangements end 30 June 2016
7 June 2016

ASIC today warned that from 1 July 2016, accountants must hold a limited Australian financial services licence or be an authorised representative of a licence-holder or licensee in order to provide financial product advice on self-managed superannuation funds. This follows the three-year transition period that commenced on 1 July 2013. For further information refer to ASIC's website.

ASIC Corporations (Financial Product Advice – Exempt Documents) Instrument 2016/356 registered on the FRLI
6 June 2016

The ASIC Corporations (Financial Product Advice – Exempt Documents) Instrument 2016/356 was registered today on the FRLI. It exempts persons from the requirement to hold an Australian financial services licence in respect of an exempt document or statement for the purposes of Regulation 7.1.08(3) of the Corporations Regulations 2001.

ASIC relief for responsible entities implementing new MIT tax regime
2 June 2016

ASIC has today granted relief to assist responsible entities of registered schemes to allow them to make changes to their constitutions without automatically holding a members' meeting. ASIC said the relief will assist responsible entities to smoothly implement the new tax system for managed investments trusts should they make the choice to do so. The new system was enacted on 5 May 2016.

In order to rely on the relief, ASIC said responsible entities will need to post a statement on their website explaining that they intend to amend the constitution, the reasons for this and the effect of the amendments. The statement will also need to explain that members can make a request within seven days that a meeting be called and give an email address for members to make this request. If 5% or more of the total number of members request a meeting within seven days of the statement being posted on the website, a members' meeting will be required to approve the amendments. If no members' meeting is required after seven days since the statement was posted on the website, responsible entities can make the amendments without the need for member approval.

ASIC said it is currently drafting an instrument to give effect to this relief and intends to release it on or before 22 June 2016. Under the instrument, responsible entities will also be granted relief from the duty to treat members who hold interests of the same class equally to the extent that it prevents an attribution being made in accordance with the requirements under the new tax system.

For further information refer to ASIC's website.

ASIC consults on 'sunsetting' class order about differential fees for registered managed investment schemes
30 May 2016

ASIC today released a consultation paper proposing to remake its class order on differential fees for registered managed investment schemes, which is currently due to expire on 1 April 2017 (Consultation Paper 258 Remaking ASIC class order on differential fees: [CO 03/217] (CP 258)).

The new instrument would continue the relief currently given by [CO 03/217] Differential fees without significant changes, so that the ongoing effect will be preserved without any disruption to the entities that rely on it. However ASIC is proposing:

  • to extend switching facility relief to a managed investment scheme operated by a related body corporate of the responsible entity; and
  • to remove the unnecessary relief extended where members transact electronically.

ASIC also seeks feedback on whether it should review its policy in relation to relief for individual fee negotiation. This relief is currently restricted to wholesale clients only.

Submissions on CP 258 are due by 12 July 2016.

For further information please refer to ASIC's website.

ASIC releases new instrument for dealing in underlying investments to replace 'sunsetting' class orders
30 May 2016

ASIC has today released a new legislative instrument on dealing in underlying investments, replacing a number of class orders that are due to expire ('sunset').

The dealing in underlying investments class orders have been remade without significant changes so that their ongoing effect will be preserved without any disruption to those who rely on them.

ASIC has replaced the following class orders into a new legislative instrument:

  • Class Order [CO 02/1161] Licensing relief (dealing) for public offer superannuation entities, which is due to sunset on 1 April 2017;
  • Class Order [CO 02/1073] Financial Services Guide: Dealing in underlying investments by responsible entities, which is due to sunset on 1 April 2017; and
  • Class Order [CO 02/1074] Financial Services Guide: Dealing in underlying investments by superannuation trustees, which is due to sunset on 1 April 2017.

All three Class Orders have been combined into a single instrument (ASIC Corporations (Superannuation and Schemes: Underlying Investments) Instrument 2016/378) so that the substantive effect of the relief in each Class Order is continued beyond the expiration date in a new legislative instrument.

For further information please refer to ASIC's website.

ASIC consults on repealing ASIC class order on managed investment schemes
30 May 2016

ASIC has today released a consultation paper proposing to repeal Class Order [CO 02/226] – Managed investment schemes – no issue required disclosure that is due to expire ('sunset') in 2017.

Consultation Paper 259 Repealing ASIC class order on managed investment schemes: No issue required disclosure (CP 259) outlines the class order to be repealed and ASIC's rationale for repealing it.

Submissions on CP 259 are due on Monday 27 June 2016.

For further information please refer to ASIC's website.

Improving disclosure of historical financial information in prospectuses
12 May 2016

ASIC has today released a consultation paper proposing to update guidance in Regulatory Guide 228 Prospectuses: Effective disclosure for retail investors (RG 228).

The updated guidance aims to assist companies and their advisers to better understand their disclosure obligations and to improve the quality of historical financial information disclosure in prospectuses. It responds to ASIC's assessment of the operation of current RG 228 in active capital markets over 2014 and 2015.

Consultation Paper 257 Improving disclosure of historical information in prospectuses: Update to RG 228 (CP 257) sets out:

  • ASIC's proposals to clarify regulatory settings on the quality and quantity of historical financial information;
  • worked case studies to illustrate the proposed policy settings in practice; and
  • a draft updated version of Section F of RG 228 incorporating the proposals.

