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Corporations Regulations 2001

Authoritative Version
  • - F2015C00303
  • In force - Superseded Version
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SR 2001 No. 193 Regulations as amended, taking into account amendments up to Treasury Laws Amendment (2015 Measures No. 1) Regulation 2015
Principal Regulations. These Regulations repeal the Corporations Regulations 1990 and the Partnerships and Associations Application Order 1999 (No. 1)
Administered by: Treasury
Registered 09 Apr 2015
Start Date 31 Mar 2015
End Date 18 Jun 2015
Table of contents.

Corporations Regulations 2001

Statutory Rules No. 193, 2001

made under the

Corporations Act 2001

Compilation No. 113

Compilation date:                              31 March 2015

Includes amendments up to:            SLI No. 39, 2015

Registered:                                         9 April 2015

This compilation is in 7 volumes

Volume 1:       regulations 1.0.01–6D.5.02

Volume 2:       regulations 7.1.02–7.6.08E

Volume 3:       regulations 7.7.01–8.4.02

Volume 4:       regulations 9.1.01–12.9.03

Volume 5:       Schedules 1, 2 and 2A

Volume 6:       Schedules 3–12

Volume 7:       Endnotes

Each volume has its own contents

 

About this compilation

This compilation

This is a compilation of the Corporations Regulations 2001 that shows the text of the law as amended and in force on 31 March 2015 (the compilation date).

This compilation was prepared on 31 March 2015.

The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law.

Uncommenced amendments

The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on ComLaw (www.comlaw.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the series page on ComLaw for the compiled law.

Application, saving and transitional provisions for provisions and amendments

If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.

Modifications

If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the series page on ComLaw for the compiled law.

Self‑repealing provisions

If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.

  

  

  


Contents

Chapter 7Financial services and markets                                      1

Part 7.7Financial service disclosure                                                                       1

Division 1Preliminary                                                                                              1

7.7.01.................... How documents, information and statements are to be given.. 1

Division 2Financial Services Guide                                                                  3

7.7.02.................... Situations in which Financial Services Guide is not required.. 3

7.7.02A................. Situations when Financial Services Guide is not required.. 7

7.7.03.................... Financial Services Guide given by financial services licensee: description of documents        9

7.7.03A................. Financial Services Guide given by financial services licensee: compensation arrangements    10

7.7.04.................... Financial Services Guide given by financial services licensee: remuneration, commission and benefits  10

7.7.04A................. Financial services guide given by financial services licensee: more detailed information about remuneration etc.......................................................................................... 13

7.7.04AA.............. Financial Services Guide given by financial services licensee: non‑monetary benefit that is not conflicted remuneration..................................................................... 14

7.7.04AB............... Financial Services Guide given by authorised representative: non‑monetary benefit that is not conflicted remuneration..................................................................... 14

7.7.05.................... Record of advice given by financial services licensee....... 14

7.7.05A................. Financial Services Guide given by authorised representative of financial services licensee: authorised representative number....................................................... 15

7.7.05B.................. Personalised Financial Services Guide............................. 15

7.7.05C.................. Exemption from providing certain information in a Financial Services Guide         17

7.7.06.................... Financial Services Guide given by authorised representative of financial services licensee: description of documents......................................................................... 18

7.7.06A................. Financial Services Guide given by authorised representative of financial services licensee—licence number.......................................................................................... 19

7.7.06B.................. Financial Services Guide given by authorised representative of financial services licensee: compensation arrangements..................................................................... 19

7.7.07.................... Financial Services Guide given by authorised representative of financial services licensee: remuneration, commission and benefits................................................... 20

7.7.07A................. Financial services guide given by authorised representative: more detailed information about remuneration etc.......................................................................................... 22

7.7.08.................... Record of advice given by authorised representative of financial services licensee  23

Division 2A—Combined Financial Services Guide and Product Disclosure Statement                24

7.7.08A................. Combined Financial Services Guide and Product Disclosure Statement  24

Division 2AA—Combined Financial Services Guide and credit guide 27

7.7.08B.................. Modification of section 942DA of the Act....................... 27

Division 2B—Record of small investment advice                                        29

7.7.08C.................. Record of small investment advice—content requirements 29

Division 3Statement of Advice                                                                          30

7.7.09.................... Situations in which statement of advice is not required: further advice    30

7.7.09A................. Situations in which Statement of Advice is not required: small investments threshold            30

7.7.09AA.............. Statement of Advice from financial services licensee........ 34

7.7.09AB............... Modification of subsection 947B(4) of the Act................ 35

7.7.09B.................. Statement of Advice from providing entity—information not included in the Statement          35

7.7.09BA............... Statement of Advice from authorised representative......... 36

7.7.09BB............... Modification of subsection 947C(4) of the Act................ 37

7.7.09BC............... Statement of Advice given by financial services licensee: non‑monetary benefit that is not conflicted remuneration..................................................................... 38

7.7.09BD............... Statement of Advice given by authorised representative: non‑monetary benefit that is not conflicted remuneration..................................................................... 38

7.7.09C.................. Requirement to keep Statement of Advice and other documents              38

7.7.10.................... Products for which a Statement of Advice is not required 39

7.7.10AA.............. Obligation on authorised representative to give a financial services guide               39

7.7.10AAA........... Record of advice without a recommendation to purchase or sell—content requirements         40

7.7.10AB............... Financial services guide—contents of guide..................... 40

7.7.10AC............... Financial services guide.................................................... 41

7.7.10AD.............. Financial services guide.................................................... 43

7.7.10AE............... Situations in which Statement of Advice not required...... 44

7.7.10AF............... Various consequential amendments to Division 7 of Part 7.7 concerning situations where Financial Services Guides do not have to be given......................................... 46

7.7.10AG.............. Various consequential amendments to Division 7 of Part 7.7  49

7.7.10AH.............. Business days................................................................... 51

7.7.10AI................ Obligation to warn client that advice does not take account of client’s objectives, financial situation or needs—carbon units, Australian carbon credit units and eligible international emissions units             51

