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Corporations Regulations 2001

Authoritative Version
  • - F2019C00865
  • In force - Superseded Version
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SR 2001 No. 193 Regulations as amended, taking into account amendments up to Corporations Amendment (National Guarantee Fund Payments) Regulations 2019
Principal Regulations. These Regulations repeal the Corporations Regulations 1990 and the Partnerships and Associations Application Order 1999 (No. 1)
Administered by: Treasury
Registered 25 Nov 2019
Start Date 19 Nov 2019
End Date 17 Dec 2019
Table of contents.

Commonwealth Coat of Arms of Australia

Corporations Regulations 2001

Statutory Rules No. 193, 2001

made under the

Corporations Act 2001

Compilation No. 150

Compilation date:                              19 November 2019

Includes amendments up to:            F2019L01474

Registered:                                         25 November 2019

This compilation is in 7 volumes

Volume 1:       regulations 1.0.01–6D.5.03

Volume 2:       regulations 7.1.02–7.6.08E

Volume 3:       regulations 7.7.01–8A.7.20

Volume 4:       regulations 9.1.01–12.9.03

Volume 5:       Schedules 1, 2 and 2A

Volume 6:       Schedules 3–13

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 19 November 2019 (the compilation date).

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 the Legislation Register (www.legislation.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 the Legislation Register 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.

Editorial changes

For more information about any editorial changes made in this compilation, see 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 the Legislation Register 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                                                       2

7.7.02                     Situations in which Financial Services Guide is not required.. 2

7.7.02A                  Situations when Financial Services Guide is not required.. 5

7.7.03                     Financial Services Guide given by financial services licensee: description of documents                                                                                  6

7.7.03A                  Financial Services Guide given by financial services licensee: compensation arrangements                                                                                  7

7.7.04                     Financial Services Guide given by financial services licensee: remuneration, commission and benefits                                                                      7

7.7.04A                  Financial services guide given by financial services licensee: more detailed information about remuneration etc                                                        9

7.7.04AA               Financial Services Guide given by financial services licensee: non‑monetary benefit that is not conflicted remuneration                                       9

7.7.04AB                Financial Services Guide given by authorised representative: non‑monetary benefit that is not conflicted remuneration                                             9

7.7.05                     Record of advice given by financial services licensee....... 10

7.7.05A                  Financial Services Guide given by authorised representative of financial services licensee: authorised representative number                              10

7.7.05B                   Personalised Financial Services Guide                      10

7.7.05C                   Exemption from providing certain information in a Financial Services Guide         11

7.7.06                     Financial Services Guide given by authorised representative of financial services licensee: description of documents                                          12

7.7.06A                  Financial Services Guide given by authorised representative of financial services licensee—licence number                                                          13

7.7.06B                   Financial Services Guide given by authorised representative of financial services licensee: compensation arrangements                                      13

7.7.07                     Financial Services Guide given by authorised representative of financial services licensee: remuneration, commission and benefits                    13

7.7.07A                  Financial services guide given by authorised representative: more detailed information about remuneration etc                                                        15

7.7.08                     Record of advice given by authorised representative of financial services licensee  16

Division 2A—Combined Financial Services Guide and Product Disclosure Statement                                                                                                             17

7.7.08A                  Combined Financial Services Guide and Product Disclosure Statement  17

Division 2AA—Combined Financial Services Guide and credit guide 19

7.7.08B                   Modification of section 942DA of the Act                19

Division 2B—Record of small investment advice                               20

7.7.08C                   Record of small investment advice—content requirements 20

Division 3Statement of Advice                                                                 21

7.7.09                     Situations in which statement of advice is not required: further advice    21

7.7.09A                  Situations in which Statement of Advice is not required: small investments threshold                                                                                  21

7.7.09AA               Statement of Advice from financial services licensee........ 24

7.7.09AB                Modification of subsection 947B(4) of the Act         24

7.7.09B                   Statement of Advice from providing entity—information not included in the Statement                                                                                  24

7.7.09BA                Statement of Advice from authorised representative 25

7.7.09BB                Modification of subsection 947C(4) of the Act         26

7.7.09BC                Statement of Advice given by financial services licensee: non‑monetary benefit that is not conflicted remuneration                                             26

7.7.09BD                Statement of Advice given by authorised representative: non‑monetary benefit that is not conflicted remuneration                                             26

7.7.09C                   Requirement to keep Statement of Advice and other documents              27

7.7.10                     Products for which a Statement of Advice is not required 27

7.7.10AA               Obligation on authorised representative to give a financial services guide               27

7.7.10AAA            Record of advice without a recommendation to purchase or sell—content requirements                                                                                  27

7.7.10AB                Financial services guide—contents of guide             28

7.7.10AC                Financial services guide                                            29

7.7.10AD               Financial services guide                                            29

7.7.10AE                Situations in which Statement of Advice not required...... 30

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   32

7.7.10AG               Various consequential amendments to Division 7 of Part 7.7  33

7.7.10AH               Business days                                                           35

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                                                          35

7.7.10A                  Statements of Advice—requirement to state information as amounts in dollars       36

7.7.10B                   Insertion of definition—further advice                      36

7.7.10C                   Omission of definition—further market‑related advice..... 37

7.7.10D                  Additional information in Statement of Advice         37

7.7.10E                   Additional information in Statement of Advice         37

7.7.11                     Statement of Advice given by financial services licensee.. 37

7.7.11A                  Statement of Advice given by authorised representative of financial services licensee—licence number                                                          38

7.7.11B                   Statement of Advice—disclosure of dollar amounts 38

7.7.12                     Statement of Advice given by authorised representative of financial services licensee                                                                                  38

7.7.13                     Statement of Advice provided by authorised representative—disclosure of dollar amounts                                                                                  39

7.7.13A                  Additional information about charges or benefits—disclosure of dollar amounts    40

7.7.13B                   Additional information about charges or benefits—disclosure of dollar amounts    40

Division 4—General advice provided to a retail client                    42

7.7.14                     Product Disclosure Statement not required               42

Division 5—Other disclosure requirements                                           43

7.7.20                     General advice to retail client—no obligation to warn client 43

7.7.20A                  Extension of disclosure requirements to wholesale clients dealing with certain unauthorised insurers                                                                     43

Division 6—Exemptions from application of Part 7.7 of the Act        45

7.7.21                     Exemption from application of Part 7.7 of the Act    45

Part 7.7A—Best interests obligations and remuneration                    46

Division 2—Best interests obligations                                                       46

7.7A.05                  Best interests duty—basic banking products etc.      46

7.7A.06                  Best interests duty—general insurance products       46

7.7A.07                  Best interests duty—basic banking products             46

Division 3—Charging ongoing fees to clients                                       47

7.7A.10                  Arrangements that are not ongoing fee arrangements....... 47

7.7A.11                  Fee disclosure statements: product fee                      47

Division 4—Conflicted remuneration                                                        48

Subdivision 1—Benefits in relation to life risk insurance products that are conflicted remuneration                                                                                                48

7.7A.11A               What this Subdivision is about                                  48

7.7A.11B                Circumstances in which benefits in relation to life risk insurance products are conflicted remuneration                                                             48

7.7A.11C                Circumstances in which benefits in relation to information about life risk insurance products are not conflicted remuneration                                 49

7.7A.11D               Circumstances in which benefits in relation to dealings in life risk insurance products are not conflicted remuneration                                             51

Subdivision 2—Monetary benefits that are not conflicted remuneration 52

7.7A.12                  What subdivision is about                                         52

7.7A.12B                Stamping fees                                                            53

7.7A.12C                Time‑sharing schemes                                               53

7.7A.12D               Brokerage fees                                                          53

7.7A.12E                Fees paid by clients for dealing services                   55

7.7A.12EA             Application of ban on conflicted remuneration—purchase or sale of financial advice business                                                                                  55

Subdivision 3—Monetary benefits that relate to life risk insurance products                56

7.7A.12EB             Life risk insurance products—clawback requirements related to cancellation etc.    56

7.7A.12EC             Life risk insurance products—clawback requirements related to reduction of policy cost                                                                                  56

Subdivision 4—Other monetary and non‑monetary benefits that are not conflicted remuneration                                                                                                56

7.7A.12F                What subdivision is about                                         56

7.7A.12G               General insurance                                                      57

7.7A.12H               Basic banking and general insurance products          57

7.7A.12I                 Mixed benefits                                                          57

7.7A.13                  Non‑monetary benefit given in certain circumstances not conflicted remuneration: prescribed amount                                                                      58

7.7A.14                  Non‑monetary benefit given in certain circumstances not conflicted remuneration: education or training course                                                      58

7.7A.15                  Non‑monetary benefit given in certain circumstances not conflicted remuneration: other education and training benefit                                    59

7.7A.15A               Non‑monetary benefit given in certain circumstances not conflicted remuneration—education and training in conducting a financial services business... 59

Subdivision 5—Application provisions relating to the Corporations Amendment (Further Future of Financial Advice Measures) Act 2012                          59

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)    59

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)                    60

7.7A.16A               Application of ban on conflicted remuneration—platform operator (Division 4 of Part 7.7A of Chapter 7 of the Act applies)                                60

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) 61

7.7A.16BA             Sale of business                                                        63

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)    63

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)   64

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)            65

7.7A.16F                Application of ban on conflicted remuneration—benefit is a pass through of a grandfathered benefit (benefit is not conflicted remuneration)         65

Subdivision 6—Application provisions relating to the Corporations Amendment (Life Insurance Remuneration Arrangements) Act 2017                      66

7.7A.16G               Definitions                                                                66

7.7A.16H               Life risk insurance products substantially related to existing products     66

Subdivision 7—Asset‑based fees on borrowed amounts                        67

7.7A.17                  Financial services licensees                                       67

7.7A.18                  Authorised representatives                                        67

Division 6—Exemptions from application of Part 7.7A of the Act    68

7.7A.40                  Exemption from application of Part 7.7A of the Act 68

Part 7.8Other provisions relating to conduct etc connected with financial products and financial services, other than financial product disclosure     69

Division 2—Dealing with clients’ money                                                 69

Subdivision A—Money other than loans                                                   69

7.8.01A                  Wholesale client money                                             69

7.8.01                     Obligation to pay money into an account                  69

7.8.02                     Accounts maintained for section 981B of the Act     72

7.8.02A                  Accounts maintained for the purposes of section 981B of the Act—special rules for retail clients                                                                        75

7.8.03                     How money to be dealt with if licensee ceases to be licensed etc             75

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                    76

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                                77

Subdivision AA—Client money reporting rules                                      77

7.8.05A                  Definitions for Subdivision AA of Division 2          77

7.8.05B                   Enforceable undertakings                                          78

7.8.05C                   Client money reporting infringement notices             78

7.8.05D                  Effect of client money reporting infringement notice provisions              79

7.8.05E                   Statement of reasons must be given                          79

7.8.05F                   Contents of client money reporting infringement notice.... 80

7.8.05G                  Amount of penalty payable to the Commonwealth    81

7.8.05H                  Compliance with client money reporting infringement notice.. 81

7.8.05J                    Extension of client money reporting infringement notice period              82

7.8.05K                   Effect of compliance with client money reporting infringement notice     82

7.8.05L                   Application to withdraw client money reporting infringement notice       83

7.8.05M                  Withdrawal of client money reporting infringement notice by ASIC       84

7.8.05N                  Notice of withdrawal of client money reporting infringement notice        84

7.8.05P                   Withdrawal of notice after compliance                      84

7.8.05Q                  Publication of details of client money reporting infringement notice        85

Subdivision B—Loan money                                                                        86

7.8.06                     Statement setting out terms of loan etc                      86

Division 3—Dealing with other property of clients                           87

7.8.06A                  Property exempt from Division 3 of Part 7.8 of the Act... 87

7.8.06B                   Wholesale client property                                          87

7.8.07                     How property to which Division 3 of Part 7.8 of the Act to be dealt with               87

Division 4—Special provisions relating to insurance                        90

7.8.08                     Debts of financial services licensee in relation to premiums etc               90

Division 4A—Special provisions relating to margin lending facilities 94

Subdivision A—Responsible lending conduct for margin lending facilities 94

7.8.08A                  Limit of margin lending facility taken to be increased....... 94

7.8.08B                   Exemption from requirement to make unsuitability assessment               95

7.8.09                     Reasonable inquiries etc about retail client: inquiries 96

7.8.09A                  Modification of section 985G of the Act                   97

7.8.10                     Circumstances in which margin lending facility is unsuitable  97

7.8.10A                  Margin lending facility taken not to be unsuitable     97

Division 6—Financial records, statements and audit                        98

Subdivision B—Financial records of financial services licensees      98

7.8.11                     Particular categories of information to be shown in records 98

7.8.11A                  Particular categories of information to be shown in records: records of non‑monetary benefit that is not conflicted remuneration                             98

7.8.12                     Requirements in relation to financial records of financial services licensees            99

Subdivision C—Financial statements of financial services licensees 100

7.8.12A                  Modification of section 989B of the Act                   100

7.8.13                     Auditor’s report with annual profit and loss statement and balance sheet                101

7.8.13A                  Compliance certificate with profit and loss statement and balance sheet   102

7.8.14                     Contents of annual profit and loss statement and balance sheet and applicable accounting procedures                                                                 102

7.8.14A                  Lodgement of annual profit and loss statement and balance sheet            102

Subdivision D—Appointment etc. of auditors                                          103

7.8.14B                   Modification of section 990B of the Act                   103

7.8.15                     Appointment of auditor by financial services licensee.... 104

7.8.16                     When person is ineligible to act as auditor of financial services licensee  106

Division 7—Other rules about conduct                                                    108

7.8.17                     Priority to clients’ orders                                           108

7.8.18                     Instructions to deal through licensed markets            108

7.8.19                     Records of instructions to deal on licensed markets and foreign markets 109

7.8.20                     Dealings with non‑licensees                                      110

7.8.20A                  Dealings involving employees of financial service licensees—risk insurance products                                                                                  113

7.8.21                     Dealings involving employees of financial services licensees  113

Division 8—Miscellaneous                                                                               115

7.8.21A                  Anti‑hawking provisions if no Product Disclosure Statement is required                115

7.8.21B                   Anti‑hawking provisions if no Product Disclosure Statement is required—carbon units, Australian carbon credit units and eligible international emissions units  115

7.8.22                     Hours for hawking certain financial products           115

7.8.22A                  Modification of Part 7.8                                            116

7.8.23                     Return of financial product: transfer between superannuation entities or RSAs       116

7.8.24                     Right of return not to apply                                       117

7.8.25                     Variation of amount to be repaid                               117

7.8.26                     Exemption from application of section 992A of the Act. 117

Part 7.9Financial product disclosure and other provisions relating to issue and sale of financial products                                                                                    118

Division 1Preliminary                                                                                   118

7.9.01                     Interpretation                                                             118

7.9.02                     Sub‑plans                                                                  120

7.9.02A                  Alternative ways of giving Statement                        121

7.9.02B                   Product Disclosure Statement in electronic form       121

Division 2Arrangements for Product Disclosure Statements in relation to superannuation products and RSA products                                                 123

Subdivision 2.1—Preliminary                                                                      123

7.9.03                     Application of Division 2                                          123

Subdivision 2.2—Late provision of Product Disclosure Statement for certain members of regulated superannuation fund, public offer superannuation fund or successor fund      123

7.9.04                     Product Disclosure Statement to be provided later    123

Subdivision 2.3—Product Disclosure Statement for retirement savings account          124

7.9.05                     Situation in which Product Disclosure Statement is not required             124

Subdivision 2.4—Additional obligations for eligible rollover funds 124

7.9.06A                  Relevant superannuation entities                               124

7.9.06B                   Application forms                                                     124

Subdivision 2.5—Product Disclosure Statement for insurance options   124

7.9.07                     Modification of Act: Product Disclosure Statement in relation to insurance options                                                                                  124

Division 2A—Product Disclosure Statement for warrants            125

7.9.07A                  Warrants                                                                    125

Division 2B—Product Disclosure Statement for market‑traded derivatives      127

7.9.07B                   Product Disclosure Statements for certain market‑traded derivatives       127

7.9.07C                   Remedies for Product Disclosure Statements for certain market‑traded derivatives 128

Division 2BA—Product Disclosure Statement for discretionary mutual funds 129

7.9.07CA                Extension of Product Disclosure Statement requirements to wholesale clients        129

Division 2C—Situations where a Product Disclosure Statement is not required              130

7.9.07D                  Product Disclosure Statement not required for offers of bundled contracts of insurance                                                                                  130

7.9.07E                   Product Disclosure Statement not required if offer of financial product is declined 130

7.9.07F                   Product Disclosure Statement not required if the client is not contactable                130

7.9.07FA                Product Disclosure Statement not required for certain specified products                131

7.9.07FB                Product Disclosure Statement not required if client not in this jurisdiction              132

7.9.07FC                Product Disclosure Statement not required general insurance situation    132

Division 2D—Preparation and content of Product Disclosure Statements          134

7.9.07J                    Only 1 responsible person for a Product Disclosure Statement               134

7.9.07K                   Definition of defective: Product Disclosure Statement, Short‑Form PDS or Replacement Product Disclosure Statement                                   134

Division 2E—Obligation to make information publicly available: registrable superannuation entities                                                                                              135

Subdivision 2E.1—Obligation to make product dashboard publicly available             135

7.9.07L                   Modification of Act                                                   135

7.9.07M                  Source of power for this Subdivision                       135

7.9.07N                  Definitions                                                                135

7.9.07P                   Meaning of MySuper product dashboard reporting standards               136

7.9.07Q                  Product dashboard—how information must be set out... 136

7.9.07R                   Product dashboard—return target                             136

7.9.07S                   Product dashboard—return                                       137

7.9.07T                   Product dashboard—comparison between return target and return          137

7.9.07U                  Comparison to be set out as a graph                          138

7.9.07V                  Product dashboard—level of investment risk            139

7.9.07W                  Product dashboard—statement of fees and other costs... 139

Division 3Dealing with money received for financial product before the product is issued                                                                                                             140

7.9.08                     Accounts                                                                   140

7.9.08A                  Dealing with interest                                                 140

7.9.08B                   Crediting of payments before money is received       141

7.9.08C                   Money held in trust for a superannuation product or RSA product         141

7.9.08D                  Statutory funds under the Life Insurance Act 1995   142

Division 4Content of Product Disclosure Statements                  143

Subdivision 4.1—Preliminary                                                                      143

7.9.09                     Application of Division 4                                          143

Subdivision 4.1A—No Product Disclosure Statement for carbon units, Australian carbon credit units and eligible international emissions units                    143

7.9.09A                  Application of Subdivision                                       143

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...... 143

7.9.09C                   Modification of Act                                                   144

Subdivision 4.2A—Form and content of Product Disclosure Statement for margin loan           144

7.9.11                     Application of Subdivision 4.2A                              144

7.9.11A                  Provisions of Part 7.7 of Act that do not apply in relation to margin loan                144

7.9.11B                   Definitions for Subdivision 4.2A                              144

7.9.11C                   Modification of Act—margin loan                            145

7.9.11D                  Form and content of Product Disclosure Statement for margin loan        145

7.9.11E                   Requirements for references to incorporated information for margin loan               145

7.9.11F                   Retention of copies of Product Disclosure Statement for margin loan     146

7.9.11G                  Requirement to provide copy of Product Disclosure Statement for margin loan free of charge                                                                                  147

7.9.11H                  Notification about change to Approved Securities List or current interest rate for margin loan                                                                                  147

Subdivision 4.2B—Content of Product Disclosure Statement for superannuation product        147

7.9.11K                   Application of Subdivision 4.2B                               147

7.9.11L                   Provisions of Part 7.7 of Act that do not apply in relation to superannuation product                                                                                  148

7.9.11LA                Attribution of accrued default amount to MySuper product—exemption from significant event notice requirements                                          148

7.9.11LB                Attribution of accrued default amount to MySuper product—modification of significant event notice requirements                                                   148

7.9.11M                  Provisions of Part 7.9 of Act that do not apply in relation to superannuation product                                                                                  149

7.9.11N                  Modification of Act—superannuation product          149

7.9.11O                  Form and content of Product Disclosure Statement for superannuation product      149

7.9.11P                   Requirements for references to incorporated information for superannuation product                                                                                  150

7.9.11Q                  Retention of copies of Product Disclosure Statement for superannuation product   151

7.9.11R                   Requirement to provide copy of Product Disclosure Statement for superannuation product free of charge                                                            152

Subdivision 4.2C—Content of Product Disclosure Statement for simple managed investment scheme                                                                                                152

7.9.11S                   Application of Subdivision 4.2C                               152

7.9.11T                   Provisions of Part 7.7 of Act that do not apply in relation to simple managed investment scheme                                                                      153

7.9.11U                  Provisions of Part 7.9 of Act that do not apply in relation to simple managed investment scheme                                                                      153

7.9.11V                  Modification of Act—simple managed investment scheme 153

7.9.11W                  Form and content of Product Disclosure Statement for simple managed investment scheme                                                                                  154

7.9.11X                  Requirements for references to incorporated information for simple managed investment scheme                                                                      154

7.9.11Y                  Retention of copies of Product Disclosure Statement for simple managed investment scheme                                                                                  155

7.9.11Z                   Requirement to provide copy of Product Disclosure Statement for simple managed investment scheme free of charge                              156

Subdivision 4.3—Other arrangements for Product Disclosure Statements and application forms                                                                                                156

7.9.12                     Modification of Act: Product Disclosure Statements and application forms for standard employer‑sponsors and successor funds                   156

7.9.13                     Offer of superannuation interest without application or eligible application             156

7.9.14                     Remedies for person acquiring financial product under defective Product Disclosure Statement: superannuation and RSAs                       157

7.9.14A                  Treatment of arrangements under which a person can instruct another person to acquire a financial product                                                        158

Subdivision 4.4—Product information for certain insurance products   158

7.9.14B                   Product information                                                  158

Division 4A—General                                                                                        160

7.9.14C                   Labour standards and environmental, social and ethical considerations   160

7.9.14D                  Further statements required in Product Disclosure Statement—financial claims scheme                                                                                  160

7.9.15                     More detailed information in Product Disclosure Statement: unauthorised foreign insurer                                                                                  161

7.9.15A                  Product Disclosure Statements—requirement to state information as amounts in dollars                                                                                  162

7.9.15B                   Product Disclosure Statements—disclosure of dollar amounts                162

7.9.15C                   Product Disclosure Statements—disclosure of dollar amounts                163

7.9.15CA                Less information in Product Disclosure Statement—financial claims scheme          164

7.9.15D                  Less information in product disclosure statement: general insurance product          164

7.9.15DA               Statement or information not included in a Product Disclosure Statement               164

7.9.15DB                Requirement to keep record of Product Disclosure Statement and other documents                                                                                  165

7.9.15DC                Requirement to lodge documents mentioned in a Product Disclosure Statement with ASIC                                                                                  166

7.9.15E                   More detailed information in product disclosure statement: general insurance product                                                                                  166

7.9.15F                   Product disclosure statement: general insurance product 166

7.9.15FA                Transitional arrangements for regulations 7.9.15D, 7.9.15E and 7.9.15F                166

7.9.15G                  Business days                                                           167

7.9.15H                  New section 1012G: product disclosure statement may sometimes be provided later                                                                                  167

7.9.15I                    Modification of section 1012IA                                169

7.9.16                     More detailed information in Product Disclosure Statement: consumer credit insurance product                                                                      169

7.9.16A                  Small scale offerings of managed investment and other prescribed financial products (20 issues or sales in 12 months)                                    170

Division 4B—Ongoing disclosure                                                                171

7.9.16G                  Ongoing disclosure of material changes and significant events                171

Division 4C—Fee Disclosure for certain financial products         172

Subdivision 4C.1—Application                                                                    172

7.9.16J                    Application of Division 4C to financial products      172

7.9.16JA                 Application of Division 4C to financial products—temporary arrangements           172

7.9.16K                   Application of Division 4C to periodic statements and Product Disclosure Statements                                                                                  172

Subdivision 4C.2—Product Disclosure Statements                                 173

7.9.16L                   More detailed information about fees and costs        173

7.9.16M                  Modification of section 1015C of the Act                 173

7.9.16N                  Presentation, structure and format of fees and costs in Product Disclosure Statements                                                                                  173

Subdivision 4C.3—Periodic statements                                                     173

7.9.16O                  Presentation, structure and format of fees and charges in periodic statements          173

Division 4D—Other requirements relating to Product Disclosure Statements and Supplementary Product Disclosure Statements         175

Subdivision 4D.1—Requirement to lodge a notice with ASIC              175

7.9.16T                   Variation of paragraph 1015D(2)(b) of the Act        175

Division 5—Ongoing requirements for product disclosure after person becomes a member                                                                                                             176

Subdivision 5.1—Preliminary                                                                      176

7.9.17                     Application of Division 5                                          176

Subdivision 5.2—Periodic statements for retail clients for financial products that have an investment component: regulated superannuation funds, ADFs and RSAs             176

7.9.18                     Application of Subdivision 5.2                                 176

7.9.19                     Specific requirements for periodic statements: superannuation funds (other than self managed superannuation funds) and RSAs                             176

7.9.19A                  Withdrawal benefit—fees, charges or expenses        177

7.9.19B                   Withdrawal benefit—fees, charges and expenses      178

7.9.20                     Specific requirements for certain periodic statements: superannuation funds (other than self managed superannuation funds)                                178

7.9.20AA               Specific requirements for certain periodic statements: superannuation funds (other than self managed superannuation funds)—long‑term returns       180

7.9.20A                  Details of other significant benefits—disclosure of fees, charges or expenses         182

7.9.20B                   Other significant benefits—disclosure of fees, charges or expenses        183

7.9.21                     Specific requirements in particular cases: member (other than capital guaranteed member) of fund other than a self managed superannuation fund       184

7.9.22                     Specific requirements: capital guaranteed funds and RSAs 184

7.9.23                     Information for capital guaranteed fund: benefits reach $10 000              185

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         185

Subdivision 5.3—Periodic statements for retail clients for financial products that have an investment component: information for RSAs                                185

7.9.25                     Application of Subdivision 5.3                                 185

7.9.26                     Specific requirements where applicable: RSAs         186

7.9.27                     Modification of Act: periodic statements for RSA holders 187

7.9.28                     Information for RSA: amount reaches $10 000        187

Subdivision 5.4—Periodic statements for retail clients for financial products that have an investment component: additional information for superannuation entities and RSA providers                                                                                                187

7.9.29                     Application of Subdivision 5.4                                 187

7.9.30                     Additional information for change to choices            187

Subdivision 5.4A—Periodic statements for retail clients for financial products that have an investment component: additional information for margin lending facilities 188

7.9.30A                  Application of Subdivision 5.4A                              188

7.9.30B                   Details to be included in periodic statements for margin lending facilities                188

Subdivision 5.5—Fund information for retail clients for financial products that have an investment component: superannuation                                            189

7.9.31                     Application of Subdivision 5.5                                 189

7.9.32                     Reporting periods: general                                        189

7.9.33                     Use of more than 1 document                                   190

Subdivision 5.6—Fund information for retail clients for financial products that have an investment component: fund information for regulated superannuation funds and ADFs 190

7.9.34                     Application of Subdivision 5.6                                 190

7.9.35                     General requirement                                                  190

7.9.36                     Specific requirements in all cases                              190

7.9.37                     Specific requirements in particular cases                   190

7.9.38                     Specific information in particular case: self managed superannuation fund              193

7.9.39                     Benefits determined by life insurance products         193

Subdivision 5.7—Fund information for retail clients for financial products that have an investment component: fund information for pooled superannuation trusts         194