ASIC also notes the release today by ASX of its consultation paper Updating ASX's admission requirements for listed entities, which is designed to enhance listing standards and which includes proposals on financial information to be included in applications for admission under the assets test.

Submissions on CP 257 close 6 July 2016.

For further information please refer to ASIC's website.

Further update on Stronger Super regime
4 May 2016

ASIC has provided an update on aspects of the Stronger Super regime aimed at providing the superannuation industry with certainty around the start dates for key superannuation reforms.

The start date for portfolio holdings disclosure reporting and choice product dashboard requirements will be deferred until 30 June 2017 to allow time for the Superannuation Legislation Amendment (Transparency Measures) Bill 2016 to pass and the Australian Government further time to consult on the detail of the requirements. These requirements were due to start on 1 July 2016 and will now start on 1 July 2017.

Additionally, ASIC has extended previous relief that allows registrable superannuation entities (RSE) licensees to provide a product dashboard with a periodic statement by including a website address for the latest product dashboard, rather than requiring a hard copy of the dashboard to be included with the periodic statement.

The start date for certain disclosures required under section 29QB of the Superannuation Industry (Supervision) Act 1993 for standard employer-sponsored sub-plans has also been further deferred until 1 July 2017.

For further information refer to ASIC's website.

ASIC remakes 'sunsetting' class order about financial calculators
21 April 2016

ASIC has released updated regulatory guidance on ASIC’s relief for generic financial calculators in Section D of Regulatory Guide 167 Licensing: Discretionary powers (RG 167) and Report 477 Response to submissions on CP 249 Remaking ASIC class order on generic financial calculators: [CO 05/1122] (REP 477).

On 30 March 2016, ASIC made a new legislative instrument to replace its class order on generic financial calculators that was due to expire ('sunset') on 1 April 2016. ASIC has remade the class order with some changes following public consultation. The new instrument is ASIC Corporations (Generic Calculators) Instrument 2016/207. This instrument continues the relief from the provisions in the Corporations Act that would apply to the provider of a financial calculator that provides financial product advice. A change under the new instrument is that if a financial calculator makes an estimate of a future return, it must be adjusted for inflation using an assumed rate of inflation of 2.5% (the mid-point of the Reserve Bank of Australia's target range for inflation over the cycle).

For further information refer to ASIC's website.

ASIC remakes 'sunsetting' class order class order on securitisation
21 April 2016

ASIC has released updated regulatory guidance on ASIC’s relief for securitisation special purpose vehicles in Section C of Regulatory Guide 167 Licensing: Discretionary powers (RG 167).

On 29 March ASIC made a new legislative instrument to replace Class Order [CO 04/1526] Securitisation special purpose vehicles that was due to expire ('sunset') on 1 April 2016. ASIC has remade the class order following public consultation. The new legislative instrument is ASIC Corporations (Securitisation Special Purpose Vehicles) Instrument 2016/272. The instrument has the same effect as relief that ASIC had granted by Class Order [CO 04/1526], with the omission of one condition on the grounds that it did not appear to be relied on. This condition previously required an AFS licensee to enter into an irrevocable deed poll agreeing to be liable for the securitisation entity’s acts or omissions.

For further information refer to ASIC's website.

ASIC remakes instruments on financial reporting and record keeping by foreign licensees
1 April 2016

ASIC has today announced that it will continue the relief available to foreign companies which are Australian financial services licensees (foreign licensees) from certain financial reporting and record keeping obligations. ASIC has also continued relief available to foreign licensees which are authorised deposit-taking institutions (foreign Authorised Deposit-taking Institutions (ADIs)).

The relief is set out in the new legislative instrument, ASIC Corporations (Foreign Licensees and ADIs) Instrument 2016/186.

The new instrument replaces Class Orders [CO 03/823] Relief from licensing, accounting and audit requirements for foreign authorised deposit-taking institutions and [CO 06/68] Conditional relief for foreign licensees from financial reporting and record keeping obligations. ASIC remade these instruments as a single instrument without significant changes before they were due to sunset over the next few years under the Legislation Act 2003.

For further information refer to ASIC's website.

ASIC remakes instruments on electronic and dual lodgement of financial reports
1 April 2016

ASIC has today released a revised legislative instrument dealing with dual lodgement and electronic lodgement of directors’ reports, financial reports and auditor’s reports (reports). The instrument, ASIC Corporations (Electronic Lodgment of Financial Reports) Instrument 2016/181, replaces three class orders due to sunset under the Legislation Act 2003 in 2016 and 2017.

The class orders replaced are:

  • Class Order [CO 00/2451] Electronic lodgment of certain reports with the ASX: approval;
  • Class Order [CO 06/6] Dual lodgment relief for NSX-listed disclosing entities; and
  • Class Order [CO 98/104] Dual lodgment relief for ASX-listed entities.

ASIC has remade these class orders as a single instrument. In addition, the approval to lodge the reports electronically has been extended to include entities listed on SIM Venture Securities Exchange and Sydney Stock Exchange.