7.7.10A................. Statements of Advice—requirement to state information as amounts in dollars       52

7.7.10B.................. Insertion of definition—further advice.............................. 53

7.7.10C.................. Omission of definition—further market‑related advice..... 54

7.7.10D................. Additional information in Statement of Advice................. 54

7.7.10E.................. Additional information in Statement of Advice................. 54

7.7.11.................... Statement of Advice given by financial services licensee.. 54

7.7.11A................. Statement of Advice given by authorised representative of financial services licensee—licence number 55

7.7.11B.................. Statement of Advice—disclosure of dollar amounts......... 55

7.7.12.................... Statement of Advice given by authorised representative of financial services licensee             56

7.7.13.................... Statement of Advice provided by authorised representative—disclosure of dollar amounts    57

7.7.13A................. Additional information about charges or benefits—disclosure of dollar amounts    58

7.7.13B.................. Additional information about charges or benefits—disclosure of dollar amounts    59

Division 4—General advice provided to a retail client                            60

7.7.14.................... Product Disclosure Statement not required....................... 60

Division 5—Other disclosure requirements                                                    61

7.7.20.................... General advice to retail client—no obligation to warn client 61

7.7.20A................. Extension of disclosure requirements to wholesale clients dealing with certain unauthorised insurers    61

Division 6—Exemptions from application of Part 7.7 of the Act        63

7.7.21.................... Exemption from application of Part 7.7 of the Act............ 63

Part 7.7A—Best interests obligations and remuneration                             64

Division 2—Best interests obligations                                                                64

Subdivision 1—Duty to act in client’s best interests                                         64

7.7A.1................... Duty if advising on combination of products.................... 64

Division 3—Charging ongoing fees to clients                                                66

7.7A.10................. Arrangements that are not ongoing fee arrangements....... 66

7.7A.11................. Fee disclosure statements: product fee.............................. 66

Division 4—Conflicted remuneration                                                                67

Subdivision 1—Monetary benefits                                                                       67

7.7A.12................. What subdivision is about................................................. 67

7.7A.12A.............. Life risk insurance products.............................................. 67

7.7A.12B............... Stamping fees................................................................... 67

7.7A.12C............... Time‑sharing schemes...................................................... 68

7.7A.12D.............. Brokerage fees.................................................................. 69

7.7A.12E............... Fees paid by clients for dealing services........................... 71

7.7A.12EA............ Application of ban on conflicted remuneration—purchase or sale of financial advice business               71

Subdivision 2—Monetary or non‑monetary benefits                                      72

7.7A.12F............... What subdivision is about................................................. 72

7.7A.12G.............. General insurance............................................................. 72

7.7A.12H.............. Basic banking and general insurance products.................. 72

7.7A.12I................ Mixed benefits.................................................................. 73

7.7A.13................. Non‑monetary benefit given in certain circumstances not conflicted remuneration: prescribed amount   74

7.7A.14................. Non‑monetary benefit given in certain circumstances not conflicted remuneration: education or training course.......................................................................................... 74

7.7A.15................. Non‑monetary benefit given in certain circumstances not conflicted remuneration: other education and training benefit............................................................................... 75

7.7A.15A.............. Non‑monetary benefit given in certain circumstances not conflicted remuneration—education and training in conducting a financial services business........................... 75

7.7A.15B............... Application of ban on conflicted remuneration—non‑platform operator (Division 4 of Part 7.7A of Chapter 7 of the Act does not apply)................................................. 76

7.7A.16................. Application of ban on conflicted remuneration—platform operator (Division 4 of Part 7.7A of Chapter 7 of the Act does not apply)..................................................... 76

7.7A.16A.............. Application of ban on conflicted remuneration—platform operator (Division 4 of Part 7.7A of Chapter 7 of the Act applies)................................................................. 77

7.7A.16B............... Application of ban on conflicted remuneration—person other than platform operator (Division 4 of Part 7.7A of Chapter 7 of the Act applies)........................................ 79

7.7A.16BA............ Sale of business................................................................ 81

7.7A.16C............... Application of ban on conflicted remuneration—employer and employee (Division 4 of Part 7.7A of Chapter 7 of the Act does not apply)................................ 81

7.7A.16D.............. Application of ban on conflicted remuneration—new arrangement entered into on or after application day (Division 4 of Part 7.7A of Chapter 7 of the Act does not apply)            83

7.7A.16E............... Application of ban on conflicted remuneration—change of party to an arrangement (Division 4 of Part 7.7A of Chapter 7 of the Act does not apply)................................ 84

7.7A.16F............... Application of ban on conflicted remuneration—benefit is a pass through of a grandfathered benefit (benefit is not conflicted remuneration)............................................. 85

Subdivision 3—Asset‑based fees on borrowed amounts                                 85

7.7A.17................. Financial services licensees............................................... 85

7.7A.18................. Authorised representatives................................................ 86

Division 6—Exemptions from application of Part 7.7A of the Act    87

7.7A.40................. Exemption from application of Part 7.7A of the Act......... 87

Part 7.8Other provisions relating to conduct etc connected with financial products and financial services, other than financial product disclosure                          88

7.8.01.................... Obligation to pay money into an account.......................... 88

7.8.02.................... Accounts maintained for section 981B of the Act............. 91

7.8.03.................... How money to be dealt with if licensee ceases to be licensed etc             95

7.8.04.................... Money to which Subdivision A of Division 2 of Part 7.8 of the Act applies taken to be held in trust: breach of financial services law........................................................ 98

7.8.05.................... Money to which Subdivision A of Division 2 of Part 7.8 of the Act applies taken to be held in trust: risk accepted by insurer........................................................... 98

7.8.06.................... Statement setting out terms of loan etc.............................. 99

7.8.06A................. Property exempt from Division 3 of Part 7.8 of the Act... 99

7.8.07.................... How property to which Division 3 of Part 7.8 of the Act to be dealt with               99

7.8.08.................... Debts of financial services licensee in relation to premiums etc               101