7.9.40                     Application of Subdivision 5.7                                 194

7.9.41                     Specific requirements in all cases                              194

7.9.42                     Specific requirements in particular cases                   194

Subdivision 5.8—Ongoing disclosure of material changes and significant events        195

7.9.43                     Modification of Act: disclosure of material changes and significant events in relation to superannuation products and RSA products             195

7.9.44                     Benefits to be paid to eligible rollover fund               196

Subdivision 5.8A—Information in relation to inactive superannuation accounts         197

7.9.44A                  Meaning of inactive                                                   197

7.9.44B                   Notices about insurance—inactivity                          197

7.9.44C                   Notices about insurance—right to cease insurance cover 199

Subdivision 5.9—Information on request: members                              200

7.9.45                     Regulated superannuation funds, ADFs and pooled superannuation trusts             200

7.9.46                     RSAs                                                                        201

Subdivision 5.10—Information on request: payments                           201

7.9.47                     Modification of Act: charges for information requested. 201

Subdivision 5.12—Periodic report when product holder ceases to hold product: superannuation products and RSA products                                             201

7.9.49                     Application of Subdivision 5.12                               201

7.9.50                     Exit reporting period                                                 201

7.9.51                     Time for compliance                                                  201

7.9.52                     General requirement                                                  201

7.9.53                     Information on death of product holder                     202

7.9.54                     Specific requirements in all cases                              202

7.9.55                     Specific requirements in particular cases                   202

7.9.56                     Exceptions to exit reporting period provisions: superannuation products and RSA products                                                                                  203

7.9.57                     Exception—members subject to compulsory protection of small amounts               203

7.9.58                     Information to be given in cases other than death of RSA holder            203

7.9.59                     Information to be given where applicable                  204

7.9.60                     Modification of Act: exceptions to exit reporting period provisions        204

Division 5AA—General requirements for financial disclosure   205

7.9.60A                  Modification of Act: disclosure                                 205

7.9.60B                   Disclosure of transactions in periodic statements      205

Division 5AB—Short‑Form Product Disclosure Statements         207

7.9.61AA               Modification of the Act: Short‑Form Product Disclosure Statements      207

Division 5A—Dealing with money received for financial product before the product is issued                                                                                                             209

7.9.61A                  Lost application money                                             209

7.9.61B                   Issue of substitute insurance product                        209

7.9.61C                   Cheques                                                                    210

Division 5B—Confirming transactions                                                     211

7.9.61D                  Transactions involving superannuation products      211

Division 5C—CGS depository interests                                                   212

7.9.61E                   CGS depository interest information website            212

Division 6Confirmation of transactions                                              213

7.9.62                     Confirmation of transactions not required                 213

7.9.63                     Confirmation of transactions: precise costs of transaction not known      215

7.9.63A                  Persons who must confirm transactions                    215

7.9.63B                   Content of confirmation of transactions—general     216

7.9.63C                   Confirmation of transaction—multiple transactions  217

7.9.63D                  Confirmation of transaction—information about cooling‑off period        218

7.9.63E                   Confirmation of transaction—facility that provides written confirmation 219

7.9.63F                   Confirmation of transaction—acquisition of financial product 219

7.9.63G                  Confirmation of transaction—disposal of financial product 219

7.9.63H                  Certain product issuers and regulated persons must meet appropriate dispute resolution requirements—self managed superannuation funds  220

7.9.63I                    Confirmation of transaction in electronic form          220

Division 7Cooling‑off periods                                                                   221

7.9.64                     Cooling‑off periods not to apply                               221

7.9.64A                  Notification of exercise of right of return—risk insurance products        222

7.9.65                     Return of financial product: general                          222

7.9.66                     Return of financial product: superannuation and RSAs.. 223

7.9.67                     Variation of amount to be repaid                               223

7.9.68                     Modification of section 1019B of the Act: client includes standard employer‑sponsor                                                                                  225

7.9.69                     Modification of provisions of Division 5 of Part 7.9 of the Act: terms of contract  227

7.9.70                     Modification of provisions of Division 5 of Part 7.9 of the Act: distributions         227

Division 8Other requirements                                                                  228

7.9.71                     Modification of section 1017D of the Act: use of more than 1 document                228

7.9.71A                  Periodic statements—exemption for passbook accounts. 228

7.9.72                     Modification of section 1017D of the Act: information already given     228

7.9.73                     Reporting periods: general                                        228

7.9.74                     Form of application                                                   228

7.9.74A                  Periodic statements—requirement to state information as amounts in dollars          229

7.9.75                     Content of periodic statements: costs of transactions       230

7.9.75A                  Ways of giving information                                      232

7.9.75B                   Information in electronic form                                   232

7.9.75BA                Fund information made available on a website          233

7.9.75C                   Periodic statements—disclosure of amounts             233

7.9.75D                  Periodic statements—disclosure of amounts             234

7.9.76                     Consents to certain statements                                   235

7.9.77                     Alternative dispute resolution requirements—product issuer that is not a financial services licensee                                                                      235

7.9.77A                  Dispute resolution requirement—obligation to cooperate with AFCA     235

7.9.78                     Additional statement: trustee required to provide benefits 236

7.9.80B                   Short selling of certain warrants                                236

Division 9—Additional requirements for transfer of lost members and lost RSA holders                                                                                                             238

7.9.81                     Lost members                                                            238

7.9.82                     Lost RSA holders                                                     238

Division 11—Superannuation to which arrangements apply under the Family Law Act 1975                                                                                                             239

7.9.84                     Definitions for Division 11                                       239

7.9.85                     Application of Division 11                                        240

7.9.86                     Acquisition of financial product                                240

7.9.87                     Modification of Act: Product Disclosure Statement in relation to superannuation interest under Family Law Act                                              240

7.9.88                     Statement content in relation to superannuation interest under Family Law Act: superannuation fund                                                  241

7.9.89                     Statement content in relation to superannuation interest under Family Law Act: RSA                                                                                  242

7.9.90                     Information for existing holders of superannuation products and RSA products in relation to superannuation interest                                              242

7.9.91                     Periodic statements for retail clients for financial products that have an investment component—general                                                 242

7.9.92                     Periodic statements for retail clients for financial products that have an investment component—superannuation interest other than percentage‑only interest                243

7.9.93                     Trustees of superannuation entities—additional obligation to provide information in relation to superannuation interest                                          244

7.9.94                     Division 5 of Part 7.9 of the Act not to apply in relation to non‑member spouse     244

Division 12—Medical indemnity insurance                                            245

7.9.95                     Medical indemnity insurance—exemption from product disclosure provisions       245

Division 13—Unsolicited offers to purchase financial products off market        246

Subdivision A—Modifying provisions of Part 7.9 of the Act: offers to purchase securities in certain proprietary companies                                                     246

7.9.95A                  Offers to which this Subdivision applies                  246

7.9.95B                   Duration and withdrawal of the offer                        246

7.9.95C                   Varying the terms of the offer                                   246

7.9.95D                  Rights if requirements not complied with                  247

Subdivision B—Other matters                                                                     247

7.9.96                     Percentage increase or decrease in the market value of a product             247

7.9.97                     Off‑market trading by professional investors etc      247

7.9.97A                  Information in offer document if payment is to be made in instalments   248

Division 14—Exemptions from Parts 7.7, 7.8 and 7.9 of the Act     250

7.9.98                     Certain providers of financial services exempted from the requirements of Parts 7.7, 7.8 and 7.9 of the Act                                                            250

7.9.98A                  Exemption from application of Part 7.9 of the Act    250

Division 15—Disclosure in relation to short sales covered by securities lending arrangement of listed section 1020B products                                        251

7.9.99                     Interpretation                                                             251

7.9.100                   Seller disclosure                                                        251

7.9.100A                Seller disclosure of existing short position                253

7.9.101                   Licensee disclosure                                                   253

7.9.102                   Public disclosure of information                               253

Part 7.10—Market misconduct and other prohibited conduct relating to financial products and financial services                                                                             255

7.10.01                   Division 3 financial products                                    255

7.10.02                   Professional standards schemes                                255

7.10.03                   Exemption for market participants of qualifying gas trading exchange    257

Part 7.11Title and transfer                                                                               258

Division 1Preliminary                                                                                   258

7.11.01                   Definitions                                                                258

7.11.03                   Arrangements about Division 4 financial products   259

7.11.04                   Arrangements for forms                                            260

7.11.05                   Document duly completed in accordance with a particular form              260

7.11.06                   Stamping of documents                                             261

7.11.07                   Application of Division 3 of Part 7.11 of the Act to certain bodies          262

7.11.08                   Interests in registered schemes                                  262

Division 2Application of Part 7.11                                                         263

7.11.09                   Application                                                                263

Division 3Transfer of Division 3 securities effected otherwise than through a prescribed CS facility                                                                                       264

7.11.10                   Application of Division 3                                          264

7.11.11                   Sufficient transfer: general                                        264

7.11.12                   Sufficient transfer of Division 3 assets: licensed trustee company or Public Trustee of a State or Territory                                                                264

7.11.13                   Sufficient transfer of Division 3 rights: licensed trustee company or Public Trustee of a State or Territory                                                                265

7.11.14                   Sufficient transfer                                                      265

7.11.15                   Transferee’s execution of transfer of Division 3 assets.. 265

7.11.16                   Transferee’s execution of transfer of Division 3 rights... 265

7.11.17                   Transfer document that purports to bear stamp of transferor's broker      266

7.11.18                   Warranties by market licensee if transfer document purports to bear its stamp        267

7.11.19                   Indemnities by market licensee and broker if transfer document purports to bear their stamps                                                                                  268

7.11.20                   Joint and several warranties and liabilities                 268

7.11.21                   Registration of certain instruments                            269

7.11.22                   Details to be included in instrument of transfer         269

Division 4Transfer of Division 4 financial products effected through prescribed CS facility                                                                                                             270

7.11.23                   Application of Division 4                                          270

7.11.24                   Application of ASTC operating rules                        270

7.11.25                   Participant’s authority to enter into transaction continues despite client’s death       270

7.11.26                   Authority to enter into transaction gives authority to transfer.. 270

7.11.27                   Effect of proper ASTC transfer on transferee: Division 4 financial products other than rights                                                                                  271

7.11.28                   Effect of proper ASTC transfer on transferee: rights       272

7.11.29                   Warranties by participant if identification code is included in transfer document     273

7.11.30                   Indemnities in respect of warranted matters: transfer not effected by the participant                                                                                  274

7.11.31                   Indemnities in respect of warranted matters: transferor not legally entitled or authorised to transfer Division 4 financial products                       274

7.11.32                   Indemnities in respect of warranted matters: participant not authorised to effect transfer                                                                                  275

7.11.33                   Joint and several warranties and liabilities                 276

7.11.34                   ASTC entitled to assume its operating rules complied with 276

7.11.35                   ASTC‑regulated transfer not to be registered unless proper ASTC transfer            276

7.11.36                   Issuer not to refuse to register proper ASTC transfer..... 276

7.11.37                   Determination of who holds Division 4 financial products for the purposes of meeting                                                                                  277

7.11.38                   Determination of who holds Division 4 financial products in class of Division 4 financial products for the purposes of meeting                        277

7.11.39                   Determination of who holds Division 4 financial products for the purposes of conferring security benefits                                                        278

Division 5Offences                                                                                          279

7.11.40                   Stamping of broker’s stamp on sufficient transfer    279

7.11.41                   Inclusion of identification codes in proper ASTC transfers 280

7.11.42                   Contravention by participant of the ASTC certificate cancellation provisions relating to use of cancellation stamps                                                    280

Division 6Civil liability                                                                                 281

7.11.43                   Contravention by participant of the ASTC certificate cancellation provisions          281

Part 7.12Miscellaneous                                                                                        282

7.12.01                   Destruction of records by ASIC                               282

Chapter 8—Mutual recognition of securities offers        283

Part 8.1—Preliminary                                                                                               283

8.1.01                     Prescribed foreign recognition scheme (Act s 1200A(1)) 283

8.1.02                     Prescribed offeror (Act s 1200A(1))                         283

8.1.03                     Prescribed recognised jurisdiction (Act s 1200A(1))...... 283

Part 8.2—Foreign offers that are recognised in this jurisdiction   284

Division 1—Recognised offers                                                                      284

8.2.01                     Prescribed offer (Act s 1200C(4))                            284

8.2.02                     Prescribed warning statements (Act s 1200E)           284

8.2.03                     Prescribed details to be given in warning statements (Act s 1200E(b))    285

8.2.04                     Prescribed home regulators (Act s 1200G(13) and (14)) 286

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)                                                                                                             287

8.4.01                     Modification of Part 7.9 of the Act—New Zealand offer documents replace Product Disclosure Statements                                               287

8.4.02                     Modification of Part 6D.2 of the Act and Part 7.9 of the Act—certain disclosure obligations not to apply                                                               287

Chapter 8A—Asia Region Funds Passport                              288

Part 8A.4—Notified foreign passport funds                                               288

Division 1—Becoming a notified foreign passport fund                  288

8A.4.10                  Rejecting a notice of intention—name of fund identical to another or unacceptable 288

Division 4—Providing key information in relation to notified foreign passport funds  289

8A.4.40                  Register of members—purposes for which a person may obtain and use a copy     289

8A.4.45                  Destruction of records by ASIC—period before documents may be destroyed       289

Part 8A.5—Register of passport funds                                                          290

8A.5.10                  Prescribed details for the Register of Passport Funds..... 290

Part 8A.7—Deregistration and denotification                                           293

8A.7.10                  Authority                                                                   293

8A.7.15                  Continued application of Corporations legislation to deregistered Australian passport funds                                                                                  293

8A.7.20                  Continued application of Corporations legislation to funds that have been removed as notified foreign passport funds                                              294


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.

             (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)  a product distributor; or

                            (iv)  an authorised representative of an entity mentioned in subparagraph (i), (ii) or (iii); and

                     (b)  is only general advice in relation to a financial product that is, or a class of financial products that includes, a financial product that is:

                              (i)  issued by the providing entity or a related body corporate of the providing entity; or

                             (ii)  offered by the providing entity; and

                     (c)  is not provided during a meeting; and

                     (d)  is not provided during a telephone call, unless:

                              (i)  the advice:

                                        (A)  concerns a class of financial products that includes a financial product already held by the client; and

                                        (B)  is provided by the providing entity for that financial product; or

                             (ii)  there is no issue or sale of any financial product during the telephone call.

Note:          The providing entity must meet obligations under the Act in relation to the telephone call such as the prohibition of hawking in sections 992A and 992AA of the Act and the requirements for Product Disclosure Statements in Part 7.9 of the Act.

          (4A)  If general advice is provided during a telephone call in accordance with paragraph (4)(d), the providing entity must tell the client that:

                     (a)  a Financial Services Guide exists; and

                     (b)  the provider will send out a Financial Services Guide on request.

             (5)  If subregulation (4) applies and the providing entity does not give a Financial Services Guide to the client when the advice is provided, the providing entity must give to the client:

                     (a)  the information that would be required to be in the Financial Services Guide by paragraphs 942B(2)(a), (e) and (f) of the Act; or

                     (b)  the information that would be required to be in the Financial Services Guide by paragraphs 942C(2)(a), (c), (f) and (g) of the Act;

as the case requires.

Note:          If general advice is provided to 1 or more retail clients, the providing entity must comply with section 949A of the Act.

          (5A)  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)  the advice is provided in circumstances in which section 1018A of the Act applies or will apply at the end of the transition period;

                     (b)  the advice is only general advice in relation to a financial product that is, or a class of financial products that includes, a financial product issued by the product issuer;

                     (c)  the advice is in the form of advertising the financial product:

                              (i)  on a billboard or a poster; or

                             (ii)  in the media within the meaning of subregulation 7.6.01(7);

                     (d)  the advertisement indicates that a person should consider whether or not the product is appropriate for the person.

          (5B)  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)  the providing entity is an issuer of derivatives that are able to be traded on a financial market;

                     (b)  the financial service is a dealing (within the meaning of section 766C of the Act) in a derivative by the providing entity;

                     (c)  at the time of the dealing, the providing entity is not a participant in the financial market on which the particular derivative may be traded;

                     (d)  the only financial service that the providing entity provides to the client is the issuing of the derivative.

             (6)  In this regulation:

product distributor means a licensee that offers a financial product for sale.

             (7)  If:

                     (a)  a financial service is provided by a person (the secondary service provider) to a client by causing or authorising another person (the intermediary) to provide or pass on the service; and

                     (b)  but for the operation of section 52 of the Act, the secondary service provider would not be taken to be providing the financial service to the client; and

                     (c)  the intermediary does not act on behalf of the secondary service provider in providing or passing on the service for the secondary service provider (see section 911B of the Act); and

                     (d)  the intermediary is a financial services licensee or an authorised representative of a financial services licensee; and

                     (e)  the secondary service provider has a written agreement with the intermediary under which the intermediary agrees to either:

                              (i)  give the secondary service provider’s Financial Services Guide relating to the financial service provided by the secondary service provider to the client; or

                             (ii)  inform the client how to obtain the secondary service provider’s Financial Services Guide relating to the financial service provided by the secondary service provider;

then, for subsection 941C(8) of the Act, the secondary service provider does not have to give the client a Financial Services Guide for the financial service.

7.7.02A  Situations when Financial Services Guide is not required

             (1)  For paragraph 951C(1)(c) of the Act, section 941C of the Act is modified by inserting after subsection 941C(1) the following subsection:

        “(1A)  The providing entity does not have to give the client a Financial Services Guide if the client has already received the documents referred to in paragraphs (7A)(b) and (c), in the circumstances set out in that subsection, that together contain all of the information that the new Financial Services Guide is required to contain.”

             (2)  For paragraph 951C(1)(c) of the Act, section 941C of the Act is modified by inserting after subsection 941C(7) the following subsections:

        “(7A)  The providing entity does not have to give the client a Financial Services Guide in the following circumstances:

                     (a)  if the providing entity will, or is likely to, provide a financial service to the client in a recommendation situation (see section 1012A), an issue situation (see section 1012B) or a sale situation (see section 1012C);

                     (b)  the providing entity gives to the client a Product Disclosure Statement;

                     (c)  the providing entity gives to the client a statement that:

                              (i)  contains so much of the information required by section 942B or 942C (as the case may be), and any regulations made for the purposes of the appropriate section, as is not already set out in the Product Disclosure Statement; and

                             (ii)  complies with the requirements set out in subsection (7B);

                     (d)  the statements mentioned in paragraphs (b) and (c) are given at the same time.

          (7B)  The statement referred to in paragraph (7A)(c) must:

                     (a)  be up to date as at the time it is given to the client; and

                     (b)  may contain information apart from that referred to in subparagraph (7A)(c)(i); and

                     (c)  meet the requirements of subsections 942B(3) and (6A) or subsections 942C(3) and (6A) (as the case may be).”

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

             (1)  For paragraph 942B(2)(k) of the Act, the Financial Services Guide given by a financial services licensee must include a statement that:

                     (a)  describes the purpose and content of the Financial Services Guide; and

                     (b)  if appropriate:

                              (i)  informs the client that the client may also receive either or both of a Statement of Advice and a Product Disclosure Statement; and

                             (ii)  describes the purpose and content of those documents.

             (2)  In describing the purpose and content of the Financial Services Guide as mentioned in subregulation (1), the client’s attention must be drawn to the following matters:

                     (a)  the Guide is designed to assist the client in deciding whether to use any of the services offered in the Guide;

                     (b)  the Guide contains information about remuneration that may be paid to the financial services licensee and other relevant persons in relation to the services offered;

                     (c)  the Guide contains information on how complaints against the financial services licensee are dealt with.

             (3)  In describing the purpose and content of a Statement of Advice or Product Disclosure Statement, the client’s attention must be drawn to a description of the circumstances in which the Statement of Advice or Product Disclosure Statement will be given.

             (4)  Subregulations (2) and (3) do not prevent the statement required under subregulation (1) from drawing attention to other matters relating to the purpose and content of the Financial Services Guide, the Statement of Advice or the Product Disclosure Statement.

             (5)  The statement required under subregulation (1) must be:

                     (a)  presented in a manner that is easy for the client to understand; and

                     (b)  displayed prominently in the Financial Services Guide.

             (6)  A statement is displayed prominently if it:

                     (a)  appears at, or close to, the front of the Financial Services Guide; and

                     (b)  stands out from the other information contained in the Guide.

Note:          Ideally, the statement should be placed:

(a)    on the inside cover or inside facing page of a paper‑based Financial Services Guide form; or

(b)    in an equivalent position of a Financial Services Guide that is not provided in a paper‑based form.

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

             (1)  For paragraph 942B(2)(k) of the Act, the Financial Services Guide given by a financial services licensee must include a statement about:

                     (a)  the kind of compensation arrangements that the licensee has in place; and

                     (b)  whether those arrangements satisfy the requirements for compensation arrangements under section 912B of the Act.

             (2)  This regulation commences, for a particular financial services licensee, on the date that subregulations 7.6.02AAA(1), (2) and (3) take effect for that licensee.

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

             (1)  For paragraph 942B(2)(k) of the Act, the Financial Services Guide given by a financial services licensee must include information, to the extent that the information is able to be ascertained at the time the Financial Services Guide is given to the client, about all remuneration (including commission) and other benefits that a person (person 1) has received, or is to receive, for referring another person to the financial services licensee.

Overview of regulation

             (2)  For paragraph 942B(4)(c) of the Act, the information required in particular situations by paragraph 942B(2)(e) in relation to persons mentioned in paragraph 942B(2)(e) or person 1 (see subregulation (1)) is as set out in subregulations (3), (4) and (5).

If remuneration is ascertainable at the time FSG is given

             (3)  The following information is required if the remuneration, commission or other benefits are able to be worked out at the time the Financial Services Guide is given to the client:

                     (a)  in a case where the remuneration, commission or other benefits are to be received by a person who is a licensed trustee company, either:

                              (i)  the remuneration, commission or other benefits; or

                             (ii)  the remuneration, commission or other benefits stated as a percentage of the income from the estate or as a percentage of the capital value of the estate;

                     (b)  in any other case—the remuneration, commission or other benefits.

If remuneration is not ascertainable at the time FSG is given and personal advice will be given

             (4)  If:

                     (a)  the remuneration (including commission) or other benefits are not able to be ascertained at the time the Financial Services Guide is given to the client; and

                     (b)  the providing entity reasonably believes that personal advice will be given to the client;

the following information is required:

                     (c)  either:

                              (i)  particulars of the remuneration (including commission) or other benefits, including, to the extent relevant, a statement of the range of amounts or rates of remuneration (including commission) or other benefits; or

                             (ii)  general information about the remuneration (including commission) or other benefits and the manner in which the remuneration (including commission) or other benefits are to be calculated;

                     (d)  a statement that:

                              (i)  if the remuneration (including commission) or other benefits are calculable at the time the personal advice is given, the remuneration (including commission) or other benefits the person receives on specific financial products to which the personal advice relates will be disclosed at the time the personal advice is given or as soon as practicable after that time; or

                             (ii)  if the remuneration (including commission) or other benefits are not calculable at the time the personal advice is given, the manner in which the remuneration (including commission) or other benefits are to be calculated will be disclosed at the time the personal advice is given or as soon as practicable after that time.

If remuneration is not ascertainable at the time FSG is given and personal advice will not be given

             (5)  If:

                     (a)  the remuneration (including commission) or other benefits are not able to be ascertained at the time the Financial Services Guide is given to the client; and

                     (b)  the providing entity reasonably believes that personal advice will not be given to the client;

the following information is required:

                     (c)  particulars of the remuneration (including commission) or other benefits, including, to the extent relevant, a statement of the range of amounts or rates of remuneration (including commission) or other benefits; or

                     (d)  both of the following:

                              (i)  general information about the remuneration (including commission) or other benefits and the manner in which the remuneration (including commission) or other benefits are to be calculated;

                             (ii)  a statement that the client may request particulars of the remuneration (including commission) or other benefits but that the request must be made within a reasonable time after the client is given the Financial Services Guide and before any financial service identified in the Guide is provided to the client.

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

             (1)  For subsection 942B(7) of the Act, if:

                     (a)  the remuneration (including commission) or other benefits that a person mentioned in paragraph 942B(2)(e) or person 1 in subregulation 7.7.04(1) has received, or is to receive, are not able to be ascertained at the time the Financial Services Guide is given to the client; and

                     (b)  the providing entity reasonably believes that personal advice will not be given to the client; and

                     (c)  the Financial Services Guide does not contain particulars of the remuneration (including commission) or other benefits;

the client may request, from the financial services licensee, particulars of the remuneration (including commission) or other benefits.

             (2)  A request under subregulation (1) must be made within a reasonable time after the client is given the Financial Services Guide and before any financial service identified in the Guide is provided to the client.

             (3)  For subregulation (1), the particulars must, to the extent relevant, include a statement of the range of amounts or rates of remuneration (including commission) or other benefits.

Examples:

1                 Remuneration is paid within the range of $X to $Y.

2                 Commission is paid at rates between X% and Y%.

             (4)  The particulars mentioned in subregulation (3) must be presented in a manner that is easy for the client to understand.

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

             (1)  This regulation is made for paragraph 942B(4)(b) of the Act.

             (2)  Information about a non‑monetary benefit that, in accordance with paragraph 963C(b) of the Act, is not conflicted remuneration is not required by paragraph 942B(2)(e) of the Act.

Note:          Under paragraph 963C(b) of the Act, if a non‑monetary benefit is given to a financial services licensee, or a representative of a financial services licensee, who provides financial advice, is less than the prescribed amount and identical or similar benefits are not given on a frequent or regular basis, the benefit is not conflicted remuneration.

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

             (1)  This regulation is made for paragraph 942C(4)(b) of the Act.

             (2)  Information about a non‑monetary benefit that, in accordance with paragraph 963C(b) of the Act, is not conflicted remuneration is not required by paragraph 942C(2)(f) of the Act.

Note:          Under paragraph 963C(b) of the Act, if a non‑monetary benefit is given to a financial services licensee, or a representative of a financial services licensee, who provides financial advice, is less than the prescribed amount and identical or similar benefits are not given on a frequent or regular basis, the benefit is not conflicted remuneration.

7.7.05  Record of advice given by financial services licensee

                   For subparagraph 942B(2)(g)(iii) of the Act, the period within which a client may request a record of the advice to which that subparagraph relates is 7 years after the day on which the advice is provided.

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

             (1)  For paragraph 942C(2)(m) of the Act, the Financial Services Guide given by an authorised representative must include the authorised representative number allocated by ASIC to the authorised representative.

             (2)  Subregulation (1) does not apply to a Financial Services Guide to which regulation 7.7.05B applies.

7.7.05B  Personalised Financial Services Guide

             (1)  This regulation applies if:

                     (a)  a financial services licensee; or

                     (b)  an authorised representative (the authoriser) of a financial services licensee;

authorises an individual to provide financial services on behalf of the licensee.