For further information refer to ASIC's website.

ASIC consults on addressing 'sunsetting' trustee company common fund class orders
24 March 2016

ASIC has today released Consultation Paper 256 which sets out ASIC's proposals to maintain relief previously provided under the Corporations Act concerning the entities to which client moneys can be deposited under s981B of the Act. The consultation paper also proposes to repeal a class order that ASIC believes is no longer required.

The instrument ASIC proposes to remake is Class Order [CO 04/1063] Section 981B money in cash common funds due to sunset on 1 April 2017.

This instrument enables client money received by an Australian financial service licensee to be deposited into a cash common fund, provided the fund is also a registered scheme.

ASIC has reviewed this class order and considers that it is operating effectively and efficiently and continues to form a useful part of the legislative framework.

CP 256 proposes to remake the class order with minor changes. A draft of the proposed legislative instrument is attached to the consultation paper.

ASIC proposes to repeal class order [CO 00/199] Trustee companies' common funds because ASIC has formed the preliminary view that this class order is no longer required and is not a useful part of the regulatory framework.

Submissions on the CP close on 27 April 2016.

For further information refer to ASIC's website.

ASIC consults on remaking ASIC class orders on financial services disclosure
23 March 2016

ASIC today released a consultation paper proposing to remake four class orders that are due to expire ('sunset') in 2017.

The class orders proposed to be remade are:

  • Class Order [CO 02/1072] Product Disclosure Statements – Top up relief for managed investment schemes;
  • Class Order [CO 07/10] Technical disclosure relief for reconstructions and capital reductions (paragraph 9);
  • Class Order [CO 03/237] Updated information in Product Disclosure Statements; and
  • Class Order [CO 03/1092] Further relief for joint Product Disclosure Statements.

ASIC proposes to remake these class orders because they are operating effectively and efficiently and continue to form a necessary and useful part of the legislative framework. No significant changes are proposed.

Consultation Paper 255 Remaking ASIC class orders on financial services disclosure (CP 255) outlines the class orders proposed to be remade.

Submissions on CP 255 are due on 26 April 2016.

For further information refer to ASIC's website.

British and Australian financial regulators sign agreement to support innovative businesses
23 March 2016

Under a new world-first agreement, innovative fintech companies in Australia and the United Kingdom will have more support from financial regulators as they attempt to enter the others’ market.

Today, the UK’s Financial Conduct Authority (FCA) and ASIC will refer to one another those innovative businesses seeking to enter the others’ market. The regulators will provide support to innovative businesses before, during and after authorisation to help reduce regulatory uncertainty and time to market.

The agreement follows the creation of Innovation Hubs at the FCA and ASIC in October 2014 and April 2015, respectively. The Hubs were set up to help businesses with innovative ideas navigate financial regulation, support them through the authorisation process and engage with the regulator. To date the FCA’s Innovation Hub has supported over 200 businesses and the authorisation of 18 businesses. Likewise, ASIC has dealt with over 75 innovative start-ups including the granting of 10 licences.

For further information refer to ASIC's website.

ASIC consults on proposed guidance about 'robo-advice'
21 March 2016

ASIC today released a consultation paper and a draft Regulatory Guide on regulating digital financial product advice (also commonly known as robo-advice).

ASIC's draft regulatory guide brings together some of the issues that persons providing, or intending to provide, digital advice to retail clients need to consider when operating in Australia—from the licensing stage (ie, obtaining an Australian financial services (AFS) licence) through to the actual provision of advice.

ASIC is also seeking feedback on issues that are unique to digital advice businesses, in particular:

  • the organisational competence obligation that applies in a digital advice context; and
  • the ways in which digital advice licensees should monitor and test their algorithms.

The closing date for submissions is 16 May 2016.

For further information (including to see a copy of the consultation paper) refer to ASIC's website.

ASIC reviews culture, conduct and conflicts of interest in vertically integrated funds management businesses
21 March 2016

ASIC has today released a report outlining its findings of an extensive review of the conflicts management practices in vertically integrated businesses in the funds management industry.

ASIC was specifically concerned about those entities with a vertically integrated business, that is, those entities which operate at least two of funds management, responsible entity, superannuation trustee, platform structure (IDPS and IDPS-like structure), investment administration and custody business. ASIC's view is that these models may create more opportunity for conflict to arise. The review did not address the deposit taking, insurance, financial advice and product manufacturing businesses.

The two-stage review involved 12 significant participants in the funds management industry. ASIC said it was encouraged that many organisations appear to take their conflicts management obligations seriously.

However, ASIC said in some organisations reviewed, it appears that the conflicts policy is one of many policies which has been prepared to satisfy a regulatory requirement rather than seeking to properly identify and address conflicts and embed requirements to address conflicts into business practices.

Going forward, ASIC will continue its focus on culture and conflicts management across the financial services industry and will work with individual participants to address any shortcomings identified in this review.

For further information (including to see a copy of the report) refer to ASIC's website.

For more see our News archive.

Acknowledgements
The following copyright notice applies to any information on this website that has been sourced from the website of the Australian Securities and Investments Commission:
ASIC – Australian Securities & Investments Commission. Reproduced with permission.