7.8.08A................. Limit of margin lending facility taken to be increased..... 107

7.8.08B.................. Exemption from requirement to make unsuitability assessment               109

7.8.09.................... Reasonable inquiries etc about retail client: inquiries...... 111

7.8.09A................. Modification of section 985G of the Act........................ 111

7.8.10.................... Circumstances in which margin lending facility is unsuitable  112

7.8.10A................. Margin lending facility taken not to be unsuitable........... 112

7.8.11.................... Particular categories of information to be shown in records 112

7.8.11A................. Particular categories of information to be shown in records: records of non‑monetary benefit that is not conflicted remuneration................................................... 113

7.8.12.................... Requirements in relation to financial records of financial services licensees            115

7.8.12A................. Modification of section 989B of the Act......................... 116

7.8.13.................... Auditor’s report with annual profit and loss statement and balance sheet                118

7.8.13A................. Compliance certificate with profit and loss statement and balance sheet   118

7.8.14.................... Contents of annual profit and loss statement and balance sheet and applicable accounting procedures    119

7.8.14A................. Lodgement of annual profit and loss statement and balance sheet            119

7.8.14B.................. Modification of section 990B of the Act......................... 120

7.8.15.................... Appointment of auditor by financial services licensee.... 121

7.8.16.................... When person is ineligible to act as auditor of financial services licensee  124

7.8.17.................... Priority to clients’ orders................................................ 127

7.8.18.................... Instructions to deal through licensed markets................. 127

7.8.19.................... Records of instructions to deal on licensed markets and foreign markets 129

7.8.20.................... Dealings with non‑licensees........................................... 131

7.8.20A................. Dealings involving employees of financial service licensees—risk insurance products           134

7.8.21.................... Dealings involving employees of financial services licensees  134

7.8.21A................. Anti‑hawking provisions if no Product Disclosure Statement is required                136

7.8.21B.................. Anti‑hawking provisions if no Product Disclosure Statement is required—carbon units, Australian carbon credit units and eligible international emissions units...... 137

7.8.22.................... Hours for hawking certain financial products................. 138

7.8.22A................. Modification of Part 7.8.................................................. 138

7.8.22B.................. Return of financial product: first home saver accounts... 139

7.8.23.................... Return of financial product: transfer between superannuation entities or RSAs       140

7.8.24.................... Right of return not to apply............................................. 140

7.8.25.................... Variation of amount to be repaid..................................... 141

7.8.26.................... Exemption from application of section 992A of the Act. 141

Part 7.9Financial product disclosure and other provisions relating to issue and sale of financial products                                                                                                                142

Division 1Preliminary                                                                                          142

7.9.01.................... Interpretation................................................................... 142

7.9.02.................... Sub‑plans........................................................................ 146

7.9.02A................. Alternative ways of giving Statement............................. 147

7.9.02B.................. Product Disclosure Statement in electronic form............ 147

Division 2Arrangements for Product Disclosure Statements in relation to superannuation products and RSA products                                                                            149

Subdivision 2.1—Preliminary                                                                            149

7.9.03.................... Application of Division 2............................................... 149

Subdivision 2.2—Late provision of Product Disclosure Statement for certain members of regulated superannuation fund, public offer superannuation fund or successor fund 149

7.9.04.................... Product Disclosure Statement to be provided later.......... 149

Subdivision 2.3—Product Disclosure Statement for retirement savings account          150

7.9.05.................... Situation in which Product Disclosure Statement is not required             150

Subdivision 2.4—Additional obligations for eligible rollover funds        150

7.9.06A................. Relevant superannuation entities..................................... 150

7.9.06B.................. Application forms........................................................... 150

Subdivision 2.5—Product Disclosure Statement for insurance options   151

7.9.07.................... Modification of Act: Product Disclosure Statement in relation to insurance options                151

Division 2A—Product Disclosure Statement for warrants                  152

7.9.07A................. Warrants......................................................................... 152

Division 2B—Product Disclosure Statement for market‑traded derivatives      154

7.9.07B.................. Product Disclosure Statements for certain market‑traded derivatives       154

7.9.07C.................. Remedies for Product Disclosure Statements for certain market‑traded derivatives 155

Division 2BA—Product Disclosure Statement for discretionary mutual funds 156

7.9.07CA............... Extension of Product Disclosure Statement requirements to wholesale clients        156

Division 2C—Situations where a Product Disclosure Statement is not required              157

7.9.07D................. Product Disclosure Statement not required for offers of bundled contracts of insurance         157

7.9.07E.................. Product Disclosure Statement not required if offer of financial product is declined 157

7.9.07F.................. Product Disclosure Statement not required if the client is not contactable                158

7.9.07FA............... Product Disclosure Statement not required for certain specified products                159

7.9.07FB............... Product Disclosure Statement not required if client not in this jurisdiction              160

7.9.07FC............... Product Disclosure Statement not required general insurance situation    160

Division 2D—Preparation and content of Product Disclosure Statements          162

7.9.07J................... Only 1 responsible person for a Product Disclosure Statement               162

7.9.07K.................. Definition of defective: Product Disclosure Statement, Short‑Form PDS or Replacement Product Disclosure Statement........................................................................ 162

Division 2E—Obligation to make information publicly available: registrable superannuation entities                                                                                                                    163

Subdivision 2E.1—Obligation to make product dashboard publicly available             163

7.9.07L.................. Modification of Act........................................................ 163

7.9.07M................. Source of power for this Subdivision............................. 163

7.9.07N................. Definitions...................................................................... 163

7.9.07P.................. Meaning of MySuper product dashboard reporting standards               165

7.9.07Q................. Product dashboard—how information must be set out... 165

7.9.07R.................. Product dashboard—return target................................... 165

7.9.07S.................. Product dashboard—return............................................. 166

7.9.07T.................. Product dashboard—comparison between return target and return          167

7.9.07U................. Comparison to be set out as a graph............................... 168

7.9.07V................. Product dashboard—level of investment risk................. 168