             (2)  For paragraph 942C(4)(b) of the Act, the Financial Services Guide in relation to a financial service does not have to include the information in paragraph 942C(2)(a) of the Act, in respect of the individual, if:

                     (a)  the financial service is dealing in a financial product or the provision of general advice or both; and

                     (b)  the individual provides the financial service in accordance with the authorisation; and

                     (c)  the licensee has reasonable grounds to believe that the identity or remuneration of the individual would not be material to a decision by a retail client whether or not to obtain the financial service; and

                     (d)  the Financial Services Guide includes:

                              (i)  the contact details and licence number of the licensee; and

                             (ii)  a statement setting out, in general terms, the individual’s role and capacity in providing the financial service.

          (2A)  For paragraph 942C(4)(b) of the Act, the Financial Services Guide in relation to a financial service does not have to include a statement setting out the name and contact details of a person if:

                     (a)  the person is:

                              (i)  a franchisee of the holder of an Australian financial services licence (the franchisor) and a corporate authorised representative of the franchisor; or

                             (ii)  an employee of a franchisee of the holder of an Australian financial services licence; and

                     (b)  the franchisor is an authorised deposit‑taking institution (within the meaning of the Banking Act 1959) and regulated by APRA; and

                     (c)  the franchise agreement:

                              (i)  subjects the person to the policies of the franchisor; and

                             (ii)  requires compliance by the person with the policies of the franchisor that were made to give effect to the franchisor’s obligations under the Australian financial services licence; and

                     (d)  the Financial Services Guide produced by the franchisor explains that the franchisor takes responsibility for the services provided by the person.

             (3)  For paragraph 942C(4)(b) of the Act, the Financial Service Guide in relation to a financial service does not have to include the information in paragraph 942C(2)(a) of the Act, in respect of an authoriser, if:

                     (a)  the financial service is dealing in a financial product or the provision of general advice or both; and

                     (b)  the authoriser provides the financial service in accordance with the authorisation; and

                     (c)  the licensee has reasonable grounds to believe that the identity or remuneration of the authoriser would not be material to a decision by a retail client whether or not to obtain the financial service; and

                     (d)  the Financial Services Guide includes:

                              (i)  the contact details and licence number of the licensee; and

                             (ii)  a statement setting out, in general terms, the authoriser’s role and capacity in providing the financial service.

Note:          The Financial Services Guide will contain all information otherwise required by section 942C of the Act.

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

             (1)  For paragraph 942B(4)(b) of the Act, for a Financial Services Guide:

                     (a)  information is not required by paragraph 942B(2)(c) of the Act about a financial service to which subsection 941C(6) of the Act applies; and

                     (b)  information is not required by paragraph 942B(2)(e) of the Act in relation to remuneration (including commission) or other benefits that are received only in respect of, or that are only attributable to, a financial service to which subsection 941C(6) of the Act applies.

             (2)  For paragraph 942C(4)(b) of the Act, for a Financial Services Guide:

                     (a)  information is not required by paragraph 942C(2)(d) of the Act, about a financial service to which subsection 941C(6) of the Act applies; and

                     (b)  information is not required by paragraph 942C(2)(f) of the Act, in relation to remuneration (including commission) or other benefits that are received only in respect of, or that are only attributable to, a financial service to which subsection 941C(6) of the Act applies.

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

             (1)  For paragraph 942C(2)(m) of the Act, the Financial Services Guide given by an authorised representative must include a statement that:

                     (a)  describes the purpose and content of the Financial Services Guide; and

                     (b)  if appropriate:

                              (i)  informs the client that the client may also receive either or both of a Statement of Advice and a Product Disclosure Statement; and

                             (ii)  describes the purpose and content of those documents.

             (2)  In describing the purpose and content of the Financial Services Guide as mentioned in subregulation (1), the client’s attention must be drawn to the following matters:

                     (a)  the Guide is designed to assist the client in deciding whether to use any of the services offered in the Guide;

                     (b)  the Guide contains information about remuneration that may be paid to the authorised representative and other relevant persons in relation to the services offered;

                     (c)  the Guide contains information on how complaints against the authorised representative are dealt with.

             (3)  In describing the purpose and content of a Statement of Advice or Product Disclosure Statement, the client’s attention must be drawn to a description of the circumstances in which the Statement of Advice or Product Disclosure Statement will be given.

             (4)  Subregulations (2) and (3) do not prevent the statement required under subregulation (1) from drawing attention to other matters relating to the purpose and content of the Financial Services Guide, the Statement of Advice or the Product Disclosure Statement.

             (5)  The statement required under subregulation (1) must be:

                     (a)  presented in a manner that is easy for the client to understand; and

                     (b)  displayed prominently in the Financial Services Guide.

             (6)  A statement is displayed prominently if it:

                     (a)  appears at, or close to, the front of the Financial Services Guide; and

                     (b)  stands out from the other information contained in the Guide.

Note:          Ideally, the statement should be placed:

(a)    on the inside cover or inside facing page of a paper‑based Financial Services Guide form; or

(b)    in an equivalent position of a Financial Services Guide that is not provided in a paper‑based form.

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

                   For paragraph 942C(2)(m) of the Act, a providing entity that is an authorised representative of a financial services licensee must include the licensee’s licence number in a Financial Services Guide given to a client.

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

             (1)  For paragraph 942C(2)(m) of the Act, the Financial Services Guide given by the authorised representative of a financial services licensee must include a statement about:

                     (a)  the kind of compensation arrangements that the licensee has in place; and

                     (b)  whether those arrangements satisfy the requirements for compensation arrangements under section 912B of the Act.

             (2)  This regulation commences, for a particular authorised representative, on the date that subregulations 7.6.02AAA(1), (2) and (3) take effect for the financial services licensee for whom he or she is a representative.

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

             (1)  For paragraph 942C(2)(m) of the Act, the Financial Services Guide given by an authorised representative of a financial services licensee must include information, to the extent that the information is able to be ascertained at the time the Financial Services Guide is given to the client, about all remuneration (including commission) and other benefits that a person (person 1) has received, or is to receive, for referring another person to:

                     (a)  the authorised representative; or

                     (b)  the financial services licensee.

Overview of regulation

             (2)  For paragraph 942C(4)(c) of the Act, the information required in particular situations by paragraph 942C(2)(f) in relation to persons mentioned in paragraph 942C(2)(f) or person 1 (see subregulation (1)) is as set out in subregulations (3), (4) and (5).

If remuneration is ascertainable at the time FSG is given

             (3)  The following information is required if the remuneration, commission or other benefits are able to be worked out at the time the Financial Services Guide is given to the client:

                     (a)  in a case where the remuneration, commission or other benefits are to be received by a person who is a licensed trustee company, either:

                              (i)  the remuneration, commission or other benefits; or

                             (ii)  the remuneration, commission or other benefits stated as a percentage of the income from the estate or as a percentage of the capital value of the estate;

                     (b)  in any other case—the remuneration, commission or other benefits.

If remuneration is not ascertainable at the time FSG is given and personal advice will be given

             (4)  If:

                     (a)  the remuneration (including commission) or other benefits are not able to be ascertained at the time the Financial Services Guide is given to the client; and

                     (b)  the providing entity reasonably believes that personal advice will be given to the client;

the following information is required:

                     (c)  either:

                              (i)  particulars of the remuneration (including commission) or other benefits, including, to the extent relevant, a statement of the range of amounts or rates of remuneration (including commission) or other benefits; or

                             (ii)  general information about the remuneration (including commission) or other benefits and the manner in which the remuneration (including commission) or other benefits are to be calculated;

                     (d)  a statement that:

                              (i)  if the remuneration (including commission) or other benefits are calculable at the time the personal advice is given, the remuneration (including commission) or other benefits the person receives on specified financial products to which the personal advice relates will be disclosed at the time the personal advice is given or as soon as practicable after that time; or

                             (ii)  if the remuneration (including commission) or other benefits are not calculable at the time the personal advice is given, the manner in which the remuneration (including commission) or other benefits are to be calculated will be disclosed at the time the personal advice is given or as soon as practicable after that time.

If remuneration is not ascertainable at the time FSG is given and personal advice will not be given

             (5)  If:

                     (a)  the remuneration (including commission) or other benefits are not able to be ascertained at the time the Financial Services Guide is given to the client; and

                     (b)  the providing entity reasonably believes that personal advice will not be given to the client;

the following information is required:

                     (c)  particulars of the remuneration (including commission) or other benefits, including, to the extent relevant, a statement of the range of amounts or rates of remuneration (including commission) or other benefits; or

                     (d)  both of the following:

                              (i)  general information about the remuneration (including commission) or other benefits and the manner in which the remuneration (including commission) or other benefits are to be calculated;

                             (ii)  a statement that the client may request particulars of the remuneration (including commission) or other benefits but that the request must be made within a reasonable time after the client is given the Financial Services Guide and before any financial service identified in the Guide is provided to the client.

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

             (1)  For subsection 942C(7) of the Act, if:

                     (a)  the remuneration (including commission) or other benefits that a person mentioned in paragraph 942C(2)(f) or person 1 in subregulation 7.7.07(1) has received, or is to receive, are not able to be ascertained at the time the Financial Services Guide is given to the client; and

                     (b)  the providing entity reasonably believes that personal advice will not be given to the client; and

                     (c)  the Financial Services Guide does not contain particulars of the remuneration (including commission) or other benefits;

the client may request, from the authorised representative, particulars of the remuneration (including commission) or other benefits.

             (2)  A request under subregulation (1) must be made within a reasonable time after the client is given the Financial Services Guide and before any financial service identified in the Guide is provided to the client.

             (3)  For subregulation (1), the particulars must, to the extent relevant, include a statement of the range of amounts or rates of remuneration (including commission) or other benefits.

Examples:

1                 Remuneration is paid within the range of $X to $Y.

2                 Commission is paid at rates between X% and Y%.

             (4)  The particulars mentioned in subregulation (3) must be presented in a manner that is easy for the client to understand.

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

                   For subparagraph 942C(2)(h)(iii) of the Act, the period within which a client may request a record of the advice to which that subparagraph relates is 7 years after the day on which the advice is provided.

Division 2ACombined Financial Services Guide and Product Disclosure Statement

7.7.08A  Combined Financial Services Guide and Product Disclosure Statement

             (1)  For subsection 942DA(1) of the Act, this regulation specifies the circumstances in which a Financial Services Guide and a Product Disclosure Statement may be combined in a single document.

          (1B)  This regulation does not apply if the Product Disclosure Statement is for a margin loan.

          (1C)  This regulation does not apply if the Product Disclosure Statement is for a superannuation product to which Subdivision 4.2B of Division 4 of Part 7.9 applies.

          (1D)  This regulation does not apply if the Product Disclosure Statement is for a simple managed investment scheme to which Subdivision 4.2C of Division 4 of Part 7.9 applies.

             (2)  A combined Financial Services Guide and Product Disclosure Statement may be issued as a single document if:

                     (a)  the providing entity for the financial service and the product issuer for a product issued in relation to that financial service are the same person; and

                     (b)  the document is divided into 2 separate parts:

                              (i)  a part identifiable as a Financial Services Guide that satisfies the requirements under the Act for a Financial Services Guide; and

                             (ii)  a part identifiable as a Product Disclosure Statement that satisfies the requirements for a Product Disclosure Statement; and

                     (c)  the title ‘Combined Financial Services Guide and Product Disclosure Statement’ is marked on or near the front of the document; and

                     (d)  the document is provided to a client at the earlier of the time at which a Financial Services Guide must be provided and the time at which a Product Disclosure Statement must be provided.

             (3)  A combined Financial Services Guide and Product Disclosure Statement may be issued as a single document if:

                     (a)  the providing entity for the financial service is a representative or a related body corporate of the product issuer; and

                     (b)  the product is only a basic deposit product, a non‑cash payment facility that is related to a basic deposit product, a general insurance product or a life risk insurance product; and

                     (c)  the document is divided into 2 separate parts:

                              (i)  a part identifiable as a Financial Services Guide that satisfies the requirements under the Act for a Financial Services Guide; and

                             (ii)  a part identifiable as a Product Disclosure Statement that satisfies the requirements for a product Disclosure Statement; and

                     (d)  the title ‘Combined Financial Services Guide and Product Disclosure Statement’ is marked on or near the front of the document; and

                     (e)  the document clearly and prominently discloses:

                              (i)  the identity of the providing entity and the product issuer; and

                             (ii)  the nature of the relationship between the providing entity and the product issuer; and

                            (iii)  the liability of the providing entity and the product issuer in relation to the document; and

                      (f)  the document is provided to a client at the earlier of the time at which a Financial Services Guide must be provided and the time at which a Product Disclosure Statement must be provided.

             (4)  For the single document:

                     (a)  the Financial Services Guide and the Product Disclosure Statement may provide for matters by the use of cross‑references to each other rather than by fully setting out material; and

                     (b)  if the document includes cross‑references:

                              (i)  the document as a whole must include all of the information required by subsections 942B(6A) and 1013C(3) of the Act; and

                             (ii)  the use of the cross‑references must not have the effect that the document is misleading or deceptive.

Division 2AACombined Financial Services Guide and credit guide

7.7.08B  Modification of section 942DA of the Act

             (1)  For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if section 942DA of the Act were modified by substituting the heading of the section with the following section heading and subsection heading:

‘942DA  Combining a Financial Services Guide and another instrument

Financial Services Guide and a Product Disclosure Statement’.

             (2)  Part 7.7 of the Act applies as if section 942DA of the Act were also modified by inserting after subsection (3) the following subsection heading and subsections:

‘Financial Services Guide and a credit guide

             (4)  If:

                     (a)  a person:

                              (i)  is:

                                        (A)  a financial services licensee; or

                                        (B)  an authorised representative of a financial services licensee; and

                             (ii)  is required to give a Financial Services Guide to a client under this Act; and

                     (b)  the person:

                              (i)  either:

                                        (A)  holds an Australian credit licence under the National Consumer Credit Protection Act 2009; or

                                        (B)  is a credit representative (within the same meaning as in the National Consumer Credit Protection Act 2009); and

                             (ii)  is required to give a credit guide to a consumer under that Act;

the person may combine the Financial Services Guide and credit guide in a single document.

             (5)  If the person combines the Financial Services Guide and credit guide in a single document, any statements or information to be included in the credit guide that are identical to statements or information to be included in the Financial Services Guide need only be included once.’

Division 2BRecord of small investment advice

7.7.08C  Record of small investment advice—content requirements

             (1)  For subsection 946AA(4) of the Act, a record of advice to a client must set out:

                     (a)  the matters set out in subregulation (2); and

                     (b)  the information that, if a Statement of Advice were to be given, would be required in that statement by paragraphs 947B(2)(d) and (e) of the Act or paragraphs 947C(2)(e) and (f) of the Act.

             (2)  For paragraph (1)(a), the matters that the record of advice must set out are:

                     (a)  brief particulars of the recommendations made to the client and the basis on which the recommendations are made; and

                     (b)  brief particulars of the information that would be required by subsection 947D(2) of the Act if a Statement of Advice were given to the client; and

                     (c)  the statement that would be required by subsection 947D(3) of the Act if a Statement of Advice were given to the client.

Note:          A client is entitled to ask the providing entity for a record of advice and the providing entity must give a copy of the record of advice to the client—see paragraph 946AA(5)(a) of the Act.

Division 3Statement of Advice

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

             (1)  For subsection 946B(3A) of the Act, a record of advice must set out:

                     (a)  the following:

                              (i)  the advice given to the client by the providing entity;

                             (ii)  if information or a statement required by subsections 947D(2) and (3) is given—the information and statement; or

                     (b)  the following:

                              (i)  brief particulars of the recommendations made and the basis on which the recommendations are made;

                             (ii)  if information under subsection 947D(2) is given—brief particulars of the information;

                            (iii)  if a statement under subsection 947D(3) is given—an acknowledgement that the statement has been given.

             (2)  The providing entity may keep the record in any form, for example, a tape recording.

             (3)  The providing entity must keep the record for 7 years after the day on which the further advice is provided.

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

             (1)  For subparagraph 946AA(1)(a)(i) of the Act, the threshold amount is $15 000.

             (2)  Subregulations (3) and (4) apply to each of the following financial products:

                     (a)  shares;

                     (b)  rights issues;

                     (c)  options over unissued shares;

                     (d)  partly paid shares;

                     (e)  debentures;

                      (f)  stapled securities.

             (3)  For small investment advice to a client that is related to the acquisition of one or more of the financial products listed in paragraphs (2)(a) to (f), the threshold amount in subregulation (1) must be calculated to include the total value of all financial investments that would be committed to by the client if the advice were accepted by the client.

Examples:

1                 If the small investment advice related to the purchase of options over unissued shares the total cost of the options would be both the cost to buy the options and the cost of the exercise price on the face of the options.

2                 If the small investment advice relates to the purchase of partly paid shares the total cost of the shares must be calculated as if all calls had been made on the shares.

Note:          The total value of all financial investments in relation to which small investment advice is provided is calculated in accordance with subsection 946AA(2) of the Act.

             (4)  For small investment advice to a client that is related to the disposal of one or more of the financial products listed in paragraphs (2)(a) to (f), the threshold amount in subregulation (1) must be calculated to include the total value of all financial investments that would be disposed of by the client if the advice were accepted by the client.

Note:          The total value of all financial investments in relation to which small investment advice is provided is calculated in accordance with subsection 946AA(2) of the Act.

             (5)  Subregulations (6) and (7) apply to each of the following financial products:

                     (a)  superannuation;

                     (b)  managed investment schemes;

                     (c)  non‑derivative instalment warrants.

             (6)  For small investment advice to a client that is related to the acquisition of one or more of the financial products listed in paragraphs (5)(a) to (c), the threshold amount in subregulation (1) must be calculated to include:

                     (a)  both:

                              (i)  the cost to the client of the initial investment; and

                             (ii)  other amounts that would be committed to by the client if the advice is taken; and

                     (b)  if the investment is not finite—the value of the investment is calculated for the 12month period beginning from the date that the record of advice is required by subregulation (10), (11) or (12) to be given to the client.

Examples:

1                 Advice given in relation to switching superannuation funds

                   A person earning $50 000 per annum is given advice to switch an existing superannuation fund balance of $12 000 to another superannuation fund and direct all future superannuation guarantee contributions to that same fund. In this event the total of the superannuation guarantee contributions in the first 12month period (ie $50 000 × 0.09 = $4 500) when added to the initial $12 000 transfer, would exceed the $15 000 threshold. In this example the exemption, in section 946AA of the Act, from the requirement to provide a Statement of Advice would not apply.

2                 Advice given to acquire non‑derivative instalment warrants

                   The terms of the nonderivative instalment warrants are that $10 000 must be paid initially, a second payment of $12 000 in 18 months time and a third and final payment of $12 000 in 3 years time. The investment advice, assuming the client has committed to implementing the advice, concerns a $34 000 investment and therefore the exemption, in section 946AA of the Act, from the requirement to provide a Statement of Advice would not apply.

Note:          The total value of all financial investments in relation to which small investment advice is provided is calculated in accordance with subsection 946AA(2) of the Act.

             (7)  For small investment advice to a client that is related to the disposal of one or more of the financial products listed in paragraphs (5)(a) to (c), the threshold amount in subregulation (1) must be calculated to include:

                     (a)  the value to the client of the total divestment; and

                     (b)  other amounts reasonably related to the divestment that would be expended if the advice is taken.

Note:          The total value of all financial investments in relation to which small investment advice is provided is calculated in accordance with subsection 946AA(2) of the Act.

             (8)  If the total value of an investment, to which investment advice to a client relates, is not able to be ascertained under subsection 946AA(2) of the Act, the investment advice is taken to exceed the threshold amount in subregulation (1).

             (9)  If an investment, to which investment advice relates, is jointly held by more than 1 client, the sum of the values of each client’s investment must be calculated to determine whether the threshold amount in subregulation (1) is exceeded.

When record of advice is given

           (10)  For subsection 946AA(4) of the Act, a record of advice is required to be given to a client when, or as soon as practicable after, investment advice is provided to the client and, in any event, subject to subregulation (12), before the providing entity provides the client with any further financial service that arises out of or in connection with the investment advice.

Statement of certain information if record of advice not given when advice provided

           (11)  If the record of advice is not given to the client when the investment advice is provided, the providing entity must, at the time the investment advice is provided, give the client a statement that contains the information that would be required to be in a Statement of Advice by:

                     (a)  paragraphs 947B(2)(d) and (e) of the Act; or

                     (b)  paragraphs 947C(2)(e) and (f) of the Act;

as the case requires, and by section 947D of the Act, if applicable.

Time‑critical cases

           (12)  If:

                     (a)  a client expressly instructs that they require a further financial service to be provided immediately, or by a specified time; and

                     (b)  the further financial service arises out of, or in connection with, the investment advice given to the client; and

                     (c)  it is not reasonably practicable to give a record of advice to the client before the further service is provided as so instructed;

the providing entity must give the client the record of advice:

                     (d)  unless paragraph (e) applies—within 5 days after providing the further service, or as soon as practicable; or

                     (e)  if the further financial service is the provision to the client of a financial product and section 1019B of the Act applies to the acquisition of the product by the client—before the start of the period applicable under subsection 1019B(3) of the Act, or sooner if practicable.

7.7.09AA  Statement of Advice from financial services licensee

             (1)  For paragraph 947B(2)(g) of the Act, a Statement of Advice given by a financial services licensee in relation to a margin lending facility, or a margin lending facility whose limit is proposed to be increased, within the meaning of subsection 761EA(1) of the Act must include the following information:

                     (a)  whether the client has taken out a loan to fund the secured property or transferred securities contributed by the client for establishing the margin lending facility;

Note:          This is sometimes referred to as ‘double gearing’.

                     (b)  if a loan to fund the secured property or transferred securities contributed by the client for establishing the margin lending facility has been taken out—whether the security for the loan includes the primary residential property of the client;

                     (c)  whether there is a guarantor for the margin lending facility, and, if so:

                              (i)  if the financial services licensee has the necessary information—a statement as to whether the guarantor has been appropriately informed of, and warned about, the risks and possible consequences of providing the guarantee; or

                             (ii)  if the financial services licensee does not have the necessary information—a statement that the financial services licensee does not have the information;

                     (d)  the amount of any other debt incurred by the client;

                     (e)  any other matter that ASIC has specified in a legislative instrument for subregulation (2).

             (2)  ASIC may specify in a legislative instrument any matter ASIC considers to be relevant for the purpose of establishing whether the margin lending facility, or the margin lending facility with the increased limit, is unsuitable for the client.

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

                   For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 947B(4) of the Act were modified by:

                     (a)  substituting the full stop at the end of paragraph (c) with a semi‑colon; and

                     (b)  inserting after paragraph (c) the following paragraph:

                    ‘(d)  that ASIC may specify in a legislative instrument matters ASIC considers to be relevant for the purposes of paragraph 947B(2)(g) of the Act.’

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

             (1)  For paragraphs 947B(4)(b) and 947C(4)(b) of the Act, a providing entity is not required to include a statement or information mentioned in Part 7.7 of the Act in a Statement of Advice to the client if the Statement of Advice:

                     (a)  refers to the statement or information; and

                     (b)  provides sufficient details about the statement or information to enable the client:

                              (i)  to identify by a unique identifier the document, or part of the document, that contains the statement or information; and

                             (ii)  to decide whether or not to read the statement or information or obtain a copy of the statement or information; and

                     (c)  states that a copy of the statement or information may be obtained from the providing entity on request, at no charge.

             (2)  Subject to subregulation (3), the providing entity must give the client the document, or part of the document (whichever is applicable), unless the providing entity has already given the document or part of the document to the client.

             (3)  If the providing entity is an authorised representative of an Australian financial services licensee, the document, or part of the document (whichever is applicable), may be provided to the client:

                     (a)  by another authorised representative appointed by and acting on behalf of the licensee; or

                     (b)  by the licensee.

             (4)  If the client requests a copy of a statement or information that the providing entity is not required to include in accordance with subregulation (1), the providing entity must provide the copy as soon as practicable, at no charge.

             (5)  If a statement or information is not required to be included in a Statement of Advice because of subregulation (1), the statement or information is taken to be included in the Statement of Advice.

             (6)  The exemption in subregulation (1) does not apply to a statement or information that is required by section 947D or 961H of the Act.

7.7.09BA  Statement of Advice from authorised representative

             (1)  For paragraph 947C(2)(h) of the Act, a Statement of Advice given by an authorised representative in relation to a margin lending facility, or a margin lending facility whose limit is proposed to be increased, within the meaning of subsection 761EA(1) of the Act must include the following information:

                     (a)  whether the client has taken out a loan to fund the secured property or transferred securities contributed by the client for establishing the margin lending facility;

Note:          This is sometimes referred to as ‘double gearing’.

                     (b)  if a loan to fund the secured property or transferred securities contributed by the client for establishing the margin lending facility has been taken out—whether the security for the loan includes the primary residential property of the client;

                     (c)  whether there is a guarantor for the margin lending facility, and, if so:

                              (i)  if the authorised representative has the necessary information—a statement as to whether the guarantor has been appropriately informed of, and warned about, the risks and possible consequences of providing the guarantee; or

                             (ii)  if the authorised representative does not have the necessary information—a statement that the authorised representative does not have the information;

                     (d)  the amount of any other debt incurred by the client;

                     (e)  any other matter that ASIC has specified in a legislative instrument for subregulation (2).

             (2)  ASIC may specify in a legislative instrument any matter ASIC considers to be relevant for the purpose of establishing whether the margin lending facility, or the margin lending facility with the increased limit, is unsuitable for the client.

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

                   For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 947C(4) of the Act were modified by:

                     (a)  substituting the full stop at the end of paragraph (c) with a semi‑colon; and

                     (b)  inserting after paragraph (c) the following paragraph:

                    ‘(d)  that ASIC may specify in a legislative instrument matters ASIC considers to be relevant for the purposes of paragraph 947C(2)(h) of the Act.’

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

             (1)  This regulation is made for paragraph 947B(4)(b) of the Act.

             (2)  Information about a non‑monetary benefit that, in accordance with paragraph 963C(b) of the Act, is not conflicted remuneration is not required by paragraph 947B(2)(d) of the Act.

Note:          Under paragraph 963C(b) of the Act, if a non‑monetary benefit is given to a financial services licensee, or a representative of a financial services licensee, who provides financial advice, is less than the prescribed amount and identical or similar benefits are not given on a frequent or regular basis, the benefit is not conflicted remuneration.

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

             (1)  This regulation is made for paragraph 947C(4)(b) of the Act.

             (2)  Information about a non‑monetary benefit that, in accordance with paragraph 963C(b) of the Act, is not conflicted remuneration is not required by paragraph 947C(2)(e) of the Act.

Note:          Under paragraph 963C(b) of the Act, if a non‑monetary benefit is given to a financial services licensee, or a representative of a financial services licensee, who provides financial advice, is less than the prescribed amount and identical or similar benefits are not given on a frequent or regular basis, the benefit is not conflicted remuneration.

7.7.09C  Requirement to keep Statement of Advice and other documents

                   A Statement of Advice and a document, or part of a document, mentioned in the Statement, must be retained, by the providing entity that gave the Statement, for 7 years after the day on which the Statement is provided to the client.

7.7.10  Products for which a Statement of Advice is not required

                   For paragraph 946B(5)(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 motor vehicle insurance product (see regulation 7.1.11);

                     (e)  a home building insurance product (see regulation 7.1.12);

                      (f)  a home contents insurance product (see regulation 7.1.13);

                     (g)  a travel insurance product (see regulation 7.1.16);

                     (h)  a personal and domestic property insurance product (see regulation 7.1.17);

                      (i)  a general insurance product prescribed by regulations made for the purposes of subparagraph 761G(5)(b)(viii) (see regulation 7.1.17A).