7.9.07W................. Product dashboard—statement of fees and other costs... 169

Division 3Dealing with money received for financial product before the product is issued  170

7.9.08.................... Accounts......................................................................... 170

7.9.08A................. Dealing with interest....................................................... 171

7.9.08B.................. Crediting of payments before money is received............ 171

7.9.08C.................. Money held in trust for a superannuation product or RSA product         172

7.9.08D................. Statutory funds under the Life Insurance Act 1995......... 173

Division 3A—Rights and obligations related to Product Disclosure Statement—first home saver accounts                                                                                                                    174

7.9.08E.................. Application forms........................................................... 174

Division 4Content of Product Disclosure Statements                         175

Subdivision 4.1—Preliminary                                                                            175

7.9.09.................... Application of Division 4............................................... 175

Subdivision 4.1A—No Product Disclosure Statement for carbon units, Australian carbon credit units and eligible international emissions units                                                 176

7.9.09A................. Application of Subdivision............................................. 176

7.9.09B.................. Provisions of Part 7.9 of Act that do not apply in relation to carbon units, Australian carbon credit units and eligible international emissions units............................... 176

7.9.09C.................. Modification of Act........................................................ 177

Subdivision 4.2—Content of Product Disclosure Statements for First Home Saver Accounts   177

7.9.10.................... Application of Subdivision............................................. 177

7.9.10A................. Definitions...................................................................... 177

7.9.10B.................. Modification of Act........................................................ 178

7.9.10C.................. Product Disclosure Statement consisting of 2 or more documents           178

7.9.10D................. Manner of giving Product Disclosure Statement for first home saver accounts       179

7.9.10E.................. Form and content of Product Disclosure Statement........ 180

Subdivision 4.2A—Form and content of Product Disclosure Statement for margin loan           180

7.9.11.................... Application of Subdivision 4.2A.................................... 180

7.9.11A................. Provisions of Part 7.7 of Act that do not apply in relation to margin loan                181

7.9.11B.................. Definitions for Subdivision 4.2A................................... 181

7.9.11C.................. Modification of Act—margin loan.................................. 181

7.9.11D................. Form and content of Product Disclosure Statement for margin loan        181

7.9.11E.................. Requirements for references to incorporated information for margin loan               182

7.9.11F.................. Retention of copies of Product Disclosure Statement for margin loan     184

7.9.11G................. Requirement to provide copy of Product Disclosure Statement for margin loan free of charge               185

7.9.11H................. Notification about change to Approved Securities List or current interest rate for margin loan                185

Subdivision 4.2B—Content of Product Disclosure Statement for superannuation product        185

7.9.11K.................. Application of Subdivision 4.2B.................................... 185

7.9.11L.................. Provisions of Part 7.7 of Act that do not apply in relation to superannuation product             186

7.9.11LA............... Attribution of accrued default amount to MySuper product—exemption from significant event notice requirements................................................................... 186

7.9.11LB............... Attribution of accrued default amount to MySuper product—modification of significant event notice requirements................................................................... 186

7.9.11M................. Provisions of Part 7.9 of Act that do not apply in relation to superannuation product             187

7.9.11N................. Modification of Act—superannuation product............... 188

7.9.11O................. Form and content of Product Disclosure Statement for superannuation product      188

7.9.11P.................. Requirements for references to incorporated information for superannuation product             189

7.9.11Q................. Retention of copies of Product Disclosure Statement for superannuation product   191

7.9.11R.................. Requirement to provide copy of Product Disclosure Statement for superannuation product free of charge........................................................................................ 192

Subdivision 4.2C—Content of Product Disclosure Statement for simple managed investment scheme  192

7.9.11S.................. Application of Subdivision 4.2C.................................... 192

7.9.11T.................. Provisions of Part 7.7 of Act that do not apply in relation to simple managed investment scheme          193

7.9.11U................. Provisions of Part 7.9 of Act that do not apply in relation to simple managed investment scheme          193

7.9.11V................. Modification of Act—simple managed investment scheme 194

7.9.11W................. Form and content of Product Disclosure Statement for simple managed investment scheme   194

7.9.11X................. Requirements for references to incorporated information for simple managed investment scheme          195

7.9.11Y................. Retention of copies of Product Disclosure Statement for simple managed investment scheme                197

7.9.11Z.................. Requirement to provide copy of Product Disclosure Statement for simple managed investment scheme free of charge............................................................................. 198

Subdivision 4.3—Other arrangements for Product Disclosure Statements and application forms          198

7.9.12.................... Modification of Act: Product Disclosure Statements and application forms for standard employer‑sponsors and successor funds........................................................ 198

7.9.13.................... Offer of superannuation interest without application or eligible application             199

7.9.13A................. Remedies for person acquiring financial product under defective Product Disclosure Statement: first home saver accounts................................................................. 200

7.9.14.................... Remedies for person acquiring financial product under defective Product Disclosure Statement: superannuation and RSAs.............................................. 201

7.9.14A................. Treatment of arrangements under which a person can instruct another person to acquire a financial product........................................................................................ 202

Subdivision 4.4—Product information for certain insurance products   202

7.9.14B.................. Product information........................................................ 202

Division 4A—General                                                                                              204

7.9.14C.................. Labour standards and environmental, social and ethical considerations   204

7.9.14D................. Further statements required in Product Disclosure Statement—financial claims scheme         205

7.9.15.................... More detailed information in Product Disclosure Statement: unauthorised foreign insurer      206

7.9.15A................. Product Disclosure Statements—requirement to state information as amounts in dollars        207

7.9.15B.................. Product Disclosure Statements—disclosure of dollar amounts                208

7.9.15C.................. Product Disclosure Statements—disclosure of dollar amounts                208

7.9.15CA............... Less information in Product Disclosure Statement—financial claims scheme          210

7.9.15D................. Less information in product disclosure statement: general insurance product          210

7.9.15DA.............. Statement or information not included in a Product Disclosure Statement               211