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

                   For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 941B(2) were omitted and the following subsection were substituted:

           “(2)  A Financial Services Guide must not be given to the person by the providing entity unless the authorising licensee, or each of the authorising licensees, on whose behalf the providing entity provides the financial services, has authorised its distribution by the providing entity.”

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

                   For subsection 946B(9) of the Act, a record of advice must set out the following:

                     (a)  the investment advice given to a client by the providing entity;

                     (b)  brief particulars of the recommendations made to the client and the basis on which the recommendations are made;

                     (c)  if the providing entity is a financial services licensee—the information that, if a Statement of Advice were to be given, would be required in that Statement by paragraphs 947B(2)(d) and (e) of the Act;

                     (d)  if the providing entity is an authorised representative—the information that, if a Statement of Advice were to be given, would be required in that Statement by paragraphs 947C(2)(e) and (f) of the Act.

Note:          A client is entitled to ask the providing entity for a record of advice under subsections 942B(8) and 942C(8) of the Act.

7.7.10AB  Financial services guide—contents of guide

Financial services guide given by financial services licensee

             (1)  For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if paragraph 942B(2)(c) of the Act were omitted and the following paragraph were substituted:

                    “(c)  either:

                              (i)  information about the financial services (the authorised services) that the providing entity will be, or is likely to be, providing to the client, and the kinds of financial products to which those services relate; or

                             (ii)  information about the kinds of financial services (the authorised services) that the providing entity is authorised by its licence to provide, and the kinds of financial products to which those services relate; and”.

Financial services guide given by authorised representative

             (2)  For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if paragraphs 942C(2)(c), (d) and (e) of the Act were omitted and the following paragraphs were substituted:

                    “(c)  either:

                              (i)  information about the financial services (the authorised services) that the providing entity will be, or is likely to be, providing to the client, and the kinds of financial products to which those services relate; or

                             (ii)  information, in relation to the authorising licensee or each of the authorising licensees, about the kinds of financial services (the authorised services) that the providing entity provides as representative of the authorising licensee, and the kinds of financial products to which those services relate; and

                     (d)  information about who the authorising licensee, or each of the authorising licensees, acts for when the authorised services are provided on their behalf by the providing entity; and

                     (e)  a statement:

                              (i)  setting out the name and contact details of the authorising licensee, or of each of the authorising licensees, mentioned in paragraph (d); and

                             (ii)  stating that the providing entity is the authorised representative of that licensee or those licensees; and”.

7.7.10AC  Financial services guide

Financial services guide given by financial services licensee—contents of guide

             (1)  For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if paragraph 942B(2)(g) were omitted and the following paragraph were substituted:

                    “(g)  if the providing entity provides further advice—a statement in relation to which the following requirements are satisfied:

                              (i)  the statement must indicate that the client may request a record of further advice that is provided to them, if they have not already been provided with a record of that advice;

                             (ii)  the statement must set out particulars of how the client may request such a record;

                            (iii)  any limitation in those particulars relating to the time within which the client may request such a record must be consistent with any applicable requirements in regulations made for the purposes of this subparagraph or, if there are no such applicable requirements, must be such as to allow the client a reasonable opportunity to request a record of the advice; and”.

Financial services guide given by financial services licensee—compliance with statement

             (2)  For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 942B(8) were omitted and the following subsection were substituted:

           “(8)  If:

                     (a)  the Financial Services Guide includes a statement to the effect that a client may request a record of further advice; and

                     (b)  the client is provided with further advice to which that statement applies; and

                     (c)  the client has not already been provided with a record of that advice;

the providing entity must comply with a request made in accordance with that statement for a record of that advice.

Note:          Failure to comply with this subsection is an offence (see subsection 1311(1)).”

7.7.10AD  Financial services guide

Financial services guide given by authorised representative—contents of guide

             (1)  For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if paragraph 942C(2)(h) were omitted and the following paragraph were substituted:

                   “(h)  if the providing entity, when acting as representative of the authorising licensee or any of the authorising licensees, provides further advice—a statement in relation to which the following requirements are satisfied:

                              (i)  the statement must indicate that the client may request a record of further advice that is provided to them, if they have not already been provided with a record of that advice;

                             (ii)  the statement must set out particulars of how the client may request such a record;

                            (iii)  any limitation in those particulars relating to the time within which the client may request such a record must be consistent with any applicable requirements in regulations made for the purposes of this subparagraph or, if there are no such applicable requirements, must be such as to allow the client a reasonable opportunity to request a record of the advice; and”.

Financial services guide given by authorised representative—compliance with statement

             (2)  For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 942C(8) were omitted and the following subsection were substituted:

           “(8)  If:

                     (a)  the Financial Services Guide includes a statement to the effect that a client may request a record of further advice; and

                     (b)  the client is provided with further advice to which that statement applies; and

                     (c)  the client has not already been provided with a record of that advice;

the providing entity must comply with a request made in accordance with that statement for a record of that advice.

Note:          Failure to comply with this subsection is an offence (see subsection 1311(1)).”

7.7.10AE  Situations in which Statement of Advice not required

                   For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if section 946B of the Act were omitted and the following section were substituted:

“946B  Situations in which a Statement of Advice is not required

First situation: further advice

             (1)  The providing entity does not have to give the client a Statement of Advice for particular advice (the further advice) if subsection (2) or (2A) applies.

             (2)  This subsection applies if:

                     (a)  the providing entity has previously given the client a Statement of Advice that set out the client’s relevant personal circumstances in relation to the advice (the previous advice) set out in that Statement; and

                     (b)  the client’s relevant personal circumstances in relation to the further advice (determined having regard to the client’s objectives, financial situation and needs as currently known to the providing entity) are not significantly different from the client’s relevant personal circumstances in relation to the previous advice; and

                     (c)  so far as the basis on which advice is given relates to other matters—the basis on which the further advice is given is not significantly different from the basis on which the previous advice was given.

Note:          Paragraphs 947B(2)(b) and 947C(2)(b) require a Statement of Advice to include information about the basis on which the advice is or was given, which may include the client's relevant personal circumstances, in which case paragraph (a) of this subsection would be satisfied.

          (2A)  This subsection applies if:

                     (a)  the client had a relationship with the providing entity before:

                              (i)  if the providing entity is a licensee—the day on which the providing entity obtained its Australian financial services Licence; or

                             (ii)  if the providing entity is an authorised representative—the day on which the licensee on whose behalf the advice is provided obtained its Australian financial services Licence; and

                     (b)  the providing entity gave the client advice (the earlier advice) of a kind that if it were given after the day the Australian financial services Licence was obtained would be considered to be personal advice; and

                     (c)  the client’s relevant personal circumstances in relation to the further advice are not significantly different from the client’s investment objectives, financial situation and particular needs that were determined for the earlier advice; and

                     (d)  so far as the basis on which advice is given relates to other matters—the basis on which the further advice is given is not significantly different from the basis on which the earlier advice was given.

             (3)  At the same time or as soon as practicable after the further advice is given to the client, the client must be given a statement that contains the information that would, if a Statement of Advice were to be given, be required to be in the Statement by paragraphs 947B(2)(d) and (e), or 947C(2)(e) and (f), as the case requires, and by section 947D, if applicable.

          (3A)  The providing entity must keep a record of the further advice and, in doing so, must comply with any applicable requirements of regulations made for the purposes of this subsection.

Note 1:       Failure to comply with this subsection is an offence (see subsection 1311(1)).

Note 2:       For the client’s right to a record of the advice, see subsections 942B(8) and 942C(8).

Note 3:       Subsections 947D(2) and (3) require additional information to be included in the record in certain circumstances.

Second situation: certain basic deposit and other products

             (5)  The providing entity does not have to give the client a Statement of Advice if the advice relates to any or all of the following:

                     (a)  a basic deposit product;

                     (b)  a facility for making non‑cash payments (see section 763D) that is related to a basic deposit product;

                     (c)  a financial product of a kind prescribed by regulations made for the purposes of this paragraph.

             (6)  However, if subsection (4) applies and the client is not given a Statement of Advice, the client must instead, when, or as soon as practicable after, the advice is provided, be given the information that would be required to be in the Statement of Advice by paragraphs 947B(2)(d) and (e), or 947C(2)(e) and (f), as the case requires.”

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

             (1)  For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if the provision set out in column 2 of the following table were modified as set out in columns 3 and 4:

 

Column 1

Column 2

Column 3

Column 4

Item

provision of Act

is modified by…

and…

1

paragraph (a) of the definition of defective in subsection 952B(1)

omitting “941D(2)”

substituting “941D(2) or paragraph 941C(7A)(c) or”

2

subparagraph (a)(iv) of the definition of defective in subsection 952B(1)

omitting “941D(2)”

substituting “941D(2) or paragraph 941C(7A)(c) or”

3

paragraph (d) of the definition of disclosure document or statement in subsection 952B(1)

omitting “946C(2)”

substituting “946C(2) or paragraph 941C(7A)(c),”

4

paragraph 952E(2)(a)

omitting “946C(2)”

substituting “946C(2) or paragraph 941C(7A)(c),”

5

paragraph 952F(1)(b)

omitting “946C(2)”

substituting “946C(2) or paragraph 941C(7A)(c),”

6

subparagraph 952F(1)(c)(i)

omitting “946C(2)”

substituting “946C(2) or paragraph 941C(7A)(c),”

7

paragraph 952G(1)(b)

omitting “946C(2)”

substituting “946C(2) or paragraph 941C(7A)(c),”

8

subparagraph 952G(1)(c)(i)

omitting “946C(2)”

substituting “946C(2) or paragraph 941C(7A)(c),”

9

paragraph (a) of the definition of defective in subsection 953A(1)

omitting “941D(2)”

substituting “941D(2) or paragraph 941C(7A)(c) or”

10

subparagraph (a)(iv) of the definition of defective in subsection 953A(1)

omitting “941D(2)”

substituting “941D(2) or paragraph 941C(7A)(c) or”

11

paragraph (d) of the definition of disclosure document or statement in subsection 953A(1)

omitting “946C(2)”

substituting “946C(2) or paragraph 941C(7A)(c),”

             (2)  For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 940C(1) were modified by omitting “or a Statement of Advice” and substituting “, a Statement of Advice or a statement referred to in paragraph 941C(7A)(c)”.

             (3)  For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 941D(4) were omitted and the following subsection were substituted:

           “(4)  The client must then be given:

                     (a)  the statement referred to in paragraph 941C(7A)(c) together with a Product Disclosure Statement as required by paragraph 941C(7A)(b)) in accordance with the requirements of subsections 941C(7A) and (7B); or

                     (b)  a Financial Services Guide;

within 5 business days after having given the statement referred to in subsection (3), or sooner if practicable.”

             (4)  For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if the following subsection were inserted at the end of section 941F:

           “(2)  If:

                     (a)  a statement referred to in paragraph 941C(7A)(c) is given to the client before the financial service is provided; and

                     (b)  the following conditions are satisfied:

                              (i)  there is a change in circumstances before the service is provided and the statement does not contain the information it would be required to contain if it were given to a person immediately after that change;

                             (ii)  the fact that the statement does not contain the up to date information is materially adverse from the point of view of a reasonable person deciding, as a retail client, whether to proceed to be provided with the financial service;

the providing entity must, before the service is provided, give the client another statement of the kind referred to in paragraph 941C(7A)(c) that contains the up to date information before the service is provided.”

7.7.10AG  Various consequential amendments to Division 7 of Part 7.7

             (1)  For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if the provisions set out in column 2 of the following table were modified as set out in columns 3 and 4:

 

Column 1

Column 2

Column 3

Column 4

Item

provision of Act

is modified by…

and…

1

paragraph (b) of the definition of defective in subsection 952B(1)

omitting “Statement of Advice”

substituting “Statement of Advice, a record of advice required by subsection 946B(3A),”

2

paragraph 952E(2)(a)

omitting “Statement of Advice”

substituting “Statement of Advice, a record of advice required by subsection 946B(3A),”

3

paragraph 952F(1)(b)

omitting “Statement of Advice”

substituting “Statement of Advice, a record of advice required by subsection 946B(3A),”

4

subparagraph 952F(1)(c)(i)

omitting “Statement of Advice”

substituting “Statement of Advice, a record of advice required by subsection 946B(3A),”

5

paragraph 952G(1)(b)

omitting “Statement of Advice”

substituting “Statement of Advice, a record of advice required by subsection 946B(3A),”

6

subparagraph 952G(1)(c)(i)

omitting “Statement of Advice”

substituting “Statement of Advice, a record of advice required by subsection 946B(3A),”

7

paragraph (b) of the definition of defective in subsection 953A(1)

omitting “Statement of Advice”

substituting “Statement of Advice, a record of advice required by subsection 946B(3A),”

             (2)  For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if the provisions set out in column 2 of the following table were modified as set out in column 3:

 

Column 1

Column 2

Column 3

Item

provision of Act

is modified by…

1

the definition of defective in subsection 952B(1)

inserting after subparagraph 952B(1)(b)(ii):

(iiA) if it is a record of advice required by subsection 946B(3A)—there is an omission from the record of advice of material required by subsection 946B(3A) or section 947D; or

2

the definition of disclosure document or statement in subsection 952B(1)

inserting after paragraph (c) of the definition the following paragraph:

(ca) a record of advice required by subsection 946B(3A); or

3

the definition of defective in subsection 953A(1)

inserting after subparagraph 952B(1)(b)(ii) the following paragraph:

(iiA) if it is a record of advice required by subsection 946B(3A)—there is an omission from the record of advice of material required by subsection 946B(3A) or section 947D; or

4

the definition of disclosure document or statement in subsection 953A(1)

inserting after paragraph (c) of the definition the following paragraph:

(ca) a record of advice required by subsection 946B(3A); or

7.7.10AH  Business days

                   For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if paragraph 946C(3)(c) was modified by omitting “5 days” and substituting “5 business days”.

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

                   For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies in relation to a carbon unit, an Australian carbon credit unit or an eligible international emissions unit as if paragraph 949A(2)(c) read as follows:

                    “(c)  if the advice relates to the acquisition, or possible acquisition, of a carbon unit, the providing entity must:

                              (i)  provide the client with the address of the website of the Clean Energy Regulator mentioned in section 202 of the Clean Energy Act 2011; and

                             (ii)  inform the client that the client should consider each statement mentioned in section 202 of the Clean Energy Act 2011 before making any decision about whether to acquire the financial product; and

                     (d)  if the advice relates to the acquisition, or possible acquisition, of an Australian carbon credit unit, the providing entity must:

                              (i)  provide the client with the address of the website of the Clean Energy Regulator mentioned in section 162 of the Carbon Credits (Carbon Farming Initiative) Act 2011; and

                             (ii)  inform the client that the client should consider each statement mentioned in section 162 of that Act before making any decision about whether to acquire the financial product; and

                     (e)  if the advice relates to the acquisition, or possible acquisition, of an eligible international emissions unit, the providing entity must:

                              (i)  provide the client with the address of the website of the Clean Energy Regulator mentioned in section 61 of the Australian National Registry of Emissions Units Act 2011; and

                             (ii)  inform the client that the client should consider each statement mentioned in section 61 of the Australian National Registry of Emissions Units Act 2011 before making any decision about whether to acquire the financial product.”.

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

             (1)  For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if paragraph 947B(2)(h) of the Act were modified to read as follows:

                           ‘(h)  unless in accordance with the regulations and a determination by ASIC, information to be disclosed in accordance with paragraph (d) and subparagraph (e)(i) must be stated as amounts in dollars.’.

             (2)  For paragraph 951C(1)(a) of the Act, a providing entity does not have to provide the information mentioned in paragraph 947B(2)(h) of the Act, in the form required by that paragraph, in a Statement of Advice prepared before 1 January 2005.

             (3)  For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if paragraph 947C(2)(i) of the Act were modified to read as follows:

                            ‘(i)  unless in accordance with the regulations and a determination by ASIC, information to be disclosed in accordance with paragraph (e) and subparagraph (f)(i) must be stated as amounts in dollars.’.

             (4)  For paragraph 951C(1)(a) of the Act, a providing entity does not have to provide the information mentioned in paragraph 947C(2)(i) of the Act, in the form required by that paragraph, in a Statement of Advice prepared before 1 January 2005.

             (5)  For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if paragraph 947D(2)(d) of the Act were modified to read as follows:

                           ‘(d)  unless in accordance with the regulations and a determination by ASIC, information to be disclosed in accordance with paragraph (a) must be stated as amounts in dollars.’.

             (6)  For paragraph 951C(1)(a) of the Act, a providing entity does not have to provide the information mentioned in paragraph 947D(2)(d) of the Act, in the form required by that paragraph, in a Statement of Advice prepared before 1 January 2005.

7.7.10B  Insertion of definition—further advice

                   For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if the following definition were inserted in section 761A:

further advice means advice to which subsection 946B(2) or (2A) applies.”

7.7.10C  Omission of definition—further market‑related advice

                   For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if the definition of “further market‑related advice” were omitted from section 761A.

7.7.10D  Additional information in Statement of Advice

                   For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 947D(2) of the Act were modified by omitting “Statement of Advice” and substituting “Statement of Advice or the record of advice under subsection 946B(3A), as the case requires,”.

7.7.10E  Additional information in Statement of Advice

                   For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 947D(3) of the Act were modified by omitting “Statement of Advice” and substituting “Statement of Advice or the record of advice under subsection 946B(3A), as the case requires”.

7.7.11  Statement of Advice given by financial services licensee

             (1)  For paragraph 947B(2)(g) of the Act, a Statement of Advice given by a financial services licensee must include information about all remuneration (including commission) and other benefits that a person (person 1) has received, or is to receive, for referring another person to the financial services licensee.

             (2)  For paragraph 947B(2)(h) of the Act, if ASIC determines that, for a compelling reason, it is not possible to state information to be disclosed in accordance with paragraph 947B(2)(d) or subparagraph 947B(2)(e)(i) as an amount in dollars, the information may be set out as a description of the amount as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate).

             (3)  For paragraph 947B(2)(h) of the Act, if ASIC determines that, for a compelling reason, it is not possible to state information to be disclosed in accordance with paragraph 947B(2)(d) or subparagraph 947B(2)(e)(i) as an amount in dollars, or to describe the amount as a percentage, the information may be set out as a description of the method of calculating the remuneration, benefits or interests (including worked dollar examples, unless that is inappropriate).

             (4)  A determination under subregulation (2) or (3) must be:

                     (a)  in writing; and

                     (b)  published in the Gazette.

             (5)  The statements and descriptions must be presented in a manner that is easy for the client to understand.

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

                   For paragraph 947C(2)(h) of the Act, a providing entity that is an authorised representative of a financial services licensee must include the licensee’s licence number in a Statement of Advice given to a client.

7.7.11B  Statement of Advice—disclosure of dollar amounts

             (1)  For paragraph 947B(2)(h) of the Act, if ASIC determines that, for a compelling reason based on the nature of a financial product or service, or the nature of the information, to state the information as an amount in dollars:

                     (a)  would impose an unreasonable burden on a providing entity, or a class of providing entities; or

                     (b)  would impose an unreasonable burden on a providing entity, or a class of providing entities, within a period specified in the determination; or

                     (c)  would not be in the interests of a client, or a class of clients;

the information may be set out as a description of the amount as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate).

             (2)  For paragraph 947B(2)(h) of the Act, if ASIC determines that, for a compelling reason, based on the nature of a financial product or service, or the nature of the information, to state the information as an amount in dollars, or to describe the amount as a percentage:

                     (a)  would impose an unreasonable burden on a providing entity, or a class of providing entities; or

                     (b)  would impose an unreasonable burden on a providing entity, or a class of providing entities, within a period specified in the determination; or

                     (c)  would not be in the interests of a client, or a class of clients;

the information may be set out as a description of the method of calculating the remuneration, benefits or interests (including worked dollar examples, unless that is inappropriate).

             (3)  A determination under subregulation (1) or (2) must be:

                     (a)  in writing; and

                     (b)  published in the Gazette.

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

             (1)  For paragraph 947C(2)(h) of the Act, a Statement of Advice given by an authorised representative of a financial services licensee must include information about all remuneration (including commission) and other benefits that a person (person 1) has received, or is to receive, for referring another person to the authorised representative or the financial services licensee.

             (2)  For paragraph 947C(2)(i) of the Act, if ASIC determines that, for a compelling reason, it is not possible to state information to be disclosed in accordance with paragraph 947C(2)(e) or subparagraph 947C(2)(f)(i) as an amount in dollars, the information may be set out as a description of the amount as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate).

             (3)  For paragraph 947C(2)(i) of the Act, if ASIC determines that, for a compelling reason, it is not possible to state information to be disclosed in accordance with paragraph 947C(2)(e) or subparagraph 947C(2)(f)(i) as an amount in dollars, or to describe the amount as a percentage, the information may be set out as a description of the method of calculating the remuneration, benefits or interests (including worked dollar examples, unless that is inappropriate).

             (4)  A determination under subregulation (1) or (2) must be:

                     (a)  in writing; and

                     (b)  published in the Gazette.

             (5)  The statements and descriptions must be presented in a manner that is easy for the client to understand.

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

             (1)  For paragraph 947C(2)(i) of the Act, if ASIC determines that, for a compelling reason based on the nature of a financial product or service, or the nature of the information, to state the information as an amount in dollars:

                     (a)  would impose an unreasonable burden on a providing entity, or a class of providing entities; or

                     (b)  would impose an unreasonable burden on a providing entity, or a class of providing entities, within a period specified in the determination; or

                     (c)  would not be in the interests of a client, or a class of clients;

the information may be set out as a description of the amount as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate).

             (2)  For paragraph 947C(2)(i) of the Act, if ASIC determines that, for a compelling reason, based on the nature of a financial product or service, or the nature of the information, to state the information as an amount in dollars, or to describe the amount as a percentage:

                     (a)  would impose an unreasonable burden on a providing entity, or a class of providing entities; or

                     (b)  would impose an unreasonable burden on a providing entity, or a class of providing entities, within a period specified in the determination; or

                     (c)  would not be in the interests of a client, or a class of clients;

the information may be set out as a description of the method of calculating the remuneration, benefits or interests (including worked dollar examples, unless that is inappropriate).

             (3)  A determination under subregulation (1) or (2) must be:

                     (a)  in writing; and

                     (b)  published in the Gazette.

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

             (1)  For paragraph 947D(2)(d) of the Act, if ASIC determines that, for a compelling reason, it is not possible to state information to be disclosed in accordance with paragraph 947D(2)(a) as an amount in dollars, the information may be set out as a description of the amount as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate).

             (2)  For paragraph 947D(2)(d) of the Act, if ASIC determines that, for a compelling reason, it is not possible to state information to be disclosed in accordance with paragraph 947D(2)(a) as an amount in dollars, or to describe the amount as a percentage, the information may be set out as a description of the method of calculating the charge or benefit (including worked dollar examples, unless that is inappropriate).

             (3)  A determination under subregulation (1) or (2) must be:

                     (a)  in writing; and

                     (b)  published in the Gazette.

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

             (1)  For paragraph 947D(2)(d) of the Act, if ASIC determines that, for a compelling reason based on the nature of a financial product or service, or the nature of the information, to state the information as an amount in dollars:

                     (a)  would impose an unreasonable burden on a providing entity, or a class of providing entities; or

                     (b)  would impose an unreasonable burden on a providing entity, or a class of providing entities, within a period specified in the determination; or

                     (c)  would not be in the interests of a client, or a class of clients;

the information may be set out as a description of the amount as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate).

             (2)  For paragraph 947D(2)(d) of the Act, if ASIC determines that, for a compelling reason, based on the nature of a financial product or service, or the nature of the information, to state the information as an amount in dollars, or to describe the amount as a percentage:

                     (a)  would impose an unreasonable burden on a providing entity, or a class of providing entities; or

                     (b)  would impose an unreasonable burden on a providing entity, or a class of providing entities, within a period specified in the determination; or

                     (c)  would not be in the interests of a client, or a class of clients;

the information may be set out as a description of the method of calculating the charge or benefit (including worked dollar examples, unless that is inappropriate).

             (3)  A determination under subregulation (1) or (2) must be:

                     (a)  in writing; and

                     (b)  published in the Gazette.

Division 4General advice provided to a retail client

7.7.14  Product Disclosure Statement not required

                   For paragraph 926B(1)(a) of the Act, a providing entity that is giving general advice in relation to a financial product for which, under Part 7.9 of the Act, a Product Disclosure Statement is not required, does not have to give the warning in paragraph 949A(2)(c) of the Act.

Division 5Other disclosure requirements

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

                   For paragraph 949A(1)(c) of the Act, the provision of general advice in the circumstances set out in subregulation 7.7.02(5A) is specified.

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

             (1)  For paragraph 949B(1)(e) of the Act, a person must give a wholesale client the information set out in subregulation (3) for a financial service provided by that person to the wholesale client if:

                     (a)  the service relates to an insurance contract specified in regulation 4C or 4D of the Insurance Regulations 2002 that may be offered or issued by an unauthorised foreign insurer (within the meaning of those Regulations) (the insurer); and

                     (b)  either:

                              (i)  the person would be required to give a Statement of Advice if the service were provided to a retail client; or

                             (ii)  the contract is offered or issued to the wholesale client.

             (2)  For paragraph 949B(1)(e) of the Act, a person must give a wholesale client the information set out in subregulation (3) for a financial service provided by that person to the wholesale client if:

                     (a)  the service relates to the wholesale client dealing with an entity (the insurer) specified in regulation 12 of the Insurance Regulations 2002; and

                     (b)  either:

                              (i)  the person would be required to give a Statement of Advice if the service were provided to a retail client; or

                             (ii)  the insurer offers or issues a financial product to the wholesale client.

             (3)  The information is:

                     (a)  a statement that the insurer is not authorised under the Insurance Act 1973 to conduct insurance business in Australia; and

                     (b)  a statement that the insurer is not subject to the provisions of the Insurance Act 1973, which establishes a system of financial supervision of general insurers in Australia; and

                     (c)  a statement that the wholesale client should consider whether to obtain further information, including:

                              (i)  the country in which the insurer is incorporated, and whether the country has a system of financial supervision of insurers; and

                             (ii)  the paid up capital of the insurer; and

                            (iii)  which country’s laws will determine disputes in relation to the financial product; and

                     (d)  a statement that the insurer cannot be a declared general insurer for the purpose of Part VC of the Insurance Act 1973, and, if the insurer becomes insolvent, the wholesale client will not be covered by the financial claims scheme provided under Part VC of that Act.

Division 6Exemptions from application of Part 7.7 of the Act

7.7.21  Exemption from application of Part 7.7 of the Act

                   For paragraph 951C(1)(a) of the Act, Part 7.7 of the Act does not apply to a financial services licensee or an authorised representative in respect of financial services provided to retail clients who are not in this jurisdiction.

Note:          Regulation 7.9.98 also contains exemptions from the operation of Part 7.7 of the Act.

Part 7.7ABest interests obligations and remuneration

Note:          Regulations 7.7A.01 to 7.7A.04 are reserved for future use.

Division 2Best interests obligations

7.7A.05  Best interests duty—basic banking products etc.

             (1)  This regulation:

                     (a)  is made for paragraph 961B(5)(b) of the Act; and

                     (b)  prescribes a circumstance in which the provider is not required to prove that he or she has taken the steps mentioned in paragraphs 961B(2)(d), (e), (f) and (g) of the Act in relation to advice that relates to a basic banking product or general insurance product.

             (2)  The provider is not required to prove that he or she has taken the steps if:

                     (a)  the provider is:

                              (i)  an agent or employee of an Australian ADI; or

                             (ii)  otherwise acting by arrangement with an Australian ADI under the name of the Australian ADI; and

                     (b)  the subject matter of the advice sought by the client relates only to the following:

                              (i)  a basic banking product;

                             (ii)  a general insurance product;

                            (iii)  consumer credit insurance;

                            (iv)  a combination of any of those products.

7.7A.06  Best interests duty—general insurance products

             (1)  This regulation:

                     (a)  is made for paragraph 961B(5)(b) of the Act; and

                     (b)  prescribes a circumstance in which the provider is not required to prove that he or she has taken the steps mentioned in paragraphs 961B(2)(d), (e), (f) and (g) of the Act.

             (2)  The provider is not required to prove that he or she has taken the steps to the extent that the subject matter of the advice sought by the client is a general insurance product.

7.7A.07  Best interests duty—basic banking products

                   For paragraph 961F(e) of the Act, a facility for making non‑cash payments (see section 763D of the Act) that is not related to a basic deposit product is a basic banking product.

Division 3Charging ongoing fees to clients

7.7A.10  Arrangements that are not ongoing fee arrangements

             (1)  This regulation is made for subsection 962A(5) of the Act.

             (2)  An arrangement of a kind mentioned in subsection 962A(1) or (2) of the Act is not an ongoing fee arrangement to the extent that the arrangement relates to a product fee mentioned in subregulation (3).

             (3)  Each of the following is a product fee:

                     (a)  a fee for the administration, management or operation of a financial product that is charged to a retail client to which the product is issued by the issuer of the product;

Example 1: A monthly account keeping fee charged by the provider of a basic deposit product.

Example 2: A monthly administration or investment fee charged by a trustee of a superannuation fund or a responsible entity of a registered scheme.

                     (b)  a fee that:

                              (i)  is a cost of providing financial product advice; and

                             (ii)  under section 99F of the Superannuation Industry (Supervision) Act 1993, is not prohibited or prevented from being passed on to a member of a regulated superannuation fund.

7.7A.11  Fee disclosure statements: product fee

             (1)  This regulation is made for paragraph 962H(3)(a) of the Act.

             (2)  Information about a product fee mentioned in subregulation 7.7A.10(3) is not required by subsection 962H(2) of the Act.

Division 4Conflicted remuneration

Subdivision 1Benefits in relation to life risk insurance products that are conflicted remuneration

7.7A.11A  What this Subdivision is about

                   This Subdivision:

                     (a)  is made for the purposes of section 963AA of the Act; and

                     (b)  prescribes circumstances, in addition to those set out in section 963A, in which a benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to a life risk insurance product, or life risk insurance products, is conflicted remuneration.

7.7A.11B  Circumstances in which benefits in relation to life risk insurance products are conflicted remuneration

Giving information in relation to life risk insurance products

             (1)  A benefit given to a financial services licensee, or a representative of a financial services licensee, is conflicted remuneration if:

                     (a)  the benefit is given to the licensee or representative in relation to information given to a person, or persons, in relation to a life risk insurance product, or life risk insurance products; and

                     (b)  access to the benefit, or the value of the benefit, is dependent on:

                              (i)  the value of a life risk insurance product, or life risk insurance products, subsequently acquired by a person or persons to whom, or in relation to whom, the information is given; or

                             (ii)  the value of a life risk insurance product, or life risk insurance products, subsequently varied that are held by a person or persons to whom, or in relation to whom, the information is given; or

                            (iii)  the number of life risk insurance products subsequently acquired by a person or persons to whom, or in relation to whom, the information is given; or

                            (iv)  the number of life risk insurance products subsequently varied that are held by a person or persons to whom, or in relation to whom, the information is given; and

                     (c)  the information is not given in the course of, or as a result of, the licensee or representative, or an associate of the licensee or representative, providing financial product advice; and

                     (d)  if the information is given in the course of providing a financial product—the information is not given in the course of providing that product to a person as a wholesale client, or to persons as wholesale clients.

Dealing in life risk insurance products

             (2)  A benefit given to a financial services licensee, or a representative of a financial services licensee, is conflicted remuneration if:

                     (a)  the benefit is given to the licensee or representative in relation to a dealing in a life risk insurance product with a person as a retail client, or dealings in life risk insurance products with persons as retail clients; and

                     (b)  access to the benefit, or the value of the benefit, is dependent on:

                              (i)  the value of the life risk insurance product to which the dealing relates, or the life risk insurance products to which the dealings relate; or

                             (ii)  the number of life risk insurance products to which the dealings relate; and

                     (c)  the dealing, or dealings, do not occur in the course of, or as a result of, the licensee or representative, or an associate of the licensee or representative:

                              (i)  providing financial product advice; or

                             (ii)  giving information in circumstances in which the benefit would be conflicted remuneration under subregulation (1).

7.7A.11C  Circumstances in which benefits in relation to information about life risk insurance products are not conflicted remuneration

Monetary benefits

             (1)  Despite subregulation 7.7A.11B(1), a monetary benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to information given to a person, or persons, in relation to a life risk insurance product, or life risk insurance products, is not conflicted remuneration if:

                     (a)  because of the nature of the benefit or the circumstances in which it is given, the benefit could not reasonably be expected to influence:

                              (i)  whether the licensee or representative gives the information to the person or persons; or

                             (ii)  the way in which the licensee or representative presents the information in giving it to the person or persons; or

                     (b)  none of the products is a group life policy for members of a superannuation entity (as defined in subsection 963B(2) of the Act) or a life policy for a member of a default superannuation fund (as defined in subsection 963B(3) of the Act) and either:

                              (i)  the benefit ratio for the benefit is the same for the year in which the product or products are issued as it is for each year in which the product or products are continued; or

                             (ii)  the benefit ratio requirements and clawback requirements in section 963BA of the Act are satisfied in relation to the benefit; or

                     (c)  the benefit is given to the licensee or representative in relation to consumer credit insurance; or

                     (d)  if the information is given in the course of providing a financial product to a person as a retail client or to persons as retail clients—the benefit is given by that person, or those persons; or

                     (e)  the benefit is given to the licensee as part of the purchase or sale of all or part of the licensee’s business, or to the representative as part of the purchase or sale of all or part of the representative’s business.

Non‑monetary benefits

             (2)  Despite subregulation 7.7A.11B(1), a non‑monetary benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to information given to a person, or persons, in relation to a life risk insurance product, or life risk insurance products, is not conflicted remuneration if:

                     (a)  because of the nature of the benefit or the circumstances in which it is given, the benefit could not reasonably be expected to influence:

                              (i)  whether the licensee or representative gives the information to the person or persons; or

                             (ii)  the way in which the licensee or representative presents the information in giving it to the person or persons; or

                     (b)  each of the following is satisfied:

                              (i)  the licensee or representative is the final recipient of the benefit, or all or part of the benefit passes through the licensee or representative to another financial services licensee, or representative of a financial services licensee, who is the final recipient of the benefit;

                             (ii)  the value of the benefit in the hands of each final recipient is less than $300;

                            (iii)  identical or similar benefits are not given on a frequent or regular basis; or

                     (c)  each of the following is satisfied:

                              (i)  the benefit has a genuine education or training purpose;

                             (ii)  the benefit is relevant to giving information in relation to life risk insurance products;

                            (iii)  if education or training is provided through an education or training course (within the meaning of regulation 7.7A.14)—subregulations 7.7A.14(3) and (4) are satisfied in relation to the education or training;

                            (iv)  if education or training is provided other than through an education or training course—the dominant purpose of the benefit is education and training; or

                     (d)  each of the following is satisfied:

                              (i)  the benefit is the provision of information technology software or support;

                             (ii)  the benefit is relevant to giving information in relation to a life risk insurance product, or life risk insurance products; or

                     (e)  if the information is given in the course of providing a financial product to a person as a retail client or to persons as retail clients—the benefit is given by that person, or those persons.

7.7A.11D  Circumstances in which benefits in relation to dealings in life risk insurance products are not conflicted remuneration

Monetary benefits

             (1)  Despite subregulation 7.7A.11B(2), a monetary benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to a dealing in a life risk insurance product with a person as a retail client, or dealings in life risk insurance products with persons as retail clients, is not conflicted remuneration if:

                     (a)  because of the nature of the benefit or the circumstances in which it is given, the benefit could not reasonably be expected to influence:

                              (i)  whether the licensee or representative deals in the life risk insurance product, or life risk insurance products; or

                             (ii)  the way in which the licensee or representative deals in the life risk insurance product, or life risk insurance products; or

                     (b)  none of the products is a group life policy for members of a superannuation entity (as defined in subsection 963B(2) of the Act) or a life policy for a member of a default superannuation fund (as defined in subsection 963B(3) of the Act) and either:

                              (i)  the benefit ratio for the benefit is the same for the year in which the product or products are issued as it is for each year in which the product or products are continued; or

                             (ii)  the benefit ratio requirements and clawback requirements in section 963BA of the Act are satisfied in relation to the benefit; or

                     (c)  the benefit is given to the licensee or representative in relation to consumer credit insurance; or

                     (d)  the benefit is given to the licensee or representative by the retail client, or retail clients; or

                     (e)  the benefit is paid to the licensee as part of the purchase or sale of all or part of the licensee’s business, or to the representative as part of the purchase or sale of all or part of the representative’s business.

Non‑monetary benefits

             (2)  Despite subregulation 7.7A.11B(2), a non‑monetary benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to a dealing in a life risk insurance product with a person as a retail client, or dealings in life risk insurance products with persons as retail clients, is not conflicted remuneration if:

                     (a)  because of the nature of the benefit or the circumstances in which it is given, the benefit could not reasonably be expected to influence:

                              (i)  whether the licensee or representative deals in the life risk insurance product, or life risk insurance products; or

                             (ii)  the way in which the licensee or representative deals in the life risk insurance product, or life risk insurance products; or

                     (b)  each of the following is satisfied:

                              (i)  the licensee or representative is the final recipient of the benefit, or all or part of the benefit passes through the licensee or representative to another financial services licensee, or representative of a financial services licensee, who is the final recipient of the benefit;

                             (ii)  the value of the benefit in the hands of each final recipient is less than $300;

                            (iii)  identical or similar benefits are not given on a frequent or regular basis; or

                     (c)  each of the following is satisfied:

                              (i)  the benefit has a genuine education or training purpose;

                             (ii)  the benefit is relevant to dealing in life risk insurance products;

                            (iii)  if the education or training is provided through an education or training course (within the meaning of regulation 7.7A.14)—subregulations 7.7A.14(3) and (4) are satisfied in relation to the education or training;

                            (iv)  if the education or training is provided other than through an education or training course—the dominant purpose of the benefit is education and training; or

                     (d)  each of the following is satisfied:

                              (i)  the benefit is the provision of information technology software or support;

                             (ii)  the benefit is relevant to dealing in life risk insurance products; or

                     (e)  the benefit is given to the licensee or representative by the retail client, or retail clients.

Subdivision 2Monetary benefits that are not conflicted remuneration

7.7A.12  What subdivision is about

                   This subdivision:

                     (a)  is made for paragraph 963B(1)(e) of the Act; and

                     (b)  prescribes the circumstances in which a monetary benefit given to a financial services licensee, or representative of a financial services licensee, (the provider) who provides financial product advice to persons as retail clients is not conflicted remuneration.

Note 1:       The definition of financial product advice is in subsection 766B(1) of the Act.

Note 2:       A reference in this Division to giving a benefit includes a reference to causing or authorising it to be given (see section 52 of the Act).

Note 3:       Under the governing rules of some regulated superannuation funds, a member may seek advice on the basis that the trustee of the fund will pay the licensee or representative for the advice and then recover the amount paid from the assets of the fund attributed to that member. In that case, the member has caused or authorised the amount to be paid to the licensee or representative. If the operation of section 52 of the Act and these regulations means that the payment is not conflicted remuneration, the trustee’s obligations under section 62 of the Superannuation Industry (Supervision) Act 1993 (which deals with the purposes for which a trustee may act in maintaining a regulated superannuation fund) will not be affected.

7.7A.12B  Stamping fees

             (1)  A monetary benefit is not conflicted remuneration if it is a stamping fee given to facilitate an approved capital raising.

             (2)  In this regulation:

approved capital raising means:

                     (a)  an offer to issue an approved financial product; or

                     (b)  an offer to sell an approved financial product;

where the purpose of the offer is to raise funds for the person issuing or selling the approved financial product.

approved financial product means:

                     (a)  debentures, stocks or bonds that are, or are proposed to be, issued by a government; or

                     (b)  shares in, or debentures of, a body that are, or are proposed to be, quoted on a prescribed financial market; or

                     (c)  interests in a managed investment scheme that are, or are proposed to be, quoted on a prescribed financial market; or

                     (d)  a right to acquire, by way of issue, shares, debentures or interests mentioned in paragraph (b) or (c).

stamping fee means a fee, or a part of a fee:

                     (a)  that a person, including an issuer of a financial product, or a person acting on behalf of the issuer, pays either directly or indirectly to a provider in connection with:

                              (i)  an offer by the issuer to issue the financial product; or

                             (ii)  an invitation by the issuer for an application to issue the financial product; or

                     (b)  that a person, including a holder of a financial product, or person acting on behalf of the holder, pays either directly or indirectly to a provider in connection with:

                              (i)  an offer by the holder to sell the financial product; or

                             (ii)  an invitation by the holder for an application to sell the financial product.

7.7A.12C  Time‑sharing schemes

                   A monetary benefit is not conflicted remuneration if the benefit is given for advice that relates to an interest in a time‑sharing scheme.

7.7A.12D  Brokerage fees

             (1)  A monetary benefit is not conflicted remuneration if:

                     (a)  the benefit consists of a percentage, of no more than 100%, of a brokerage fee that is given to a provider who is a trading participant of a prescribed financial market or the market known as the ASX24; and

                     (b)  the provider, directly or indirectly, gives the benefit to a representative of the provider.

Note 1:       For prescribed financial market, see regulation 1.0.02A.

Note 2:       The ASX24 is the financial market operated by Australian Securities Exchange Limited that was formerly known as the Sydney Futures Exchange.

          (1A)  A monetary benefit is not conflicted remuneration if:

                     (a)  the benefit is a fee paid between a financial services licensee that is a trading participant of a prescribed financial market and a financial services licensee that is not a trading participant in respect of dealings undertaken by a retail client through a specified service; and

                     (b)  each of those trades is executed by the trading participant on behalf of the retail client; and

                     (c)  the fee is a percentage, not exceeding 100%, of a brokerage fee paid directly or indirectly by the retail client; and

                     (d)  no portion of the benefit is paid to a person other than the trading participant or the licensee that is not a trading participant.

             (2)  In this regulation:

brokerage fee means a fee that a retail client pays to a provider in relation to a transaction in which the provider, on behalf of the retail client, deals in a financial product that is traded on:

                     (a)  a prescribed financial market; or

                    (aa)  the market known as the ASX24; or

                     (b)  a prescribed foreign financial market.

Note 1:       Regulations 7.7A.17 and 7.7A.18 relate to exemptions in relation to the charging of asset‑based fees on borrowed amounts.

Note 2:       The ASX24 is the financial market operated by Australian Securities Exchange Limited that was formerly known as the Sydney Futures Exchange.

prescribed foreign financial market means a financial market that:

                     (a)  has its principal place of business in a foreign country; and

                     (b)  has been authorised by an authority in that country that is a signatory to the International Organization of Securities Commissions’ Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information of May 2002.

specified service means a service which:

                     (a)  is provided for retail clients under the name or brand name of:

                              (i)  the financial services licensee that is not a trading participant; or

                             (ii)  the trading participant and the financial services licensee that is not a trading participant; and

                     (b)  relates to the dealing, on behalf of the retail client, in a financial product traded on:

                              (i)  a prescribed financial market; or

                             (ii)  a prescribed foreign financial market; and

                     (c)  is provided in either or both of the following ways:

                              (i)  by direct electronic access;

                             (ii)  by telephone, but only if:

                                        (A)  direct electronic access is not available for a temporary period, or the retail client expresses a preference that the service be provided by telephone; and

                                        (B)  neither the trading participant nor the financial services licensee that is not a trading participant is to provide financial product advice to the retail client by telephone in relation to the dealing undertaken on the retail client’s behalf; and

                     (d)  is provided in circumstances in which neither the trading participant nor the financial services licensee that is not a trading participant provides personal advice to the retail client in relation to the dealing undertaken on the retail client’s behalf.

trading participant of a prescribed financial market or the market known as the ASX24 means a person who:

                     (a)  is a participant of the market admitted under the market’s operating rules; and

                     (b)  is allowed, under the market’s operating rules, to deal in one or more of the financial products that are able to be traded on the market.

Note:          The ASX24 is the financial market operated by Australian Securities Exchange Limited that was formerly known as the Sydney Futures Exchange.

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

                   A monetary benefit is not conflicted remuneration if the benefit is given to the provider by a retail client in relation to the provider dealing in a financial product on behalf of the client.

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

                   A monetary benefit is not conflicted remuneration to the extent that:

                     (a)  the benefit is given to a financial services licensee or a representative of the licensee; and

                     (b)  the benefit is paid as part of:

                              (i)  the purchase or sale of all or part of the licensee’s financial advice business; or

                             (ii)  the purchase or sale of all or part of the representative’s financial advice business; and

                     (c)  the price is calculated using a formula:

                              (i)  which is based, in whole or in part, on the number or value of all or part of the financial products held by the licensee’s clients or the representative’s clients; and

                             (ii)  in which the weighting attributed to the financial products issued by the licensee or a related body corporate or other person is the same as the weighting attributed to other similar financial products.

Subdivision 3Monetary benefits that relate to life risk insurance products

7.7A.12EB  Life risk insurance products—clawback requirements related to cancellation etc.

                   For the purposes of subparagraph 963BA(3)(a)(i) of the Act, the prescribed circumstances are that the life risk insurance product, or the relevant one of the life risk insurance products, is cancelled or is not continued because:

                     (a)  the person insured dies; or

                     (b)  the person insured commits an act of self‑harm; or

                     (c)  the person insured reaches an age that, under the terms of the life risk insurance product under which the person is insured, has the result that the product is cancelled or is not continued; or

                     (d)  an administrative error has been made.

7.7A.12EC  Life risk insurance products—clawback requirements related to reduction of policy cost

                   For the purposes of subparagraph 963BA(3)(a)(ii) of the Act, the prescribed circumstances are that the policy cost for the life risk insurance product, or the relevant one of the life risk insurance products, is reduced because:

                     (a)  the person who issued the product and the person to whom the product is issued agree that there is a reduction in a risk in relation to a person insured under the product; or

                     (b)  the person who issued the product reduces the premium for the product without changing the risks covered, or the benefits available, in relation to any person insured under the product; or

                     (c)  each of the following is satisfied:

                              (i)  a rebate is paid or a discount applied;

                             (ii)  it is reasonable in all the circumstances to conclude that the rebate is paid or discount applied to induce the person to whom the product is issued to acquire, or to continue to hold, the product; or

                     (d)  a benefit payable in relation to a person insured under the product has been, or is being, paid; or

                     (e)  an administrative error has been made.

Subdivision 4Other monetary and non‑monetary benefits that are not conflicted remuneration

7.7A.12F  What subdivision is about

                   This subdivision:

                     (a)  is made for paragraphs 963B(1)(e) and 963C(f) of the Act; and

                     (b)  prescribes the circumstances in which a monetary or non‑monetary benefit given to a financial services licensee, or representative of a financial services licensee, (the provider) who provides financial product advice to persons as retail clients is not conflicted remuneration.

Note:          The definition of financial product advice is in subsection 766B(1) of the Act.

7.7A.12G  General insurance

                   A benefit is not conflicted remuneration if the benefit is given in relation to a general insurance product.

Note:          If a benefit is given in relation to a financial product that consists of both general insurance and life risk insurance, the benefit is to be treated as relating to a general insurance product and a life risk insurance product.

7.7A.12H  Basic banking and general insurance products

                   A benefit is not conflicted remuneration if:

                     (a)  to the extent that the benefit is given in relation to financial product advice, the benefit only relates to the following financial products:

                              (i)  a basic banking product;

                             (ii)  a general insurance product;

                            (iii)  consumer credit insurance;

                            (iv)  a combination of any of those products; and

                     (b)  the provider does not, at the same time, provide advice about any other financial products; and

                     (c)  the provider is:

                              (i)  an agent or an employee of an Australian ADI; or

                             (ii)  otherwise acting by arrangement with an Australian ADI under the name of the Australian ADI.

7.7A.12I  Mixed benefits

             (1)  A benefit that is given in one or more of the circumstances set out in the prescribed provisions is not conflicted remuneration even if:

                     (a)  the benefit also relates to other activities, but only to the extent that the part of the benefit that relates to the other activities is not conflicted remuneration; or

                     (b)  the provider, at the same time, provides other services (whether or not financial services).

             (2)  However, subregulation (1) does not apply to the extent that the prescribed provisions under which the benefit is given provide that:

                     (a)  the benefit may only relate to particular financial products or services; or

                     (b)  the provider must not receive the benefit if the provider is, at the same time, providing other specified financial services.

             (3)  In this regulation:

prescribed provision means:

                     (a)  paragraph 963B(1)(a), (b), (c) or (d) of the Act, or a regulation made under paragraph 963B(1)(e) of the Act; or

                     (b)  paragraph 963C(a), (b), (c), (d) or (e) of the Act, or a regulation made under paragraph 963C(f) of the Act.

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

                   For subparagraph 963C(b)(i) of the Act, the amount is $300 for each financial services licensee, or each representative of a financial services licensee, who is the final recipient of a non‑monetary benefit.

Note:          Under paragraph 963C(b) of the Act, if a non‑monetary benefit is given to a financial services licensee, or a representative of a financial services licensee, who provides financial advice, is less than the prescribed amount and identical or similar benefits are not given on a frequent or regular basis, the benefit is not conflicted remuneration.

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

             (1)  This regulation is made for subparagraph 963C(c)(iii) of the Act.

             (2)  This regulation sets out requirements if a non‑monetary benefit to which subparagraphs 963C(c)(i) and (ii) of the Act apply is the provision of an education or training course to a financial services licensee, or a representative of a financial services licensee.

Note:          Under paragraph 963C(c) of the Act, if certain non‑monetary benefits have a genuine education or training purpose, are relevant to the provision of financial product advice to retail clients and comply with the regulations, the benefits are not conflicted remuneration.

             (3)  Education or training activities for the professional development of the participants in the course must take up at least:

                     (a)  75% of the time spent on the course; or

                     (b)  6 hours a day;

whichever is the lesser.

             (4)  The participant, or the participant’s employer or licensee, must pay for the costs of:

                     (a)  travel and accommodation relating to the course; and

                     (b)  events and functions held in conjunction with the course.

Example:    The cost of day trips or dinners.

             (5)  In this regulation:

education or training course includes a conference or seminar.

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

             (1)  This regulation is made for subparagraph 963C(c)(iii) of the Act.

             (2)  This regulation sets out a requirement if a non‑monetary benefit to which subparagraphs 963C(c)(i) and (ii) of the Act apply is not the provision of an education or training course to which regulation 7.7A.13 applies.

Note:          Under paragraph 963C(c) of the Act, if certain non‑monetary benefits have a genuine education or training purpose, are relevant to the provision of financial product advice to retail clients and comply with the regulations, the benefits are not conflicted remuneration.

             (3)  The dominant purpose of the non‑monetary benefit must be education and training.

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

             (1)  This regulation:

                     (a)  is made for paragraph 963C(f) of the Act; and

                     (b)  prescribes the circumstances in which a non‑monetary benefit given to a financial services licensee, or representative of a financial services licensee, who provides financial product advice to persons as retail clients is not conflicted remuneration.

Note:          For financial product advice, see subsection 766B(1) of the Act.

             (2)  The benefit is not conflicted remuneration if the benefit:

                     (a)  has a genuine education or training purpose; and

                     (b)  is relevant to the carrying on of a financial services business; and

                     (c)  complies with regulations made for the purposes of subparagraph 963C(c)(iii) of the Act.

Subdivision 5Application provisions relating to the Corporations Amendment (Further Future of Financial Advice Measures) Act 2012

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)

             (1)  This regulation:

                     (a)  is made for subsection 1528(2) of the Act; and

                     (b)  prescribes a circumstance in which Division 4 of Part 7.7A of Chapter 7 of the Act does not apply to a benefit.

Note:          Subsection 1528(1) of the Act sets out a rule about when Division 4 of Part 7.7A of Chapter 7 of the Act does not apply to a benefit given to a financial services licensee, or a representative of a financial services licensee. Subsection 1528(2) of the Act permits regulations to prescribe circumstances in which that Division applies, or does not apply, to a benefit.

             (2)  The circumstance is that the benefit would have been given as mentioned in subsection 1528(1) of the Act had it not been redirected under one or more later arrangements.

             (3)  For subregulation (2), if a party to an arrangement changes, the arrangement is taken to have continued in effect, after the change, as the same arrangement.

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)

             (1)  This regulation:

                     (a)  is made for subsection 1528(2) of the Act; and

                     (b)  prescribes a circumstance in which Division 4 of Part 7.7A of Chapter 7 of the Act does not apply to a benefit.

Note:          Subsection 1528(1) of the Act sets out a rule about when Division 4 of Part 7.7A of Chapter 7 of the Act does not apply to a benefit given to a financial services licensee, or a representative of a financial services licensee. Subsection 1528(2) of the Act permits regulations to prescribe circumstances in which that Division applies, or does not apply, to a benefit.

             (2)  The circumstance is that:

                     (a)  the benefit is given by a platform operator; and

                     (b)  either:

                              (i)  the benefit is given under an arrangement that was entered into before the application day, within the meaning of subsection 1528(4) of the Act; or

                             (ii)  the benefit would have been given as mentioned in subparagraph (i) had it not been redirected under one or more later arrangements.

             (3)  For subregulation (2), if a party to an arrangement changes, the arrangement is taken to have continued in effect, after the change, as the same arrangement.

             (4)  If this regulation and regulation 7.7A.16A or 7.7A.16B are able to apply in relation to the benefit, disregard this regulation.

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

             (1)  This regulation:

                     (a)  is made for subsection 1528(2) of the Act; and

                     (b)  prescribes circumstances in which Division 4 of Part 7.7A of Chapter 7 of the Act applies to a benefit; and

                     (c)  does not apply in relation to a benefit to which regulation 7.7A.16C applies.

Note:          Subsection 1528(1) of the Act sets out a rule about when Division 4 of Part 7.7A of Chapter 7 of the Act does not apply to a benefit given to a financial services licensee, or a representative of a financial services licensee. Subsection 1528(2) of the Act permits regulations to prescribe circumstances in which that Division applies, or does not apply, to a benefit.

             (2)  The circumstance is that:

                     (a)  the benefit is given by a person acting in the capacity as a platform operator; and

                     (b)  the benefit is given under an arrangement that was entered into before the application day, within the meaning of subsection 1528(4) of the Act; and

                     (c)  the benefit:

                              (i)  relates to an acquisition (including a regulated acquisition, within the meaning of subsection 1012IA(1) of the Act) of a financial product on the instructions of a person who had not given an instruction to the person acting in the capacity of a platform operator to open an account on the platform before 1 July 2014; or

                             (ii)  does not relate to a person who opened an account on the platform before 1 July 2014.