7.9.15DB............... Requirement to keep record of Product Disclosure Statement and other documents                212

7.9.15DC............... Requirement to lodge documents mentioned in a Product Disclosure Statement with ASIC   213

7.9.15E.................. More detailed information in product disclosure statement: general insurance product            213

7.9.15F.................. Product disclosure statement: general insurance product 214

7.9.15FA............... Transitional arrangements for regulations 7.9.15D, 7.9.15E and 7.9.15F                214

7.9.15G................. Business days................................................................. 215

7.9.15H................. New section 1012G: product disclosure statement may sometimes be provided later              215

7.9.15I................... Modification of section 1012IA...................................... 217

7.9.16.................... More detailed information in Product Disclosure Statement: consumer credit insurance product            218

7.9.16A................. Small scale offerings of managed investment and other prescribed financial products (20 issues or sales in 12 months)........................................................................... 219

Division 4B—Ongoing disclosure                                                                       220

7.9.16G................. Ongoing disclosure of material changes and significant events                220

Division 4C—Fee Disclosure for certain financial products               221

Subdivision 4C.1—Application                                                                           221

7.9.16J................... Application of Division 4C to financial products............ 221

7.9.16JA................ Application of Division 4C to financial products—temporary arrangements           221

7.9.16K.................. Application of Division 4C to periodic statements and Product Disclosure Statements           221

Subdivision 4C.2—Product Disclosure Statements                                        222

7.9.16L.................. More detailed information about fees and costs.............. 222

7.9.16M................. Modification of section 1015C of the Act....................... 222

7.9.16N................. Presentation, structure and format of fees and costs in Product Disclosure Statements           223

Subdivision 4C.3—Periodic statements                                                            223

7.9.16O................. Presentation, structure and format of fees and charges in periodic statements          223

Division 4D—Other requirements relating to Product Disclosure Statements and Supplementary Product Disclosure Statements                                                                    224

Subdivision 4D.1—Requirement to lodge a notice with ASIC                     224

7.9.16T.................. Variation of paragraph 1015D(2)(b) of the Act.............. 224

Division 5—Ongoing requirements for product disclosure after person becomes a member   225

Subdivision 5.1—Preliminary                                                                            225

7.9.17.................... Application of Division 5............................................... 225

Subdivision 5.2—Periodic statements for retail clients for financial products that have an investment component: regulated superannuation funds, ADFs and RSAs            225

7.9.18.................... Application of Subdivision 5.2....................................... 225

7.9.19.................... Specific requirements for periodic statements: superannuation funds (other than self managed superannuation funds) and RSAs............................................................ 225

7.9.19A................. Withdrawal benefit—fees, charges or expenses.............. 227

7.9.19B.................. Withdrawal benefit—fees, charges and expenses........... 227

7.9.20.................... Specific requirements for certain periodic statements: superannuation funds (other than self managed superannuation funds).................................................... 229

7.9.20AA.............. Specific requirements for certain periodic statements: superannuation funds (other than self managed superannuation funds)—long‑term returns..................... 231

7.9.20A................. Details of other significant benefits—disclosure of fees, charges or expenses         234

7.9.20B.................. Other significant benefits—disclosure of fees, charges or expenses        235

7.9.21.................... Specific requirements in particular cases: member (other than capital guaranteed member) of fund other than a self managed superannuation fund.................................. 237

7.9.22.................... Specific requirements: capital guaranteed funds and RSAs 238

7.9.23.................... Information for capital guaranteed fund: benefits reach $10 000              239

7.9.24.................... Modification of Act: pensioners, members subject to compulsory protection of small amounts and members with small amounts that are expected to grow quickly.... 239

Subdivision 5.3—Periodic statements for retail clients for financial products that have an investment component: information for RSAs                                                              240

7.9.25.................... Application of Subdivision 5.3....................................... 240

7.9.26.................... Specific requirements where applicable: RSAs............... 240

7.9.27.................... Modification of Act: periodic statements for RSA holders 242

7.9.28.................... Information for RSA: amount reaches $10 000.............. 242

Subdivision 5.4—Periodic statements for retail clients for financial products that have an investment component: additional information for superannuation entities and RSA providers            242

7.9.29.................... Application of Subdivision 5.4....................................... 242

7.9.30.................... Additional information for change to choices................. 243

Subdivision 5.4A—Periodic statements for retail clients for financial products that have an investment component: additional information for margin lending facilities     243

7.9.30A................. Application of Subdivision 5.4A.................................... 243

7.9.30B.................. Details to be included in periodic statements for margin lending facilities                244

Subdivision 5.5—Fund information for retail clients for financial products that have an investment component: superannuation                                                                          245

7.9.31.................... Application of Subdivision 5.5....................................... 245

7.9.32.................... Reporting periods: general.............................................. 245

7.9.33.................... Use of more than 1 document......................................... 246

Subdivision 5.6—Fund information for retail clients for financial products that have an investment component: fund information for regulated superannuation funds and ADFs        246

7.9.34.................... Application of Subdivision 5.6....................................... 246

7.9.35.................... General requirement........................................................ 247

7.9.36.................... Specific requirements in all cases.................................... 247

7.9.37.................... Specific requirements in particular cases......................... 247

7.9.38.................... Specific information in particular case: self managed superannuation fund              251

7.9.39.................... Benefits determined by life insurance products............... 251

Subdivision 5.7—Fund information for retail clients for financial products that have an investment component: fund information for pooled superannuation trusts        252

7.9.40.................... Application of Subdivision 5.7....................................... 252

7.9.41.................... Specific requirements in all cases.................................... 252

7.9.42.................... Specific requirements in particular cases......................... 253

Subdivision 5.8—Ongoing disclosure of material changes and significant events        255

7.9.43.................... Modification of Act: disclosure of material changes and significant events in relation to superannuation products and RSA products............................................ 255

7.9.44.................... Benefits to be paid to eligible rollover fund.................... 255

Subdivision 5.9—Information on request: members                                    257

7.9.45.................... Regulated superannuation funds, ADFs and pooled superannuation trusts             257