             (3)  For subregulation (2), treat a benefit as having been given by a person acting in the capacity as a platform operator if it:

                     (a)  is given by a platform operator; and

                     (b)  relates to activities undertaken in connection with the platform as a result of instructions to the platform operator from a client who has set up, or is setting up, an account on the platform.

             (4)  For subregulation (2), if a retail client has an interest in a financial product before 1 July 2014, treat a benefit as relating to an acquisition of the financial product whether it is paid in relation to the initial acquisition of the financial product or the subsequent holding of the financial product.

             (5)  For subregulation (2), if a party to an arrangement changes, the arrangement is taken to have continued in effect, after the change, as the same arrangement.

             (6)  If this regulation and regulation 7.7A.16 are able to apply in relation to the benefit, disregard regulation 7.7A.16.

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)

             (1)  This regulation:

                     (a)  is made for subsection 1528(2) of the Act; and

                     (b)  prescribes a circumstance in which Division 4 of Part 7.7A of Chapter 7 of Chapter 7 of the Act applies to a benefit; and

                     (c)  does not apply in relation to a benefit to which regulation 7.7A.16C applies.

Note:          Subsection 1528(1) of the Act sets out a rule about when Division 4 of Part 7.7A of Chapter 7 of the Act does not apply to a benefit given to a financial services licensee, or a representative of a financial services licensee. Subsection 1528(2) of the Act permits regulations to prescribe circumstances in which that Division applies, or does not apply, to a benefit.

             (2)  The circumstance is that:

                     (a)  the benefit is given by a person who is not acting in the capacity of a platform operator; and

                     (b)  the benefit is given under an arrangement that was entered into before the application day, within the meaning of subsection 1528(4) of the Act; and

                     (c)  the benefit:

                              (i)  is given in relation to the acquisition, on or after 1 July 2014, of a financial product, for the benefit of a retail client; or

                             (ii)  does not relate to a financial service provided, before 1 July 2014, for the benefit of a retail client; and

                     (d)  the client did not have an interest in the product before 1 July 2014.

Note:          For the definition of platform operator, see subsection 1526(1) of the Act.

             (3)  For subregulation (2), treat a benefit as having been given by a person acting in the capacity as a platform operator if it:

                     (a)  is given by a platform operator; and

                     (b)  relates to activities undertaken in connection with the platform as a result of instructions to the platform operator from a client who has set up, or is setting up, an account on the platform.

Continuity of arrangement

             (4)  For subregulation (2):

                     (a)  if a party to an arrangement changes, treat the arrangement as having continued in effect, after the change, as the same arrangement; and

                     (b)  if a retail client has an interest in a financial product before 1 July 2014, treat a benefit as relating to an acquisition of the financial product whether it is paid in relation to the initial acquisition of the financial product or the subsequent holding of the financial product.

Managed investment schemes

             (5)  For subregulation (2), if a retail client:

                     (a)  had an interest in a managed investment scheme before 1 July 2014; and

                     (b)  acquires a further interest in the managed investment scheme on or after 1 July 2014;

do not treat the acquisition of the further interest as having occurred on or after 1 July 2014.

Multi product offerings

             (6)  For subregulation (2), if:

                     (a)  more than one financial product is marketed and offered together under one product disclosure statement (a multi‑product offering) in a way in which:

                              (i)  a retail client receives a consolidated report on a periodic basis listing the client’s holdings in all of those financial products; and

                             (ii)  there is a facility which allows a retail client to choose between, acquire, switch or transfer an interest in one or more of those financial products; and

                     (b)  the benefit is to be paid by the issuer of the product disclosure statement; and

                     (c)  a retail client opened an account on the multi‑product offering before 1 July 2014; and

                     (d)  the retail client acquires an interest or a further interest in any one or more of the financial products available in the multi‑product offering on or after 1 July 2014;

do not treat the acquisition of the interest, or further interest, mentioned in paragraph (d) as having occurred on or after 1 July 2014.

Relationship with regulation 7.7A.16

             (7)  If this regulation and regulation 7.7A.16 are able to apply in relation to the benefit, disregard regulation 7.7A.16.

7.7A.16BA  Sale of business

                   The application of regulation 7.7A.16, 7.7A.16A or 7.7A.16B in relation to a benefit is not affected only because the benefit, or the right to the benefit, is transferred as part of the sale of a business, or a part of a business.

Note:          This means that the buyer of a business will have the same protection for benefits that the seller of the business had.

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)

             (1)  This regulation:

                     (a)  is made for subsection 1528(2) of the Act; and

                     (b)  prescribes circumstances in which Division 4 of Part 7.7A of Chapter 7 of the Act does not apply to a benefit.

Note:          Subsection 1528(1) of the Act sets out a rule about when Division 4 of Part 7.7A of Chapter 7 of the Act does not apply to a benefit given to a financial services licensee, or a representative of a financial services licensee. Subsection 1528(2) of the Act permits regulations to prescribe circumstances in which that Division applies, or does not apply, to a benefit.

Remuneration arrangement relating to enterprise agreement or collective agreement‑based transitional instrument

             (2)  A circumstance is that:

                     (a)  the benefit is paid under a remuneration arrangement between an employer and an employee; and

                     (b)  the benefit is paid in accordance with an enterprise agreement (including its associated documents), or a collective agreement‑based transitional instrument (including its associated documents), that was entered into before the application day, within the meaning of subsection 1528(4) of the Act.

When subregulation (2) ceases to apply

             (3)  If:

                     (a)  an enterprise agreement referred to in paragraph (2)(b) was in force immediately before the application day; and

                     (b)  the nominal expiry date of the agreement had not passed immediately before the application day;

the circumstance in subregulation (2) ceases to apply at the end of 18 months after the nominal expiry date of the agreement.

             (4)  If:

                     (a)  an enterprise agreement referred to in paragraph (2)(b) was in force immediately before the application day; and

                     (b)  the nominal expiry date of the agreement passed before the application day;

the circumstance in subregulation (2) ceases to apply on 1 July 2015.

Remuneration arrangement not relating to enterprise agreement or collective agreement‑based transitional instrument

             (5)  A circumstance is that:

                     (a)  the benefit is paid under a remuneration arrangement between an employer and an employee; and

                     (b)  the benefit is not paid in accordance with an enterprise agreement (including its associated documents) or a collective agreement‑based transitional instrument (including its associated documents); and

                     (c)  the benefit is payable in relation to a period that ends before 1 July 2015.

Definitions

             (6)  In this regulation:

collective agreement‑based transitional instrument has the meaning given by subitem 2(5) of Schedule 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.

enterprise agreement has the same meaning as in the Fair Work Act 2009.

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)

             (1)  This regulation:

                     (a)  is made for subsection 1528(2) of the Act; and

                     (b)  prescribes a circumstance in which Division 4 of Part 7.7A of Chapter 7 of the Act does not apply to a benefit.

Note:          Subsection 1528(1) of the Act sets out a rule about when Division 4 of Part 7.7A of Chapter 7 of the Act does not apply to a benefit given to a financial services licensee, or a representative of a financial services licensee. Subsection 1528(2) of the Act permits regulations to prescribe circumstances in which that Division applies, or does not apply, to a benefit.

             (2)  The circumstance is that:

                     (a)  the benefit is paid under an arrangement (the new arrangement) that was entered into on or after the application day, within the meaning of subsection 1528(4) of the Act; and

                     (b)  the new arrangement is on the same terms as an arrangement (the previous arrangement) that was in place immediately before the application day, except that the new arrangement does not provide for the giving of remuneration that would not be permissible under section 1528 of the Act or regulations made for that section; and

                     (c)  the previous arrangement was terminated as a result of the application of Division 4 of Part 7.7A of Chapter 7 of the Act.

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)

             (1)  This regulation:

                     (a)  is made for subsection 1528(2) of the Act; and

                     (b)  prescribes a circumstance in which Division 4 of Part 7.7A of Chapter 7 of the Act does not apply to a benefit.

Note:          Subsection 1528(1) of the Act sets out a rule about when Division 4 of Part 7.7A of Chapter 7 of the Act does not apply to a benefit given to a financial services licensee, or a representative of a financial services licensee. Subsection 1528(2) of the Act permits regulations to prescribe circumstances in which that Division applies, or does not apply, to a benefit.

             (2)  The circumstance is that:

                     (a)  the benefit is given under an arrangement that was entered into before the application day, within the meaning of subsection 1528(4) of the Act; and

                     (b)  a party to the arrangement changes.

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

                   A benefit is not conflicted remuneration to the extent that:

                     (a)  the benefit is a pass through of a benefit (a grandfathered benefit) to which Division 4 of Part 7.7A of Chapter 7 of the Act does not apply because of subsection 1528(1) or (3) of the Act or a regulation made for subsection 1528(2) of the Act; and

                     (b)  the benefit, as passed through, was given under an arrangement:

                              (i)  that was entered into before the application day, within the meaning of subsection 1528(4) of the Act; or

                             (ii)  by which an authorised representative of a financial services licensee became an authorised representative of another financial services licensee; or

                            (iii)  by which a representative of a financial services licensee, or an employee of an authorised representative of a financial services licensee, became an authorised representative of the licensee or a related body corporate of the licensee; and

                     (c)  the benefit, as passed through, is consistent with purposes of the arrangement under which the grandfathered benefit was paid; and

                     (d)  the total amount of the benefit, as passed through, does not exceed 100 per cent of the grandfathered benefit.

Subdivision 6Application provisions relating to the Corporations Amendment (Life Insurance Remuneration Arrangements) Act 2017

7.7A.16G  Definitions

                   In this Subdivision:

amending Act means the Corporations Amendment (Life Insurance Remuneration Arrangements) Act 2017.

commencement day means the day on which Schedule 1 to the Corporations Amendment (Life Insurance Remuneration Arrangements) Act 2017 commences.

7.7A.16H  Life risk insurance products substantially related to existing products

             (1)  This regulation is made for the purposes of subsection 1549B(3) of the Act.

             (2)  The amendments made by Schedule 1 to the amending Act do not apply to a benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to a life risk insurance product issued to a person on or after the commencement day (the post‑commencement product) if:

                     (a)  the person held another life risk insurance product immediately before the commencement day (the pre‑commencement product); and

                     (b)  either:

                              (i)  the person acquires the post‑commencement product by exercising an option given to the person under the pre‑commencement product; or

                             (ii)  the person acquires the post‑commencement product because the pre‑commencement product was cancelled due to an administrative error.

Subdivision 7Asset‑based fees on borrowed amounts

7.7A.17  Financial services licensees

                   For subsection 964D(4) of the Act, a circumstance in which subsections 964D(1) and (2) of the Act do not apply is that the asset‑based fee being charged is a brokerage fee within the meaning of regulation 7.7A.12D.

7.7A.18  Authorised representatives

                   For subsection 964E(3) of the Act, a circumstance in which subsection 964E(1) of the Act does not apply is that the asset‑based fee being charged is a brokerage fee within the meaning of regulation 7.7A.12D.

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

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

                   For paragraph 1368(d) of the Act, Part 7.7A of the Act does not have effect in relation to a financial services licensee or an authorised representative in respect of financial services provided to retail clients who are not in this jurisdiction.

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

Division 2Dealing with clients’ money

Subdivision AMoney other than loans

7.8.01A  Wholesale client money

                   For the purposes of paragraph 981A(4)(a) of the Act, money paid as mentioned in subsection 981A(1) of the Act is exempt from Subdivision A of Division 2 of Part 7.8 of the Act at a time if:

                     (a)  at that time the licensee has the client’s written agreement to the money being dealt with other than in accordance with that Subdivision; and

Note 1:    It is not necessary for the agreement to mention that Subdivision explicitly.

Note 2:    If the licensee obtains the agreement after the money is paid, that Subdivision ceases to apply to the money when the licensee obtains the agreement.

                     (b)  either:

                              (i)  the financial service referred to in subparagraph 981A(1)(a)(i) of the Act is or relates to a dealing in a derivative; or

                             (ii)  the financial product referred to in subparagraph 981A(1)(a)(ii) of the Act is a derivative; and

                     (c)  the entry into of the derivative was not or will not be cleared through a clearing and settlement facility; and

                     (d)  the financial service or product would have been provided to the client as a wholesale client if:

                              (i)  the service or product were provided to the client when the money was paid; and

                             (ii)  section 761GA of the Act (about sophisticated investors) did not apply.

7.8.01  Obligation to pay money into an account

             (1)  For subparagraph 981B(1)(a)(i) of the Act, the reference in that subparagraph to an account with an Australian ADI does not prevent a financial services licensee that is an ADI from paying money into an account held by itself.

             (2)  For subparagraph 981B(1)(a)(ii) of the Act, the following accounts are prescribed:

                     (a)  an account with an approved foreign bank;

                     (b)  a cash management trust.

             (3)  For subparagraph 981B(1)(b)(iv) of the Act, if, in accordance with an agreement mentioned in paragraph 7.8.02(3)(a), a financial services licensee is required to pay an amount mentioned in subparagraph 7.8.02(3)(a)(iv), that amount is money which must be paid into an account to which that subparagraph applies.

             (4)  For subparagraph 981B(1)(b)(iv) of the Act:

                     (a)  money paid to a financial services licensee:

                              (i)  from or on behalf or an insured or intending insured for or on account of an insurer; and

                             (ii)  in connection with a contract of insurance or proposed contract of insurance;

                            is money which may be paid into an account to which that subparagraph applies; and

                     (b)  money paid to a financial services licensee from or on behalf of an insurer for or on account of an insured or intending insured is money which may be paid into an account to which that subparagraph applies.

          (4A)  For subparagraph 981B(1)(b)(iv) of the Act, if a financial services licensee is required, by the market integrity rules or the operating rules of a licensed market, to pay an amount into an account to which section 981B relates, the amount is money which may be paid into that account.

             (5)  For paragraph 981B(1)(c) of the Act, a financial services licensee must:

                     (a)  operate an account to which that paragraph applies as a trust account; and

                     (b)  designate the account to be a trust account; and

                     (c)  hold all moneys paid into the account (other than moneys paid to the financial services licensee under the financial services licensee’s obligation to call margins from clients under the market integrity rules, the operating rules of a licensed market or the operating rules of a licensed CS facility) on trust for the benefit of the person who is entitled to the moneys.

             (6)  For subparagraph 981B(1)(b)(iv) of the Act, money received under section 1017E of the Act is money which may be paid into:

                     (a)  an account to which section 981B relates; or

                     (b)  an insurance broking account maintained under section 26 of the Insurance (Agents and Brokers) Act 1984.

             (7)  For paragraph 981B(1)(c) of the Act, if money received under section 1017E of the Act is paid into an account under subregulation (6), Part 7.8 of the Act applies to the money.

Note:          See also subregulation 7.9.08(3).

             (8)  For paragraph 981B(1)(c) of the Act, if a financial services licensee is required to call margins from a client under the market integrity rules, the operating rules of a licensed market or the operating rules of a licensed CS facility:

                     (a)  the financial services licensee may operate an account to which that paragraph applies as:

                              (i)  a clients’ segregated account; or

                             (ii)  a trust account;

                            in accordance with the operating rules or market integrity rules; and

                     (b)  if:

                              (i)  the account is operated outside Australia; and

                             (ii)  the law in force in the jurisdiction where it is maintained requires the account to be designated in a particular way;

                            the financial services licensee must designate the account in that way.

Note:          The operating rules or market integrity rules may require client moneys, including moneys used for margining, to be held in either a clients’ segregated account or a trust account.

             (9)  For subparagraph 981B(1)(b)(iv) of the Act, if an account is operated in accordance with subregulation (8), all money received by the financial services licensee under Subdivision A of Division 2 of Part 7.8 of the Act is money that may be paid into that account.

           (10)  Subregulation (8) does not affect the operation of section 981E of the Act.

           (11)  For subparagraph 981B(1)(b)(iv) of the Act, each of the following is money that may be paid into an account:

                     (a)  mixed money;

                     (b)  unidentified money.

           (12)  For paragraph 981B(1)(c) of the Act, if mixed money is paid into an account under subregulation (11), the licensee must, as soon as practicable, but within 1 month after the mixed money is paid into the account, remove from the account the part of the money that is not section 981B money.

           (13)  For paragraph 981B(1)(c) of the Act, if unidentified money is paid into an account under subregulation (11), the licensee must, as soon as practicable after the unidentified money is paid into the account:

                     (a)  identify any part of the money that is section 981B money; and

                     (b)  remove from the account any part of the money that is not section 981B money.

           (14)  For subregulations (11) to (13):

mixed money means money that:

                     (a)  is received by the licensee as a single payment; and

                     (b)  is not wholly section 981B money, but includes section 981B money.

section 981B money means:

                     (a)  money to which Subdivision A of Division 2 of Part 7.8 of the Act applies; or

                     (b)  money that is allowed to remain in the account because of the operation of subparagraphs 981B(1)(b)(ii) and (iii) of the Act; or

                     (c)  money mentioned in subregulation (4).

unidentified money means money that:

                     (a)  is received by the licensee as a single payment; and

                     (b)  at the time of receipt, is unable to be identified as section 981B money or mixed money; and

                     (c)  might include section 981B money.

7.8.02  Accounts maintained for section 981B of the Act

Withdrawals from account

             (1)  For paragraph 981C(1)(a) of the Act, payments may be made out of an account maintained for section 981B of the Act in any of the following circumstances:

                     (a)  making a payment to, or in accordance with the written direction of, a person entitled to the money (subject to regulation 7.8.02A);

                     (b)  defraying brokerage and other proper charges;

                     (c)  paying to the financial services licensee money to which the financial services licensee is entitled (subject to regulation 7.8.02A);

                     (d)  making a payment of moneys due to an insurer in connection with a contract of insurance;

                     (e)  making a payment that is otherwise authorised by law;

                      (f)  paying to the financial services licensee money to which the financial services licensee is entitled pursuant to the market integrity rules or the operating rules of a licensed market.

          (1A)  For paragraph 981C(1)(a) and subparagraph 981B(1)(b)(iv) of the Act, if, under paragraph (1)(a), a financial services licensee (the paying licensee) withdraws money from an account maintained for section 981B of the Act and pays it to another financial services licensee (the receiving licensee):

                     (a)  the paying licensee must ensure that the receiving licensee is notified, at the same time as the payment is made or as soon as practicable, that the money:

                              (i)  has been withdrawn from an account of the paying licensee maintained for section 981B of the Act; and

                             (ii)  should be paid into an account of the receiving licensee maintained for section 981B of the Act; and

                     (b)  not later than the day after the receiving licensee receives the payment, the receiving licensee must pay the money into an account of the receiving licensee maintained for section 981B of the Act.

Permissible investments

             (2)  For paragraph 981C(1)(a) of the Act, and subject to subregulations (3), (4) and (5), the following kinds of investment may be made in relation to an account maintained for section 981B of the Act:

                     (a)  investment in any manner in which trustees are for the time being authorised by law to invest trust funds;

                     (b)  investment on deposit with an eligible money market dealer;

                     (c)  investment on deposit at interest with an Australian ADI;

                     (d)  the acquisition of cash management trust interests;

                     (e)  investment in a security issued or guaranteed by the Commonwealth or a State or Territory;

                      (f)  investment on deposit with a licensed CS facility.

             (3)  A financial services licensee must not invest an amount in a way permitted by subregulation (2) unless:

                     (a)  the financial services licensee has obtained the client’s written agreement to the following matters:

                              (i)  the making of the investment;

                             (ii)  how earnings on the investment are to be dealt with (including whether or not the earnings are to be shared, and whether or not the earnings are to be paid into the account);

                            (iii)  how the realisation of the investment is to be dealt with (including whether or not the capital invested, and the proceeds of the investment, are to be deposited into the account);

                            (iv)  how any losses made on the investment are to be dealt with (including the circumstances in which the financial services licensee is required to pay an amount equal to the difference between the amount invested and the amount received, into the account or otherwise);

                             (v)  the fee (if any) that the financial services licensee proposes to charge for the investment; and

                     (b)  the money is money to which the client is entitled.

Note:          The investment arrangement may be a managed investment scheme.

             (4)  For paragraph 981A(4)(a) of the Act, subregulation (3) does not apply to money to which subregulation 7.8.01(4) applies.

             (5)  In subregulation (2):

investment does not include the making of an investment in accordance with the specific direction of a client.

Note:          Paragraph (1)(a) deals with the withdrawal of money from an account in accordance with the written direction of a person entitled to the money.

             (6)  For paragraph 981C(1)(b) of the Act, in relation to moneys received in relation to insurance products, the financial services licensee must ensure that:

                     (a)  the balance of moneys in an account maintained by the financial services licensee under section 981B of the Act; and

                     (b)  the total amount previously withdrawn from the account and currently invested under subregulation (2);

is at least the sum of:

                     (c)  any amounts that an insurer is entitled to receive from the account; and

                     (d)  any amounts that an insured or intending insured is entitled to receive from the account.

          (6A)  For paragraph (6)(c), if, at a particular time, money received by a financial services licensee for or on account of an insurer as mentioned in paragraph 7.8.01(4)(a) is paid into the account, the insurer is taken to be entitled to receive payment of:

                     (a)  the amount; or

                     (b)  if any deductions from the amount are authorised by a written agreement between the insurer and the broker—the amount less the deductions;

throughout the period:

                     (c)  beginning at that time; and

                     (d)  ending when the payment is actually made to the insurer;

whether or not the amount has been invested under subregulation (2).

          (6B)  For paragraph (6)(d), if, at a particular time, money received by a financial services licensee for or on account of an insured or intending insured as mentioned in paragraph 7.8.01(4)(b) is paid into an account, the insured or intending insured is taken to be entitled to receive payment of the amount throughout the period:

                     (a)  beginning at that time; and

                     (b)  ending when the payment is actually made to the insured or intending insured;

whether or not the amount has been invested under subregulation (2).

          (6C)  On application by a financial services licensee in the prescribed form, ASIC may consent in writing to the minimum balance of monies received in relation to insurance products being less than the level specified in subregulation (6).

             (7)  For paragraph 981C(1)(c) of the Act, if money is held in an account maintained for section 981B of the Act:

                     (a)  the financial services licensee is entitled to the interest on the account; and

                     (b)  the interest on the account is not required to be paid into the account;

only if the financial services licensee discloses to the client that the financial services licensee is keeping the interest (if any) earned on the account.

Interest and other earnings on investments

             (8)  For paragraph 981C(1)(d) of the Act, interest or other earnings on:

                     (a)  an investment of money withdrawn from an account maintained for section 981B of the Act; or

                     (b)  the proceeds of the realisation of such an investment;

must be dealt with in accordance with the written agreement between the financial services licensee and the client under subregulation (3).

7.8.02A  Accounts maintained for the purposes of section 981B of the Act—special rules for retail clients

             (1)  Paragraph 7.8.02(1)(a) does not apply to a written direction to the extent the direction allows the financial services licensee to use derivative retail client money as mentioned in subregulation (3) of this regulation.

             (2)  Paragraph 7.8.02(1)(c) does not apply to an entitlement of the financial services licensee to use derivative retail client money as mentioned in subregulation (3) of this regulation.

             (3)  Subregulations (1) and (2) apply to using the money:

                     (a)  as the licensee’s capital, including working capital; or

                     (b)  for the purpose of meeting obligations incurred by the licensee other than on behalf of the client; or

                     (c)  for the purpose of entering into, or meeting obligations under, transactions that the licensee enters into to hedge, counteract or offset the risk to the licensee associated with a transaction between the licensee and the client.

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

             (1)  For paragraph 981F(a) of the Act, this regulation applies if a financial services licensee ceases to be licensed (including a cessation because the financial services licensee’s licence has been suspended or cancelled).

             (2)  For paragraph 981F(b) of the Act, this regulation applies if a financial services licensee:

                     (a)  becomes insolvent under an administration; or

                     (b)  is the subject of any of the following arrangements:

                              (i)  the appointment of an administrator under section 436A, 436B or 436C of the Act;

                             (ii)  the commencement of winding up;

                            (iii)  the appointment of a receiver of property of the financial services licensee, whether by a court or otherwise;

                            (iv)  the appointment of a receiver and manager of property of the financial services licensee, whether by a court or otherwise;

                             (v)  entry into a compromise or arrangement with creditors of the financial services licensee, or a class of creditors;

                            (vi)  if the financial services licensee is deceased—administration of the estate of the financial services licensee under Part XI of the Bankruptcy Act 1966;

                           (vii)  if the financial services licensee is deceased—administration of the estate of the financial services licensee under the law of an external Territory that provides for the administration of the insolvent estate of a deceased person;

                          (viii)  an arrangement under the law of a foreign country that provides for a matter mentioned in subparagraphs (i) to (vii).

             (3)  For paragraph 981F(d) of the Act, this regulation applies if:

                     (a)  a financial services licensee ceases to carry on a particular activity authorised by the financial services licence; and

                     (b)  money is paid in connection with that activity.

             (4)  For each person who is entitled to be paid money from an account of the financial services licensee maintained for section 981B of the Act, the account is taken to be subject to a trust in favour of the person.

             (5)  If money in an account of the financial services licensee maintained for section 981B of the Act has been invested, for each person who is entitled to be paid money from the account, the investment is taken to be subject to a trust in favour of the person.

             (6)  Money in the account of the financial services licensee maintained for section 981B of the Act is to be paid as follows:

                     (a)  the first payment is of money that has been paid into the account in error;

                     (b)  if money has been received on behalf of insureds in accordance with a contract of insurance, the second payment is payment to each insured person who is entitled to be paid money from the account, in the following order:

                              (i)  the amounts that the insured persons are entitled to receive from the moneys in the account in respect of claims that have been made;

                             (ii)  the amounts that the insured persons are entitled to receive from the moneys in the account in respect of other matters;

                     (c)  if:

                              (i)  paragraph (b) has been complied with; or

                             (ii)  paragraph (b) does not apply;

                            the next payment is payment to each person who is entitled to be paid money from the account;

                     (d)  if the money in the account is not sufficient to be paid in accordance with paragraph (a), (b) or (c), the money in the account must be paid in proportion to the amount of each person’s entitlement;

                     (e)  if there is money remaining in the account after payments made in accordance with paragraphs (a), (b) and (c), the remaining money is taken to be money payable to the financial services licensee.

             (7)  This regulation applies despite anything to the contrary in the Bankruptcy Act 1966 or a law relating to companies.

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

                   For paragraph 981H(3)(b) of the Act, if client money is held by an investment mentioned in subregulation 7.8.02(5) following a breach of a financial services law:

                     (a)  the money is subject to a trust in favour of the client to the extent that the client is entitled to the money; and

                     (b)  any investment of the money is subject to a trust in favour of the client to the extent that the client is entitled to the investment; and

                     (c)  the proceeds of a realisation of an investment of the money are subject to a trust in favour of the client to the extent that the client is entitled to the proceeds.

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

             (1)  For paragraph 981H(3)(b) of the Act, this regulation applies if, in relation to an insurance product:

                     (a)  a financial services licensee is holding money to which Subdivision A of Division 2 of Part 7.8 of the Act applies; and

                     (b)  the risk in relation to the insurance product has been accepted by an insurer.

             (2)  The financial services licensee holds the money on trust for the insurer in accordance with Division 2 of Part 7.8 of the Act, subject to the agreement of the insurer.

             (3)  This regulation does not affect the operation of regulations 7.8.03 and 7.8.08.

             (4)  For paragraph 981C(1)(c) of the Act, if money to which this regulation applies is held in an account maintained for section 981B of the Act:

                     (a)  the financial services licensee is entitled to the interest on the account; and

                     (b)  the interest on the account is not required to be paid into the account.

Subdivision AAClient money reporting rules

7.8.05A  Definitions for Subdivision AA of Division 2

                   In this Subdivision:

client money reporting infringement notice means an infringement notice given under regulation 7.8.05C.

client money reporting infringement notice period has the meaning given by subregulation 7.8.05H(2).

recipient, in relation to a client money reporting infringement notice, means the person to whom ASIC gives the infringement notice, or intends to give the infringement notice, under regulation 7.8.05C.

7.8.05B  Enforceable undertakings

             (1)  For the purposes of paragraph 981N(1)(d) of the Act, ASIC may accept a written undertaking, given by a person who is alleged to have contravened subsection 981M(1) of the Act, as an alternative to civil proceedings.

             (2)  Without limiting subregulation (1), ASIC may accept an undertaking that includes any of the following:

                     (a)  an undertaking to take specified action within a specified period;

                     (b)  an undertaking to refrain from taking specified action;

                     (c)  an undertaking to pay a specified amount within a specified period to the Commonwealth or to some other specified person.

Note:          An undertaking may relate to a client money reporting infringement notice given in relation to the alleged contravention. For example, an infringement notice may require a person to give an undertaking, a person may give an undertaking to comply with an infringement notice or a person may give an undertaking if the person does not comply with an infringement notice or if the infringement notice is withdrawn.

             (3)  If ASIC agrees, in writing, to the withdrawal or variation of the undertaking, the person who gave the undertaking may withdraw or vary the undertaking.

             (4)  If ASIC is satisfied that the person who gave the undertaking has breached a term of the undertaking, ASIC may apply to a Court for an order under subregulation (5).

             (5)  If the Court is satisfied that the person has breached a term of the undertaking, the Court may make one or more of the following orders:

                     (a)  an order directing the person to comply with the term of the undertaking;

                     (b)  an order directing the person to pay to the Commonwealth an amount not exceeding the amount of any financial benefit that the person has obtained directly or indirectly and that is reasonably attributable to the breach;

                     (c)  an order directing the person to compensate another person who has suffered loss or damage as a result of the breach;

                     (d)  any other order that the Court considers appropriate.

             (6)  This regulation does not affect the liability of a person to civil proceedings if ASIC does not accept an undertaking in relation to the alleged contravention referred to in subregulation (1).

7.8.05C  Client money reporting infringement notices

             (1)  This regulation is made for the purposes of subsection 981N(1) of the Act.

             (2)  If ASIC has reasonable grounds to believe that a person has contravened subsection 981M(1) of the Act, ASIC may give the person an infringement notice (a client money reporting infringement notice) in relation to the alleged contravention.

             (3)  A client money reporting infringement notice may relate to one or more alleged contraventions of a client money reporting rule.

             (4)  If ASIC withdraws a client money reporting infringement notice given to a person in relation to an alleged contravention of a client money reporting rule, ASIC may give the person a new infringement notice in relation to the alleged contravention.

Example:    A client money reporting infringement notice given to a person in relation to an alleged contravention of a client money reporting rule may be withdrawn, and a new infringement notice given to the person in relation to that alleged contravention, if the original infringement notice contained an error.

7.8.05D  Effect of client money reporting infringement notice provisions

             (1)  Regulations 7.8.05C to 7.8.05Q do not require ASIC to give a client money reporting infringement notice to a person in relation to an alleged contravention of a client money reporting rule.

             (2)  Regulations 7.8.05C to 7.8.05Q do not affect the liability of a person to civil proceedings if ASIC does not give a client money reporting infringement notice to the person in relation to an alleged contravention of a client money reporting rule.

             (3)  Regulations 7.8.05C to 7.8.05Q do not affect the liability of a person to civil proceedings if:

                     (a)  ASIC gives a client money reporting infringement notice to the person in relation to an alleged contravention of a client money reporting rule; and

                     (b)  either:

                              (i)  the infringement notice is withdrawn; or

                             (ii)  the person does not comply with the infringement notice in accordance with regulation 7.8.05H.

             (4)  Regulations 7.8.05C to 7.8.05Q do not limit or otherwise affect the penalty that a Court could impose on the person for a contravention of a client money reporting rule.

7.8.05E  Statement of reasons must be given

             (1)  Before giving a recipient a client money reporting infringement notice, ASIC must:

                     (a)  give the recipient a written statement that sets out ASIC’s reasons for believing that the recipient has contravened a client money reporting rule; and

                     (b)  give the recipient, or a representative of the recipient, an opportunity to:

                              (i)  appear at a private hearing before ASIC; and

                             (ii)  give evidence to ASIC; and

                            (iii)  make submissions to ASIC;

                            in relation to the alleged contravention of the client money reporting rule.

             (2)  If a recipient, or a representative of a recipient, gives ASIC evidence or information under paragraph (1)(b) in relation to the alleged contravention of a client money reporting rule, the evidence or information is not admissible in evidence in any proceedings against the recipient, other than proceedings relating to the evidence or information being false or misleading.

7.8.05F  Contents of client money reporting infringement notice

                   A client money reporting infringement notice:

                     (a)  must state the date on which it is given; and

                     (b)  must be identified by a unique code; and

                     (c)  must state the name and address of the recipient; and

                     (d)  must state that it is being given by ASIC under regulation 7.8.05C; and

                     (e)  must specify details of each alleged contravention of a client money reporting rule to which the infringement notice relates, including:

                              (i)  the conduct that made up each alleged contravention (including, to the extent known, the date on which it occurred and the place at which it occurred); and

                             (ii)  each client money reporting rule that ASIC alleges the recipient has contravened; and

                      (f)  must, in relation to each client money reporting rule to which the infringement notice relates, state the maximum pecuniary penalty that a Court could order the recipient to pay for contravening the rule; and

                     (g)  must, in relation to each alleged contravention of a client money reporting rule to which the infringement notice relates:

                              (i)  specify the penalty (if any) payable for the alleged contravention; and

                             (ii)  specify the remedial measures (if any) that the recipient must undertake or institute; and

                            (iii)  specify the sanctions (if any) that the recipient must accept; and

                            (iv)  specify the terms of an undertaking (if any) that the recipient must give under regulation 7.8.05B; and

                     (h)  if one or more penalties are specified in the infringement notice—must:

                              (i)  specify the total penalty that the recipient must pay to the Commonwealth; and

                             (ii)  state that the penalty is payable to ASIC on behalf of the Commonwealth; and

                            (iii)  explain how the penalty can be paid; and

                      (i)  must state that the recipient may choose not to comply with the infringement notice, but that if the recipient does not comply, civil proceedings may be brought against the recipient in relation to the alleged contravention; and

                      (j)  must explain what the recipient must do to comply with the infringement notice and the effect of compliance with the infringement notice; and

                     (k)  must state that the recipient may apply to ASIC:

                              (i)  for withdrawal of the notice under regulation 7.8.05L; or

                             (ii)  for an extension of time under regulation 7.8.05J; and

                      (l)  must state that ASIC may publish details of the infringement notice under regulation 7.8.05Q; and

                    (m)  may include any other information that ASIC considers necessary.

Note:          For the purposes of subparagraph (h)(i), the total penalty is the sum of the penalties payable under subparagraph (g)(i).

7.8.05G  Amount of penalty payable to the Commonwealth

             (1)  The penalty payable for an alleged contravention of a client money reporting rule is the amount determined by ASIC (which may be nil), subject to subsection 981N(2) of the Act.

Note:          See subsection 981N(2) of the Act for the maximum penalty payable.

             (2)  If a client money reporting infringement notice relates to more than one alleged contravention, the total penalty payable under the infringement notice is the sum of the penalties (if any) payable for the alleged contraventions.

7.8.05H  Compliance with client money reporting infringement notice

             (1)  A recipient complies with a client money reporting infringement notice if, during the client money reporting infringement notice period, the recipient does all of the following:

                     (a)  pays the total penalty specified in the infringement notice under subparagraph 7.8.05F(h)(i) (if any);

                     (b)  undertakes or institutes the remedial measures specified in the infringement notice under subparagraph 7.8.05F(g)(ii) (if any);

                     (c)  accepts the sanctions specified in the infringement notice under subparagraph 7.8.05F(g)(iii) (if any);

                     (d)  gives an undertaking (including an undertaking to comply with the infringement notice) with the terms specified in the infringement notice under subparagraph 7.8.05F(g)(iv) (if any).

             (2)  The client money reporting infringement notice period for a client money reporting infringement notice:

                     (a)  starts on the day on which the infringement notice is given to the recipient; and

                     (b)  ends:

                              (i)  27 days after the day on which the infringement notice is given to the recipient; or

                             (ii)  on another day permitted by this regulation.

             (3)  If the recipient applies for a further period of time in which to comply with the client money reporting infringement notice, and the application is granted, the client money reporting infringement notice period ends at the end of the further period allowed.

             (4)  If the recipient applies for a further period of time in which to comply with the client money reporting infringement notice, and the application is refused, the client money reporting infringement notice period ends on the later of:

                     (a)  28 days after the day on which the infringement notice was given to the recipient; and

                     (b)  7 days after the notice of refusal is given to the recipient.

             (5)  If the recipient applies for the client money reporting infringement notice to be withdrawn, and the application is refused, the client money reporting infringement notice period ends 28 days after the notice of refusal is given to the recipient.

7.8.05J  Extension of client money reporting infringement notice period

             (1)  During the client money reporting infringement notice period, a recipient may apply, in writing, to ASIC for a further period of no more than 28 days in which to comply with the client money reporting infringement notice.

             (2)  The application must:

                     (a)  specify the client money reporting infringement notice’s unique identification code; and

                     (b)  set out the reasons for the application.

             (3)  Within 14 days after receiving the application, ASIC must:

                     (a)  grant or refuse a further period no longer than the period sought (and no longer than 28 days); and

                     (b)  notify the recipient in writing of the decision and, if the decision is a refusal, the reasons for the decision.

             (4)  If ASIC refuses a further period under paragraph (3)(a), the recipient may not make a further application under subregulation (1) in relation to that client money reporting infringement notice.

             (5)  If ASIC does not grant or refuse a further period under paragraph (3)(a) within 14 days after receiving the application, ASIC is taken to have refused a further period.

7.8.05K  Effect of compliance with client money reporting infringement notice

             (1)  Subject to subregulation (3), if:

                     (a)  a client money reporting infringement notice is given to a recipient in relation to an alleged contravention of a client money reporting rule; and

                     (b)  the infringement notice is not withdrawn; and

                     (c)  the recipient complies with the infringement notice;

the effects in subregulation (2) apply.

             (2)  The effects are:

                     (a)  any liability of the recipient to the Commonwealth for the alleged contravention of the client money reporting rule is discharged; and

                     (b)  no civil or criminal proceedings may be brought or continued by the Commonwealth against the recipient for the conduct specified in the client money reporting infringement notice as being the conduct that made up the alleged contravention of the client money reporting rule or rules; and

                     (c)  no administrative action may be taken by ASIC under section 914A, 915B, 915C or 920A of the Act against the recipient for the conduct specified in the infringement notice as being the conduct that made up the alleged contravention of the client money reporting rule; and

                     (d)  the recipient is not taken to have admitted guilt or liability in relation to the alleged contravention; and

                     (e)  the recipient is not taken to have contravened the client money reporting rule.

Note:          Third parties are not prevented from commencing civil proceedings against the recipient, including under section 1101B of the Act. ASIC is not prevented from applying for an order on behalf of a plaintiff in accordance with the Act.

             (3)  Subregulation (2) does not apply if the recipient has knowingly:

                     (a)  provided false or misleading information to ASIC; or

                     (b)  withheld evidence or information from ASIC;

in relation to the alleged contravention of the client money reporting rule.

7.8.05L  Application to withdraw client money reporting infringement notice

             (1)  During the client money reporting infringement notice period, a recipient of a client money reporting infringement notice may apply, in writing, to ASIC for the infringement notice to be withdrawn.

             (2)  The application must:

                     (a)  specify the client money reporting infringement notice’s unique identification code; and

                     (b)  set out the reasons for the application.

             (3)  Within 14 days after receiving the application, ASIC must:

                     (a)  withdraw or refuse to withdraw the client money reporting infringement notice; and

                     (b)  notify the recipient in writing of the decision and, if the decision is a refusal, the reasons for the decision.

             (4)  In deciding whether to withdraw the client money reporting infringement notice, ASIC may take the following matters into account:

                     (a)  whether the recipient has previously been found to have contravened subsection 981M(1) of the Act;

                     (b)  the circumstances in which the contravention set out in the infringement notice is alleged to have occurred;

                     (c)  whether an infringement notice has previously been given to the recipient in relation to an alleged contravention of subsection 981M(1) of the Act, and whether the recipient complied with the infringement notice;

                     (d)  any other relevant matters.

             (5)  If ASIC refuses to withdraw the client money reporting infringement notice, the recipient may not make a further application under subregulation (1) in relation to that infringement notice.

             (6)  If ASIC has not withdrawn, or refused to withdraw, the client money reporting infringement notice within 14 days after receiving the application, ASIC is taken to have refused to withdraw the infringement notice.

7.8.05M  Withdrawal of client money reporting infringement notice by ASIC

             (1)  ASIC may withdraw a client money reporting infringement notice given by ASIC without an application under regulation 7.8.05L having been made.

             (2)  In deciding whether to withdraw a client money reporting infringement notice under this regulation, ASIC may take the matters referred to in subregulation 7.8.05L(4) into account.

7.8.05N  Notice of withdrawal of client money reporting infringement notice

             (1)  A notice withdrawing a client money reporting infringement notice must include the following information:

                     (a)  the name and address of the recipient;

                     (b)  the date the infringement notice was given;

                     (c)  the infringement notice’s unique identification code.

             (2)  The notice must also state that the client money reporting infringement notice is withdrawn.

7.8.05P  Withdrawal of notice after compliance

             (1)  ASIC may withdraw a client money reporting infringement notice after the recipient has complied with the infringement notice only if the recipient agrees, in writing, to the withdrawal.

             (2)  If a client money reporting infringement notice is withdrawn after the penalty specified in it (if any) has been paid, the Commonwealth must refund the amount of the penalty to the person who paid it.

             (3)  If a client money reporting infringement notice is withdrawn after the recipient has complied with a requirement specified in the infringement notice:

                     (a)  to undertake or institute remedial measures; or

                     (b)  to accept sanctions other than a payment of a penalty to the Commonwealth; or

                     (c)  to give an undertaking;

the remedial measures, sanctions or undertaking are taken to no longer be enforceable by ASIC.

7.8.05Q  Publication of details of client money reporting infringement notice

             (1)  If ASIC gives a client money reporting infringement notice to a recipient, ASIC may, at the end of the client money reporting infringement notice period, publish details of the infringement notice.

             (2)  If ASIC decides to publish details of the client money reporting infringement notice, ASIC must publish the details in accordance with either or both of subregulations (3) and (4).

             (3)  ASIC may publish details of a client money reporting infringement notice by publishing in the Gazette:

                     (a)  a copy of the infringement notice; and

                     (b)  a statement as to whether the recipient has complied with the infringement notice; and

                     (c)  if the recipient has complied with the infringement notice—a statement that:

                              (i)  compliance is not an admission of guilt or liability; and

                             (ii)  the recipient is not regarded as having contravened a client money reporting rule; and

                     (d)  if the recipient has not complied with the infringement notice—a statement that:

                              (i)  the giving of an infringement notice to a recipient is only an allegation that the recipient has contravened a client money reporting rule; and

                             (ii)  the recipient is not regarded as having contravened the client money reporting rule or rules specified in the infringement notice.

             (4)  ASIC may publish details of a client money reporting infringement notice by issuing a written or oral statement that includes:

                     (a)  an accurate summary of the details of the infringement notice, including:

                              (i)  the name of the recipient; and

                             (ii)  the amount of the penalty specified in the infringement notice (if any); and

                            (iii)  the remedial measures specified in the infringement notice (if any); and

                            (iv)  the sanctions specified in the infringement notice (if any); and

                             (v)  the terms of an undertaking specified in the infringement notice (if any); and

                            (vi)  the conduct specified in the infringement notice as being the conduct that made up the alleged contravention; and

                     (b)  a statement as to whether the recipient has complied with the infringement notice; and

                     (c)  if the recipient has complied with the infringement notice—a statement that:

                              (i)  compliance is not an admission of guilt or liability; and

                             (ii)  the recipient is not regarded as having contravened a client money reporting rule; and

                     (d)  if the recipient has not complied with the infringement notice—a statement that:

                              (i)  the giving of an infringement notice to a recipient is only an allegation that the recipient has contravened a client money reporting rule; and

                             (ii)  the recipient is not regarded as having contravened the client money reporting rule or rules specified in the infringement notice.

Subdivision BLoan money

7.8.06  Statement setting out terms of loan etc

                   For subsection 982C(1) of the Act, the financial services licensee must give a client a disclosure document that contains, as far as practicable, the matters required for Division 2 of Part 7.9 of the Act.

Division 3Dealing with other property of clients

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

                   For paragraph 984A(2)(a) of the Act, property given as security for a standard margin lending facility is exempt from Division 3 of Part 7.8 of the Act.

Note:          Paragraph 984A(2)(a) of the Act provides that the regulations may exempt property given in specified circumstances from some or all of the provisions of Division 3 of Part 7.8 of the Act.

7.8.06B  Wholesale client property

                   For the purposes of paragraph 984A(2)(a) of the Act, property given as mentioned in subsection 984A(1) of the Act is exempt from Division 3 of Part 7.8 of the Act at a time if:

                     (a)  at that time the licensee has the client’s written agreement to the property being dealt with other than in accordance with that Division; and

Note 1:    It is not necessary for the agreement to mention that Division explicitly.

Note 2:    If the licensee obtains the agreement after the property is given, that Division ceases to apply to the property when the licensee obtains the agreement.

                     (b)  either:

                              (i)  the financial service referred to in subparagraph 984A(1)(a)(i) of the Act is or relates to a dealing in a derivative; or

                             (ii)  the financial product referred to in subparagraph 984A(1)(a)(ii) of the Act is a derivative; and

                     (c)  the entry into of the derivative was not or will not be cleared through a clearing and settlement facility; and

                     (d)  the financial service or product would have been provided to the client as a wholesale client if:

                              (i)  the service or product were provided to the client when the property was given; and

                             (ii)  section 761GA of the Act (about sophisticated investors) did not apply.

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

             (1)  For paragraph 984B(1)(a) of the Act, this regulation sets out requirements in relation to property to which Division 3 of Part 7.8 of the Act applies.

             (2)  The financial services licensee must hold the property on trust for the benefit of the person who is entitled to it.

             (3)  If the client requests the financial services licensee, in writing, to deposit the property in safe custody with an ADI:

                     (a)  the licensee must deposit the property; or

                     (b)  if the licensee does not comply with the request for any reason, the licensee must notify the client, as soon as practicable, of the failure to comply with the request.

             (4)  If the client requests the financial services licensee, in writing, to deposit the property in safe custody with a financial services licensee that provides a custodial or depositary service for section 766E of the Act:

                     (a)  the licensee must deposit the property; or

                     (b)  if the licensee does not comply with the request for any reason, the licensee must notify the client, as soon as practicable, of the failure to comply with the request.

             (5)  If the client requests the financial services licensee, in writing, to deposit the property in safe custody in the place where the property was deposited with, or received by, the licensee:

                     (a)  the licensee must deposit the property in accordance with the request; and

                     (b)  if the licensee does not comply with the request for any reason, the licensee must notify the client, as soon as practicable, of the failure to comply with the request.

             (6)  If the client requests that the body corporate that issued or made available the securities, managed investment products or foreign passport fund products underlying the property register the property in the name of a nominee controlled by the financial services licensee, the financial services licensee must arrange for the body corporate to register the securities, managed investment products or foreign passport fund products in that way.

             (7)  If:

                     (a)  none of subsections (3) to (6) applies; and

                     (b)  the property is not registered in the client’s name by the body corporate that issued or made available the securities, managed investment products or foreign passport fund products underlying the property;

the financial services licensee must arrange to have the property registered in the client’s name.

             (8)  A financial services licensee must not deposit property as security for a loan or advance to the financial services licensee unless:

                     (a)  the client owes the financial services licensee an amount in connection with a transaction entered into by the financial services licensee on the client’s behalf; and

                     (b)  the financial services licensee gives the client a written notice that identifies the property and states that the dealer proposes to deposit it as security for a loan or advance to the financial services licensee; and

                     (c)  the amount, or total of the amounts, that the client owes on the day of the deposit is at least the amount of the loan or advance.

             (9)  If a financial services licensee deposits property as security for a loan or advance to the financial services licensee, in accordance with subregulation (8):

                     (a)  the financial services licensee must, not later than 1 business day after the amount, or total of the amounts, that the client owes on the day of the deposit are repaid, withdraw the property from that deposit; and

                     (b)  if, at the end of 3 months after the day of that deposit, or at the end of any subsequent interval of 3 months, the property has not been withdrawn from that deposit—the financial services licensee must give the client written notice of that fact.

           (10)  In this regulation:

property includes scrip, but does not include money.

Division 4Special provisions relating to insurance

7.8.08  Debts of financial services licensee in relation to premiums etc

             (1)  Subregulations (2) to (4) apply if:

                     (a)  money is received by a financial services licensee:

                              (i)  from, or on behalf of, an insured or intending insured, or from another financial services licensee on behalf of an insured or intending insured; and

                             (ii)  as a premium or an instalment of a premium in connection with a contract of insurance or a proposed contract of insurance; and

                     (b)  the risk, or a part of the risk, to which the contract or proposed contract relates is accepted by or on behalf of an insurer; and

                     (c)  the financial services licensee who so received the money is informed of, or otherwise ascertains, the amount of the premium or instalment to be paid.

             (2)  The financial services licensee who received the money must pay to the insurer an amount equal to the amount of the premium or instalment to be paid:

                     (a)  in the period of 90 days (the relevant period) after:

                              (i)  the day on which the cover provided by the insurer under the contract starts to have effect; or

                             (ii)  the first day of the period to which the instalment relates; or

                     (b)  if it is not practicable for the financial services licensee to pay the amount in the relevant period—as soon as practicable after the end of that period.

             (3)  If the financial services licensee has not received the amount of the premium, or of an instalment of the premium, payable in respect of a contract of insurance at the end of the relevant period, the financial services licensee must notify the insurer in writing, not later than 7 days after the end of the relevant period, that the financial services licensee has not received the amount.

             (4)  Subregulation (3) does not apply if the financial services licensee receives the amount:

                     (a)  in the period of 7 days mentioned in subregulation (3); and

                     (b)  before notifying the insurer in accordance with subregulation (3).

             (5)  Subregulations (6) and (7) apply if:

                     (a)  a financial services licensee receives money from, or on behalf of:

                              (i)  an insured or intending insured; or

                             (ii)  another financial services licensee on behalf of an insured or intending insured;

                            as a premium or an instalment of a premium in connection with a contract of insurance or a proposed contract of insurance; and

                     (b)  the risk, or a part of the risk, to which the contract or proposed contract relates is accepted by or on behalf of an insurer; and

                     (c)  the financial services licensee who received the money has not been informed of, and has not otherwise ascertained, the amount of the premium or instalment to be paid.

             (6)  The financial services licensee who received the money must pay the amount mentioned in subregulation (7) to the insurer:

                     (a)  in the period of 90 days (the relevant period) after:

                              (i)  the day on which the cover provided by the insurer under the contract starts to have effect; or

                             (ii)  the first day of the period to which the instalment relates; or

                     (b)  if it is not practicable for the financial services licensee to pay the amount in the relevant period—as soon as practicable after the end of that period.

             (7)  For subregulation (6), the amount is:

                     (a)  for a new contract of insurance, an amount not less than the lesser of:

                              (i)  the amount of the money received; or

                             (ii)  75% of the amount fairly estimated by the financial services licensee to be the premium or instalment that is to be paid; and

                     (b)  for a renewal of a contract of insurance, an amount not less than the lesser of:

                              (i)  the amount of the money so received; or

                             (ii)  75% of the previous year’s premium for the risk, or of the last instalment of that years premium.

             (8)  Subregulation (9) applies if:

                     (a)  the risk, or a part of the risk, to which a contract of insurance or a proposed contract of insurance relates is accepted by or on behalf of an insurer; and

                     (b)  the contract of insurance or proposed contract of insurance has been, or is being, arranged or effected by a financial services licensee (licensee 1), either directly or through another financial services licensee; and

                     (c)  licensee 1 has not been informed of, and has not otherwise ascertained, the amount of a premium or of an instalment of a premium to be paid in connection with the contract or proposed contract.

             (9)  Licensee 1 must, notify the insurer in writing, within 10 days after the day on which the risk, or that part of the risk, was accepted, that:

                     (a)  the risk, or that part of the risk, has been accepted; and

                     (b)  licensee 1 does not know the amount of the premium or instalment to be paid;

unless licensee 1 is informed of, or otherwise ascertains, the amount of the premium or instalment to be paid before notifying the insurer.

           (10)  Nothing in this regulation prevents:

                     (a)  an insurer from making a contract or arrangement with a financial services licensee providing for the financial services licensee to pay an amount to the insurer before the time by which the financial services licensee is required by the provision concerned to pay that amount to the insurer; or

                     (b)  an insurer from authorising a financial services licensee in writing to pay on behalf of the insurer, out of the money received by the financial services licensee as a premium or instalment of a premium in respect of a contract of insurance arranged with the insurer, any charges required by law to be paid by the insurer in respect of the contract; or

                     (c)  a financial services licensee from exercising any legal right available to the financial services licensee to deduct from any moneys payable by the financial services licensee to the insurer any remuneration payable by the insurer to the financial services licensee in relation to a contract of insurance.

           (11)  For subregulation (1) or (5), if the risk, or a part of the risk, to which a contract or proposed contract mentioned in that subregulation is accepted on behalf of an insurer by an insurance intermediary other than the insurance financial services licensee who received the moneys from or on behalf of the insured or intending insured, the payment of the premium, or part of the premium, by the financial services licensee to the intermediary is taken to be a payment of the premium or part of the premium by the financial services licensee to the insurer.

           (12)  For subregulation (3) or (8), if:

                     (a)  a financial services licensee is required to notify an insurer in accordance with that subregulation; and

                     (b)  an insurance intermediary other than the financial services licensee has accepted the risk, or a part of the risk, to which the contract or proposed contract relates on behalf of the insurer;

a notification by the financial services licensee to the intermediary is taken to be a notification by the financial services licensee to the insurer.

           (13)  Subregulations (14) and (15) apply if:

                     (a)  a financial services licensee receives money from, or on behalf of, an insured or intending insured in connection with a contract of insurance or proposed contract of insurance; and

                     (b)  at the end of 30 days after the day on which the money was received, the risk, or a part of the risk, to which the contract or proposed contract relates has not been accepted.

           (14)  If the risk has not been accepted, the financial services licensee must, within 7 days after the end of the 30 day period:

                     (a)  give notice to the insured or intending insured, in a form (if any) approved by ASIC for this paragraph, that the risk has not been accepted; and

                     (b)  return the money to the insured or intending insured.