7.9.46.................... RSAs.............................................................................. 258

Subdivision 5.10—Information on request: payments                                 258

7.9.47.................... Modification of Act: charges for information requested. 258

Subdivision 5.11—Information about complaints                                         258

7.9.48.................... Source of power for this Subdivision............................. 258

7.9.48A................. Definitions...................................................................... 258

7.9.48B.................. Complaints—general...................................................... 259

7.9.48C.................. Complaints about benefits other than death benefits—decision made      259

7.9.48D................. Complaints about benefits other than death benefits—no decision made 260

7.9.48A................. Definitions...................................................................... 261

7.9.48B.................. Complaints—general...................................................... 261

Subdivision 5.12—Periodic report when product holder ceases to hold product: superannuation products and RSA products                                                                                       262

7.9.49.................... Application of Subdivision 5.12..................................... 262

7.9.50.................... Exit reporting period....................................................... 262

7.9.51.................... Time for compliance....................................................... 262

7.9.52.................... General requirement........................................................ 262

7.9.53.................... Information on death of product holder.......................... 263

7.9.54.................... Specific requirements in all cases.................................... 263

7.9.55.................... Specific requirements in particular cases......................... 264

7.9.56.................... Exceptions to exit reporting period provisions: superannuation products and RSA products  264

7.9.57.................... Exception—members subject to compulsory protection of small amounts               264

7.9.58.................... Information to be given in cases other than death of RSA holder            265

7.9.59.................... Information to be given where applicable....................... 266

7.9.60.................... Modification of Act: exceptions to exit reporting period provisions        267

Division 5AA—General requirements for financial disclosure          268

7.9.60A................. Modification of Act: disclosure...................................... 268

7.9.60B.................. Disclosure of transactions in periodic statements............ 268

Division 5AB—Short‑Form Product Disclosure Statements               270

7.9.61AA.............. Modification of the Act: Short‑Form Product Disclosure Statements      270

Division 5A—Dealing with money received for financial product before the product is issued               272

7.9.61A................. Lost application money................................................... 272

7.9.61B.................. Issue of substitute insurance product.............................. 273

7.9.61C.................. Cheques.......................................................................... 273

Division 5B—Confirming transactions                                                           274

7.9.61D................. Transactions involving superannuation products............ 274

Division 5C—CGS depository interests                                                          276

7.9.61E.................. CGS depository interest information website................. 276

Division 6Confirmation of transactions                                                     277

7.9.62.................... Confirmation of transaction: superannuation products and RSAs            277

7.9.63.................... Confirmation of transactions: precise costs of transaction not known      280

7.9.63A................. Persons who must confirm transactions......................... 280

7.9.63B.................. Content of confirmation of transactions—general........... 282

7.9.63C.................. Confirmation of transaction—multiple transactions........ 283

7.9.63D................. Confirmation of transaction—information about cooling‑off period        285

7.9.63E.................. Confirmation of transaction—facility that provides written confirmation 286

7.9.63F.................. Confirmation of transaction—acquisition of financial product 286

7.9.63G................. Confirmation of transaction—disposal of financial product 287

7.9.63H................. Certain product issuers and regulated persons must meet appropriate dispute resolution requirements—self managed superannuation funds....................................... 287

7.9.63I................... Confirmation of transaction in electronic form................ 287

Division 7Cooling‑off periods                                                                          288

7.9.64.................... Cooling‑off periods not to apply..................................... 288

7.9.64A................. Notification of exercise of right of return—risk insurance products        289

7.9.65.................... Return of financial product: general................................ 289

7.9.65A................. Return of financial product: first home saver accounts... 290

7.9.66.................... Return of financial product: superannuation and RSAs.. 291

7.9.67.................... Variation of amount to be repaid..................................... 292

7.9.68.................... Modification of section 1019B of the Act: client includes standard employer‑sponsor            295

7.9.69.................... Modification of provisions of Division 5 of Part 7.9 of the Act: terms of contract  297

7.9.70.................... Modification of provisions of Division 5 of Part 7.9 of the Act: distributions         298

Division 8Other requirements                                                                         299

7.9.71.................... Modification of section 1017D of the Act: use of more than 1 document                299

7.9.71A................. Periodic statements—exemption for passbook accounts. 299

7.9.72.................... Modification of section 1017D of the Act: information already given     299

7.9.73.................... Reporting periods: general.............................................. 300

7.9.74.................... Form of application......................................................... 300

7.9.74A................. Periodic statements—requirement to state information as amounts in dollars          300

7.9.74B.................. Periodic statements—additional details for First Home Saver Accounts  302

7.9.75.................... Content of periodic statements: costs of transactions...... 303

7.9.75A................. Ways of giving information............................................ 306

7.9.75B.................. Information in electronic form........................................ 307

7.9.75BA............... Fund information made available on a website............... 307

7.9.75C.................. Periodic statements—disclosure of amounts................... 308

7.9.75D................. Periodic statements—disclosure of amounts................... 309

7.9.76.................... Consents to certain statements........................................ 310

7.9.77.................... Alternative dispute resolution requirements—product issuer that is not a financial services licensee       310

7.9.78.................... Additional statement: trustee required to provide benefits 311

7.9.80B.................. Short selling of certain warrants..................................... 312

Division 9—Additional requirements for transfer of lost members and lost RSA holders          314

7.9.81.................... Lost members................................................................. 314

7.9.82.................... Lost RSA holders........................................................... 314

Division 11—Superannuation to which arrangements apply under the Family Law Act 1975                316

7.9.84.................... Definitions for Division 11............................................. 316

7.9.85.................... Application of Division 11............................................. 317

7.9.86.................... Acquisition of financial product...................................... 317

7.9.87.................... Modification of Act: Product Disclosure Statement in relation to superannuation interest under Family Law Act.................................................................................. 318

7.9.88.................... Statement content in relation to superannuation interest under Family Law Act: superannuation fund    319

7.9.89.................... Statement content in relation to superannuation interest under Family Law Act: RSA             320

7.9.90.................... Information for existing holders of superannuation products and RSA products in relation to superannuation interest............................................................................ 321

7.9.91.................... Periodic statements for retail clients for financial products that have an investment component—general........................................................................................ 322

7.9.92.................... Periodic statements for retail clients for financial products that have an investment component—superannuation interest other than percentage‑only interest 322

7.9.93.................... Trustees of superannuation entities—additional obligation to provide information in relation to superannuation interest............................................................................ 323

7.9.94.................... Division 5 of Part 7.9 of the Act not to apply in relation to non‑member spouse     324

Division 12—Medical indemnity insurance                                                   325

7.9.95.................... Medical indemnity insurance—exemption from product disclosure provisions       325

Division 13—Unsolicited offers to purchase financial products off market        326

7.9.96.................... Percentage increase or decrease in the market value of a product             326

7.9.97.................... Off‑market trading by professional investors etc............ 326

7.9.97A................. Information in offer document if payment is to be made in instalments   327

Division 14—Exemptions from Parts 7.7, 7.8 and 7.9 of the Act     329

7.9.98.................... Certain providers of financial services exempted from the requirements of Parts 7.7, 7.8 and 7.9 of the Act........................................................................................ 329

7.9.98A................. Exemption from application of Part 7.9 of the Act.......... 329

Division 15—Disclosure in relation to short sales covered by securities lending arrangement of listed section 1020B products                                                                 331

7.9.99.................... Interpretation................................................................... 331

7.9.100.................. Seller disclosure.............................................................. 332

7.9.100A............... Seller disclosure of existing short position..................... 333

7.9.101.................. Licensee disclosure......................................................... 334

7.9.102.................. Public disclosure of information..................................... 335

Part 7.10—Market misconduct and other prohibited conduct relating to financial products and financial services                                                                                                                   337

7.10.01.................. Division 3 financial products.......................................... 337

7.10.02.................. Professional standards schemes...................................... 337

7.10.03.................. Exemption for market participants of qualifying gas trading exchange    339

Part 7.11Title and transfer                                                                                      340

Division 1Preliminary                                                                                          340

7.11.01.................. Definitions...................................................................... 340

7.11.03.................. Arrangements about Division 4 financial products......... 342

7.11.04.................. Arrangements for forms................................................. 343

7.11.05.................. Document duly completed in accordance with a particular form              344

7.11.06.................. Stamping of documents.................................................. 345

7.11.07.................. Application of Division 3 of Part 7.11 of the Act to certain bodies          345

7.11.08.................. Interests in registered schemes........................................ 346

Division 2Application of Part 7.11                                                               347

7.11.09.................. Application..................................................................... 347

Division 3Transfer of Division 3 securities effected otherwise than through a prescribed CS facility                                                                                                                    348

7.11.10.................. Application of Division 3............................................... 348

7.11.11.................. Sufficient transfer: general.............................................. 348

7.11.12.................. Sufficient transfer of Division 3 assets: licensed trustee company or Public Trustee of a State or Territory........................................................................................ 349

7.11.13.................. Sufficient transfer of Division 3 rights: licensed trustee company or Public Trustee of a State or Territory........................................................................................ 349

7.11.14.................. Sufficient transfer........................................................... 349

7.11.15.................. Transferee’s execution of transfer of Division 3 assets.. 350

7.11.16.................. Transferee’s execution of transfer of Division 3 rights... 350

7.11.17.................. Transfer document that purports to bear stamp of transferor's broker      351

7.11.18.................. Warranties by market licensee if transfer document purports to bear its stamp        353

7.11.19.................. Indemnities by market licensee and broker if transfer document purports to bear their stamps                353

7.11.20.................. Joint and several warranties and liabilities...................... 354

7.11.21.................. Registration of certain instruments.................................. 355

7.11.22.................. Details to be included in instrument of transfer............... 356

Division 4Transfer of Division 4 financial products effected through prescribed CS facility              357

7.11.23.................. Application of Division 4............................................... 357

7.11.24.................. Application of ASTC operating rules............................. 357

7.11.25.................. Participant’s authority to enter into transaction continues despite client’s death       357

7.11.26.................. Authority to enter into transaction gives authority to transfer.. 358

7.11.27.................. Effect of proper ASTC transfer on transferee: Division 4 financial products other than rights                359

7.11.28.................. Effect of proper ASTC transfer on transferee: rights...... 360

7.11.29.................. Warranties by participant if identification code is included in transfer document     361

7.11.30.................. Indemnities in respect of warranted matters: transfer not effected by the participant                363

7.11.31.................. Indemnities in respect of warranted matters: transferor not legally entitled or authorised to transfer Division 4 financial products............................................................ 364

7.11.32.................. Indemnities in respect of warranted matters: participant not authorised to effect transfer         365

7.11.33.................. Joint and several warranties and liabilities...................... 365

7.11.34.................. ASTC entitled to assume its operating rules complied with 366

7.11.35.................. ASTC‑regulated transfer not to be registered unless proper ASTC transfer            366

7.11.36.................. Issuer not to refuse to register proper ASTC transfer..... 367

7.11.37.................. Determination of who holds Division 4 financial products for the purposes of meeting          367

7.11.38.................. Determination of who holds Division 4 financial products in class of Division 4 financial products for the purposes of meeting........................................................ 368

7.11.39.................. Determination of who holds Division 4 financial products for the purposes of conferring security benefits........................................................................................ 369

Division 5Offences                                                                                                 370

7.11.40.................. Stamping of broker’s stamp on sufficient transfer.......... 370

7.11.41.................. Inclusion of identification codes in proper ASTC transfers 371

7.11.42.................. Contravention by participant of the ASTC certificate cancellation provisions relating to use of cancellation stamps............................................................................. 372

Division 6Civil liability                                                                                        373

7.11.43.................. Contravention by participant of the ASTC certificate cancellation provisions          373

Part 7.12Miscellaneous                                                                                              374

7.12.01.................. Destruction of records by ASIC..................................... 374

Chapter 8—Mutual recognition of securities offers              375

Part 8.1—Preliminary                                                                                                     375

8.1.01.................... Prescribed foreign recognition scheme (Act s 1200A(1)) 375

8.1.02.................... Prescribed offeror (Act s 1200A(1)).............................. 375

8.1.03.................... Prescribed recognised jurisdiction (Act s 1200A(1))...... 376

Part 8.2—Foreign offers that are recognised in this jurisdiction          377

Division 1—Recognised offers                                                                             377

8.2.01.................... Prescribed offer (Act s 1200C(4)).................................. 377

8.2.02.................... Prescribed warning statements (Act s 1200E)................ 377

8.2.03.................... Prescribed details to be given in warning statements (Act s 1200E(b))    380

8.2.04.................... Prescribed home regulators (Act s 1200G(13) and (14)) 380

Division 4—Modification of the Act in relation to its application to recognised offers for interests in New Zealand managed investment schemes (Act s 1020G, 1200M)        382

8.4.01.................... Modification of Part 7.9 of the Act—New Zealand offer documents replace Product Disclosure Statements........................................................................................ 382

8.4.02.................... Modification of Part 6D.2 of the Act and Part 7.9 of the Act—certain disclosure obligations not to apply........................................................................................ 382


Chapter 7Financial services and markets

Part 7.7Financial service disclosure

Division 1Preliminary

7.7.01  How documents, information and statements are to be given

             (1)  For subsection 940C(3) of the Act:

                     (a)  if general advice is given orally in a public forum, information that subsection 941C(5) of the Act requires to be given must be given orally; and

                     (b)  if general advice is given in electronic form in a public forum, information that subsection 941C(5) of the Act requires to be given must be given in electronic form; and

                     (c)  if general advice is given in writing (otherwise than in electronic form) in a public forum, information that subsection 941C(5) of the Act requires to be given must be given in writing; and

                     (d)  if general advice is given in any other manner in a public forum, information that subsection 941C(5) of the Act requires to be given must be given in the same manner.

             (2)  For paragraph 940C(7)(a) of the Act, a Financial Services Guide and a Statement of Advice may be given to a person in either of the following ways:

                     (a)  making the Guide or Statement available to the person in any way that:

                              (i)  is agreed to by the person; and

                             (ii)  allows the regulated person to be satisfied, on reasonable grounds, that the person has received the Guide or Statement;

                     (b)  making the Guide or Statement available to the person’s agent in any way that:

                              (i)  is agreed to by the agent; and

                             (ii)  allows the regulated person to be satisfied, on reasonable grounds, that the agent has received the Guide or Statement.

             (3)  For paragraph 940C(7)(b) of the Act, a document, information or statement that is to be given in electronic form must, as far as practicable, be presented in a way that will allow the person to whom it is given to keep a copy of it so that the person can have ready access to it in the future.

             (4)  A document or statement that is to be given in electronic form must be presented in a way that clearly identifies the information that is part of the document or statement.

Division 2Financial Services Guide

7.7.02  Situations in which Financial Services Guide is not required

             (1)  For paragraph 941C(6)(c) of the Act, the following are prescribed:

                     (a)  a deposit product that is a facility in relation to which:

                              (i)  there is no minimum period before which funds cannot be withdrawn or transferred from the facility without a reduction in the return generated for the depositor; or

                             (ii)  if there is such a period, it expires on or before the end of the period of 2 years starting on the day on which funds were first deposited in the facility;

                     (b)  travellers’ cheques;

                     (c)  a cash management trust interest;

                     (d)  a capital guaranteed FHSA product.

             (2)  For subsection 941C(4) of the Act:

                     (a)  providing general advice to the public, or a section of the public, at an event organised by or for financial services licensees to which retail clients are invited is prescribed; and

                     (b)  a broadcast of general advice to the public, or a section of the public, that may be viewed or heard by any person is prescribed; and

                     (c)  distributing or displaying promotional material that:

                              (i)  provides general advice to the public, or a section of the public; and

                             (ii)  is available in a place that is accessible to the public is prescribed.

Examples:

1                 Television or radio broadcasts.

2                 Distributing promotional material contained in newspapers and magazines.

3                 Sending a broadcast via an Internet website or webcast.

4                 Giving a public lecture or seminar for retail clients, including employees of a workplace.

Note:          If general advice is given to the public, or a section of the public, the requirements of subsection 941C(5) of the Act must be complied with. Additionally, if general advice is provided to 1 or more retail clients, the providing entity must comply with section 949A of the Act.

             (3)  For subsection 941C(8) of the Act, a Financial Services Guide does not have to be given to a client in the following circumstances:

                     (a)  a person (person 1) makes an inquiry by telephone in relation to the rental of a vehicle from another person (person 2);

                     (b)  as a result of that inquiry, it becomes apparent to person 2 that a financial service will be, or is likely to be, provided to person 1;

                     (c)  the financial service is the issue of an insurance product that relates to either or both of:

                              (i)  the accidental death of, or bodily injury to, a person caused by an accident in connection with the use of the rented vehicle during the rental period; and

                             (ii)  the loss or destruction of, or damage to, either or both of baggage and personal effects belonging to a person in the rented vehicle caused by an insured event during the rental period;

                     (d)  person 2 makes arrangements for a document that is the equivalent of a Financial Services Guide to be given to person 1 no later than the start of the use to which the insurance product relates.

Example:    The commencement of a journey of the rental vehicle is a use to which the insurance product relates.

          (3A)  For subsection 941C(8) of the Act, a Financial Services Guide does not have to be given to a client for a financial service provided in the circumstances specified in paragraph 7.6.01(1)(la).

             (4)  For subsection 941C(8) of the Act, a Financial Services Guide does not have to be given to a client in respect of advice that:

                     (a)  is provided by a providing entity that is:

                              (i)  a product issuer; or

                             (ii)  a related body corporate of a product issuer; or

                            (iii)