           (15)  If a part of the risk to which the contract or proposed contract relates has not been accepted, the financial services licensee must, within 7 days after the end of the 30 day period:

                     (a)  give notice to the insured or intending insured, in a form (if any) approved by ASIC for this paragraph, of the extent to which the risk has not been accepted; and

                     (b)  return that part of the money that relates to the part of the risk that has not been accepted to the insured or intending insured.

           (16)  If a financial services licensee receives money from, or on behalf of, an insurer for payment to, or on behalf of, an insured, the financial services licensee must pay an amount equal to the money to, or on behalf of, the insured:

                     (a)  within 7 days after the day on which the financial services licensee received the money; or

                     (b)  if it is not practicable for the financial services licensee to pay the amount in that period—as soon as practicable after the end of the period.

           (17)  Nothing in subregulation (16) prevents:

                     (a)  an insured from making a contract or arrangement with an insurance financial services licensee providing for the financial services licensee to pay an amount mentioned in that subregulation to or on behalf of the insured before the time by which the financial services licensee is required by that subregulation to pay that amount to or on behalf of the insured; or

                     (b)  a financial services licensee from exercising any legal right available to the financial services licensee to deduct from an amount payable by the financial services licensee to the insured any money payable by the insured to the financial services licensee in connection with a contract of insurance.

           (18)  A person is guilty of an offence if the person contravenes subregulation (2), (3), (6), (9), (14) or (16), whether or not it was done with the consent of the insurer or of the insured or intending insured.

Penalty:

                     (a)  for an individual—20 penalty units; and

                     (b)  for a body corporate—200 penalty units.

           (19)  Subregulation (18) does not apply if the person has a reasonable excuse.

Note:          A defendant bears an evidential burden in relation to the matter in subregulation (18) (see subsection 13.3(3) of the Criminal Code).

           (20)  Strict liability applies to subregulation (18).

Note:          For strict liability, see section 6.1 of the Criminal Code.

           (21)  If:

                     (a)  under subregulation (2), (3), (6) or (9), a financial services licensee is required to pay an amount to, or to notify, an insurer; and

                     (b)  under the contract or proposed contract of insurance concerned the insurer is an underwriting member of Lloyd’s;

it is sufficient compliance with the subregulation if the financial services licensee pays the amount to, or notifies, as the case may be, the Lloyd’s broker concerned.

Division 4ASpecial provisions relating to margin lending facilities

Subdivision AResponsible lending conduct for margin lending facilities

7.8.08A  Limit of margin lending facility taken to be increased

             (1)  For paragraph 985E(3)(a) of the Act, the limit of a margin lending facility is taken to be increased, despite subsection 985E(2) of the Act, if:

                     (a)  the increase is a result of a contribution of further secured property or transferred securities that occurs without the prior knowledge or agreement of the provider; and

                     (b)  the provider permits the increase to continue; and

                     (c)  the increase is no more than 5% of the current limit of the margin lending facility (within the meaning given by subsection 761EA(11) of the Act).

             (2)  If the limit of a margin lending facility is taken to be increased in the circumstances mentioned in subregulation (1), subsection 985E(1) of the Act is modified by omitting ‘before the critical day:’ and inserting ‘after the critical day:’.

Note:          Paragraph 992C(1)(c) of the Act provides that the regulations may provide that Part 7.8 of the Act applies as if specified provisions were omitted, modified or varied as specified in the regulations.

             (3)  For subregulation (1), if:

                     (a)  more than one contribution of further secured property or transferred securities under the margin lending facility occurs on a day; and

                     (b)  each of the contributions is taken to increase the limit of the facility; and

                     (c)  either:

                              (i)  the cumulative increase is no more than 5% of the current limit of the margin lending facility; or

                             (ii)  if the cumulative increase is more than 5% of the current limit of the margin lending facility, the provider ensures that the increases are reduced so that the cumulative increase becomes no more than 5% of the current limit of the margin lending facility;

the increases are taken to be one increase for this regulation.

Increase prior to assessment only to occur once

             (4)  Subregulation (5) applies if:

                     (a)  the limit of a margin lending facility is taken to be increased in the circumstances mentioned in subregulation (1); and

                     (b)  an assessment has not yet been made in accordance with section 985F of the Act.

             (5)  If the limit of the margin lending facility would be taken to increase further in accordance with subregulation (1):

                     (a)  the limit is taken not to be further increased until:

                              (i)  an assessment has been made in accordance with section 985F of the Act; and

                             (ii)  it is assessed that the facility will not be unsuitable for the client if the limit is increased; and

                     (b)  the provider must ensure that the increase does not continue unless paragraph (a) permits it.

If facility assessed as unsuitable

             (6)  If:

                     (a)  the limit of a margin lending facility is taken to be increased in the circumstances mentioned in subregulation (1); and

                     (b)  the assessment made in accordance with section 985F of the Act assesses that the facility is unsuitable for the client because of the increased limit;

the limit is taken to be reduced to the limit of the margin lending facility before the increase, and the provider must ensure that the limit is reduced within 90 days of the day the assessment is made.

Facility not unsuitable for subsection 985K(4) of the Act

             (7)  For subsection 985K(4) of the Act, a margin lending facility is taken not to be unsuitable if:

                     (a)  the limit of the margin lending facility is taken to be increased in the circumstances mentioned in subregulation (1); and

                     (b)  the assessment made in accordance with section 985F of the Act assesses that the facility:

                              (i)  is not unsuitable for the client; or

                             (ii)  is unsuitable for the client because of the increased limit; and

                     (c)  in the case of subparagraph (b)(ii), the provider ensures that the limit is reduced, within 90 days of the day the assessment is made, to the limit of the margin lending facility before the increase.

7.8.08B  Exemption from requirement to make unsuitability assessment

             (1)  For paragraph 992C(1)(a) of the Act, a person is exempt from the requirement in paragraph 985E(1)(c) of the Act to make an assessment if the margin lending facility mentioned in paragraph 985E(1)(a) or (b) of the Act is a facility mentioned in subregulation (2):

                     (a)  in respect of the full amount of the loan, including any interest, fees and charges; and

                     (b)  in relation to which the client has not taken out a loan to fund the secured property contributed by the client for establishing the margin lending facility.

             (2)  For subregulation (1), the facility is a standard margin lending facility (within the meaning given by subsection 761EA(2) of the Act) under the terms of which:

                     (a)  the credit provided must be applied wholly:

                              (i)  to acquire one or more marketable securities, or a beneficial interest in one or more marketable securities; or

                             (ii)  to repay another credit facility, under the terms of which the credit provided was applied wholly to acquire one or more marketable securities, or a beneficial interest in one or more marketable securities; and

                     (b)  the secured property mentioned in paragraphs (c) and (d) of that subsection:

                              (i)  consists wholly of one or more marketable securities, or a beneficial interest in one or more marketable securities; or

                             (ii)  consists:

                                        (A)  partly of one or more marketable securities, or a beneficial interest in one or more marketable securities; and

                                        (B)  partly of cash given to the provider and held in trust for the client for the sole purpose of servicing obligations under the facility; and

                     (c)  the liability of the client to the provider is limited to the rights relating to the secured property.

7.8.09  Reasonable inquiries etc about retail client: inquiries

             (1)  For paragraph 985G(1)(c) of the Act, the following inquiries about a client are prescribed in relation to a margin lending facility, or a margin lending facility whose limit is proposed to be increased, within the meaning of subsection 761EA(1) of the Act:

                     (a)  reasonable inquiries as to whether the client has taken out a loan to fund the secured property or transferred securities contributed by the client for establishing the margin lending facility;

Note:          This is sometimes referred to as ‘double gearing’.

                     (b)  if a loan to fund the secured property or transferred securities contributed by the client for establishing the margin lending facility has been taken out—reasonable inquiries as to whether the security for the loan includes the primary residential property of the client;

                     (c)  if there is a guarantor for the margin lending facility—reasonable inquiries as to whether the guarantor has been appropriately informed of, and warned about, the risks and possible consequences of providing the guarantee;

                     (d)  reasonable inquiries as to the amount of any other debt incurred by the client;

                     (e)  any other matter that ASIC has specified in a legislative instrument for subregulation (2).

             (2)  ASIC may specify in a legislative instrument any matter ASIC considers to be relevant for the purpose of establishing whether the margin lending facility, or the margin lending facility with the increased limit, is unsuitable for the client.

7.8.09A  Modification of section 985G of the Act

                   For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies as if section 985G of the Act were modified by inserting after subsection (2) the following subsection:

                 ‘(2A)  The regulations may provide that ASIC may specify in a legislative instrument matters ASIC considers to be relevant for the purposes of paragraph 985G(1)(c) of the Act.’

7.8.10  Circumstances in which margin lending facility is unsuitable

                   For paragraph 985H(2)(b) of the Act, a margin lending facility, or a margin lending facility whose limit is proposed to be increased, within the meaning of subsection 761EA(1) of the Act is unsuitable for a retail client if the client:

                     (a)  is, on an ongoing basis, unable to be contacted by any of the usual means of communication; and

                     (b)  has not appointed an agent to act on the client’s behalf.

7.8.10A  Margin lending facility taken not to be unsuitable

                   For subsection 985K(4) of the Act, a margin lending facility is taken not to be unsuitable:

                     (a)  if:

                              (i)  an assessment of unsuitability was undertaken in accordance with the Act; and

                             (ii)  the assessment reasonably concluded that the margin lending facility is not unsuitable; or

                     (b)  if a person is exempt under regulation 7.8.08B from the requirement to make an assessment of unsuitability in relation to the margin lending facility.

Division 6Financial records, statements and audit

Subdivision BFinancial records of financial services licensees

7.8.11  Particular categories of information to be shown in records

                   For paragraph 988E(g) of the Act, the following matters are specified:

                     (a)  all underwriting transactions entered into by the financial services licensee;

                     (b)  all financial products dealt with by the licensee under instructions from another person;

                     (c)  each person who gave instructions to deal with financial products;

                     (d)  all property:

                              (i)  that is not the property of the financial services licensee; and

                             (ii)  for which the financial services licensee, or a nominee controlled by the financial services licensee, is accountable;

                     (e)  each person by whom, or for whom, property mentioned in paragraph (d) is held;

                      (f)  the extent to which property mentioned in paragraph (d) is:

                              (i)  held in safe custody; or

                             (ii)  deposited with a third party as security for a loan or advance made to the financial services licensee;

                     (g)  all transactions in relation to insurance products entered into with, or on behalf of, foreign insurers.

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

             (1)  This regulation is made for paragraph 988E(g) and section 988F of the Act.

             (2)  The following table sets out matters in relation to a non‑monetary benefit that:

                     (a)  is given to a financial services licensee or a representative of a financial services licensee; and

                     (b)  either:

                              (i)  is not conflicted remuneration in accordance with paragraph 963C(b) of the Act, and is over $100; or

                             (ii)  is not conflicted remuneration in accordance with paragraph 963C(c) or (d) of the Act; or

Note:          Particulars of the matters must be shown in the records kept by the financial services licensee.

 

Item

Matter

1

A description of the benefit

2

Either:

 

(a) the value of the benefit; or

 

(b) if the value is not known, the estimated value of the benefit;

 

expressed as a dollar amount or as a range of dollars

3

The date on which the benefit was given

4

The name of the person who gave the benefit and, if relevant, the number of the person’s financial services licence

5

Whether the benefit was given to the licensee or to a representative of the licensee

6

If the benefit was given to an authorised representative of the licensee, the name and contact details of the authorised representative

7

If the benefit was given to another representative of the licensee, the name and contact details of the other representative

             (3)  At the request of a person, a financial services licensee must give the person the particulars in its records relating to the matters in items 1 to 4 of the table for the last financial year.

             (4)  The licensee may require the person making the request to pay a charge for obtaining the particulars.

             (5)  The amount of the charge must not exceed the reasonable costs that the licensee incurs that are reasonably related to giving the particulars (including any costs incurred in photocopying the document containing the particulars).

Note:          This would include the costs of collating the information.

             (6)  The licensee must give the particulars to the person as soon as practicable, and no later than one month after the person makes the request to the licensee.

7.8.12  Requirements in relation to financial records of financial services licensees

             (1)  For section 988F of the Act, the financial records of a financial services licensee must be kept in sufficient detail as to show or include, for basic deposit products:

                     (a)  separate particulars of every transaction by the financial services licensee; and

                     (b)  the day on which, or the period during which, each transaction by the financial services licensee took place.

             (2)  For section 988F of the Act, the financial records of a financial services licensee must be kept in sufficient detail as to show or include, for all financial products other than basic deposit products:

                     (a)  the information mentioned in subregulation (1); and

                     (b)  if the financial services licensee is not a partner in a firm—separate particulars of each transaction by the financial services licensee with, or for the account of:

                              (i)  clients of the financial services licensee; or

                             (ii)  the financial services licensee’s own account; or

                            (iii)  other financial services licensees; or

                            (iv)  representatives of the financial services licensee; or

                             (v)  employees of the financial services licensee; and

                     (c)  if the financial services licensee is a partner in a firm—separate particulars of each transaction by the financial services licensee with, or for the account of:

                              (i)  clients of the financial services licensee other than the partners in the firm; or

                             (ii)  the partners in the firm; or

                            (iii)  the financial services licensee’s own account; or

                            (iv)  other financial services licensees; or

                             (v)  representatives of the financial services licensee; or

                            (vi)  employees of the financial services licensee; and

                     (d)  copies of acknowledgments of the receipt of financial products or documents of title to financial products.

Subdivision CFinancial statements of financial services licensees

7.8.12A  Modification of section 989B of the Act

             (1)  For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies as if subsection 989B(3) were modified to read as follows:

           “(3)  The licensee must, with the statement and balance sheet, lodge with ASIC:

                     (a)  for a licensee who is a limited licensee for the whole of a financial year—a compliance certificate containing the information and matters required by the regulations; or

                     (b)  for a licensee who is a limited licensee for part of a financial year:

                              (i)  a compliance certificate containing the information and matters required by the regulations for the part of the financial year that the licensee was a limited licensee; and

                             (ii)  an auditor’s reporting containing the information and matters required by the regulations for the part of the financial year that the licensee was not a limited licensee; or

                     (c)  for all other licensees—an auditor’s report containing the information and matters required by the regulations.

Note:          Failure to comply with this subsection is an offence (see subsection 1311(1)).”.

             (2)  For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies as if section 989B of the Act were modified by inserting after subsection 989B(3) the following subsection:

           “(4)  In this section:

class of product advice means financial product advice about a class of products but does not include a recommendation about a specific product in the class.

Example:    A financial services licensee may give a recommendation about term deposit products but must not make a specific recommendation that a person deposit their money into a term deposit product offered by a particular bank or building society.

limited financial service means the following financial services:

                     (a)  financial product advice on self‑managed superannuation funds;

                     (b)  financial product advice on superannuation products in relation to a person’s existing holding in a superannuation product but only to the extent required for:

                              (i)  making a recommendation that the person establish a self‑managed superannuation fund; or

                             (ii)  providing advice to the person on contributions or pensions under a superannuation product;

                     (c)  class of product advice on the following:

                              (i)  superannuation products;

                             (ii)  securities;

                            (iii)  simple managed investment schemes;

                            (iv)  general insurance products;

                             (v)  life risk insurance products;

                            (vi)  basic deposit products;

                     (d)  arrange to deal in an interest in a self‑managed superannuation fund.

Note 1:       See section 761A for the meaning of basic deposit product, financial product advice, general insurance product, life risk insurance product, self‑managed superannuation fund and superannuation product.

Note 2:       Financial product advice on self‑managed superannuation funds includes advice about acquiring or disposing of an interest in a self‑managed superannuation fund.

limited licensee means a financial services licensee that:

                     (a)  does not deal with money to which Division 2 of Part 7.8 of the Act applies; and

                     (b)  is only licensed to provide one or more limited financial services.

simple managed investment scheme has the same meaning as in the regulations.”.

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

             (1)  For subparagraph 989B(3)(b)(ii) or paragraph 989B(3)(c) of the Act, an auditor’s report lodged with a true and fair profit and loss statement and balance sheet in respect of a financial year must be lodged with ASIC in the prescribed form.

             (2)  For subparagraph 989B(3)(b)(ii) or paragraph 989B(3)(c) of the Act, an auditor’s report lodged with a true and fair profit and loss statement and balance sheet in respect of a financial year must contain a statement of the auditor’s opinion on the following matters:

                     (a)  the effectiveness of internal controls used by a financial services licensee to comply with:

                              (i)  Divisions 2, 3, 4, 5 and 6 of Part 7.8 of the Act; and

                             (ii)  Division 7 of Part 7.8 of the Act other than section 991A;

                     (b)  whether each account required by sections 981B and 982B of the Act to be maintained by the financial services licensee has been operated and controlled in accordance with those sections;

                     (c)  whether all necessary records, information and explanations were received from the financial services licensee.

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

                   For paragraph 989B(3)(a) and subparagraph 989B(3)(b)(i) of the Act, a compliance certificate lodged by a licensee with a true and fair profit and loss statement and balance sheet in respect of a financial year must:

                     (a)  be lodged with ASIC in the prescribed form; and

                     (b)  be signed by:

                              (i)  if the licensee is an individual—the licensee; or

                             (ii)  if the licensee is a corporation—an officer of the corporation; or

                            (iii)  if the licensee is a partnership or the trustees of a trust—a partner or trustee who performs duties in relation to financial services.

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

                   For paragraph 989C(a) of the Act, a true and fair profit and loss statement and balance sheet in respect of a financial year must contain a declaration by the financial services licensee that:

                     (a)  the profit and loss statement and balance sheet give a true and fair view of the matters stated in it; and

                     (b)  if the licensee is required to lodge an auditor’s report under subparagraph 989B(3)(b)(ii) or paragraph 989B(3)(c) of the Act—the auditor’s report lodged with the profit and loss statement and balance sheet is a true copy of the report on the profit and loss statement and balance sheet of the financial services licensee; and

                     (c)  if the licensee is required to lodge a compliance certificate under paragraph 989B(3)(a) or subparagraph 989B(3)(b)(i) of the Act—the information in the compliance certificate lodged with the profit and loss statement and balance sheet is complete and accurate.

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

                   For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies as if paragraph 989D(1)(b) were modified to read as follows:

                           ‘(b)  if the licensee is:

                                          (i)  a body corporate that is a disclosing entity or a registered scheme—the day that is 3 months after the end of that financial year; or

                                         (ii)  a body corporate that is not a disclosing entity or a registered scheme—the day that is 4 months after the end of that financial year.’.

Subdivision DAppointment etc. of auditors

7.8.14B  Modification of section 990B of the Act

             (1)  For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies as if subsection 990B(1) of the Act were modified by:

                     (a)  omitting “must, within 1 month after beginning to hold the licence,” and substituting “who is not a limited licensee must”; and

                     (b)  omitting “(4) and (5)” and substituting “(4), (5) and (5A)”.

             (2)  For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies as if section 990B of the Act were modified by inserting after subsection 990B(5) the following subsection:

        “(5A)  The licensee must appoint an auditor or auditors within:

                     (a)  if the licensee was a limited licensee—one month after the licensee ceased to be a limited licensee; or

                     (b)  for all other licensees—one month after beginning to hold the licence.”.

             (3)  For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies as if subsection 990B(9) of the Act were modified to read as follows:

           “(9)  In this section:

class of product advice means financial product advice about a class of products but does not include a recommendation about a specific product in the class.

Example:    A financial services licensee may give a recommendation about term deposit products but must not make a specific recommendation that a person deposit their money into a term deposit product offered by a particular bank or building society.

limited financial services means the following financial services:

                     (a)  financial product advice on self‑managed superannuation funds;

                     (b)  financial product advice on superannuation products in relation to a person’s existing holding in a superannuation product but only to the extent required for:

                              (i)  making a recommendation that the person establish a self‑managed superannuation fund; or

                             (ii)  providing advice to the person on contributions or pensions under a superannuation product;

                     (c)  class of product advice on the following:

                              (i)  superannuation products;

                             (ii)  securities;

                            (iii)  simple managed investment schemes;

                            (iv)  general insurance products;

                             (v)  life risk insurance products;

                            (vi)  basic deposit products;

                     (d)  arrange to deal in an interest in a self‑managed superannuation fund.

Note 1:       See section 761A for the meaning of basic deposit product, financial product advice, general insurance product, life risk insurance product, self‑managed superannuation fund and superannuation product.

Note 2:       Financial product advice on self‑managed superannuation funds includes advice about acquiring or disposing of an interest in a self‑managed superannuation fund.

limited licensee means a financial services licensee that:

                     (a)  does not deal with money to which Division 2 of Part 7.8 of the Act applies; and

                     (b)  is only licensed to provide one or more limited financial services.

person means:

                     (a)  an individual auditor; or

                     (b)  an authorised audit company.

simple managed investment scheme has the same meaning as in the regulations.”.

7.8.15  Appointment of auditor by financial services licensee

             (1)  For subsections 990B(7) and (8) of the Act, this regulation:

                     (a)  sets out matters related to the appointment of a firm as auditor of the financial statements of a financial service licensee; and

                     (b)  modifies the effect of section 990E of the Act.

          (1A)  If an applicant for a financial services licence:

                     (a)  specifies, in the application for the licence, the name of a person or firm that is to be, or has been, appointed to audit the applicant’s financial statements; and

                     (b)  the auditor or auditors specified are appointed before the end of 1 month after the licence takes effect;

the applicant is taken to have lodged a notice under subsection 990B(6) of the Act.

             (2)  The appointment is taken to be an appointment of each person who is:

                     (a)  a member of the firm; and

                     (b)  a registered company auditor;

whether the person is resident in Australia or not at the date of the appointment.

             (3)  Unless subregulation (4) applies, the appointment of the members of a firm as auditors that is taken by subregulation (2) to have been made because of the appointment of the firm as auditor of the holder is not affected by the dissolution of the firm.

             (4)  If a firm that has been appointed as auditor is reconstituted because of the death, retirement or withdrawal of a member or members, or because of the admission of a new member or new members, or both:

                     (a)  a person who:

                              (i)  was taken under subregulation (2) to be an auditor of the financial services licensee; and

                             (ii)  has retired or withdrawn from the firm as previously constituted;

                            is taken to have resigned as auditor as from the day of the retirement or withdrawal; and

                     (b)  a person who:

                              (i)  is a registered company auditor; and

                             (ii)  is admitted to the firm;

                            is taken to have been appointed as an auditor of the holder as from the date of the admission; and

                     (c)  the reconstitution of the firm does not affect the appointment of the continuing members of the firm who are registered company auditors as auditors; and

                     (d)  nothing in paragraphs (a) to (c) affects the operation of section 990C of the Act.

             (5)  Sections 990F to 990H of the Act do not apply to a resignation mentioned in paragraph (4)(a) unless:

                     (a)  the person who is taken to have resigned was the only member of the firm who was a registered company auditor; and

                     (b)  there is no member of the firm who is a registered company auditor after the retirement or withdrawal of that person.

             (6)  A report or notice that purports to be made or given by a firm appointed as auditor is taken not to have been duly made or given unless it is signed by a member of the firm who is a registered company auditor:

                     (a)  in the firm’s name; and

                     (b)  in his or her own name.

             (7)  If a vacancy in the office of an auditor continues, the surviving or continuing auditor or auditors (if any) may act as auditor while the vacancy continues.

             (8)  If a vacancy occurs in the office of an auditor, and there is no surviving or continuing auditor of the financial services licensee, the financial services licensee must, within 14 days after the vacancy occurs appoint as auditor:

                     (a)  a person who is eligible to act as auditor; or

                     (b)  2 or more persons each of whom is eligible to act as auditor; or

                     (c)  a firm that is eligible to act as auditor; or

                     (d)  2 or more firms each of which is eligible to act as auditor; or

                     (e)  a combination of persons and firms each of which is eligible to act as auditor.

             (9)  If an auditor ceases to hold office in accordance with paragraph 990E(a) or (d) of the Act, the financial services licensee for which the auditor acted must lodge with ASIC a notice in the prescribed form stating that the auditor has ceased to hold the office.

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

             (1)  For section 990C of the Act, a person is ineligible to act as auditor of a financial services licensee in any of the following circumstances:

                     (a)  the person is not a registered company auditor;

                     (b)  the person is indebted in an amount exceeding $5 000 to:

                              (i)  the financial services licensee; or

                             (ii)  if the financial services licensee is a body corporate—to a body corporate related to the financial services licensee;

                     (c)  a body corporate in which the person has a substantial holding is indebted in an amount exceeding $5 000 to:

                              (i)  the financial services licensee; or

                             (ii)  if the financial services licensee is a body corporate—to a body corporate related to the financial services licensee;

                     (d)  the person is a partner or employee of the financial services licensee;

                     (e)  if the financial services licensee is a body corporate—the person is:

                              (i)  an officer of the body; or

                             (ii)  a partner, employer or employee of an officer of the body; or

                            (iii)  a partner or employee of an employee of an officer of the body.

             (2)  For section 990C of the Act, a firm is ineligible to act as auditor of a financial services licensee at a particular time unless:

                     (a)  at least 1 member of the firm is a registered company auditor who is ordinarily resident in Australia; and

                     (b)  if the business name under which the firm is carrying on business is not registered under a law of a State or Territory—a return has been lodged in the prescribed form showing, in relation to each member of the firm:

                              (i)  the member’s full name; and

                             (ii)  the member’s address at that time; and

                     (c)  no member of the firm is indebted in an amount exceeding $5 000 to:

                              (i)  the financial services licensee; or

                             (ii)  if the financial services licensee is a body corporate—to a body corporate related to the financial services licensee; and

                     (d)  no body corporate in which any member of the firm has a substantial holding is indebted in an amount exceeding $5 000 to:

                              (i)  the financial services licensee; or

                             (ii)  if the financial services licensee is a body corporate—to a body corporate related to the financial services licensee; and

                     (e)  no member of the firm is a partner or employee of the financial services licensee; and

                      (f)  if the financial services licensee is a body corporate—no member of the firm is:

                              (i)  an officer of the body; or

                             (ii)  a partner, employer or employee of an officer of the body; or

                            (iii)  a partner or employee of an employee of an officer of the body; and

                     (g)  if the financial services licensee is a body corporate—no officer of the financial services licensee receives any remuneration from the firm for acting as a consultant to it on accounting or auditing matters.

             (3)  For paragraphs (1)(b), (1)(c), (2)(c) and (2)(d), a debt owed by a natural person to a body corporate is to be disregarded if:

                     (a)  the body corporate is:

                              (i)  an Australian ADI; or

                             (ii)  a body corporate registered under the Life Insurance Act 1995; and

                     (b)  the debt arose because of a loan that the body corporate or entity made to the person in the ordinary course of its ordinary business; and

                     (c)  the person used the amount of the loan to pay the whole or part of the purchase price of premises that the person uses as their principal place of residence.

             (4)  For subregulations (1) and (2), a person is taken to be an officer of a body corporate if:

                     (a)  the person is an officer of a related body corporate; or

                     (b)  unless ASIC directs that this paragraph not apply in relation to the person—the person has, at any time within the immediately preceding period of 12 months, been an officer or promoter of the body corporate or of a related body corporate.

             (5)  For this regulation, a person is not taken to be an officer of a body corporate by reason only of being or having been the liquidator of the body corporate or of a related body corporate.

             (6)  For this regulation, a person is not taken to be an officer of a body corporate:

                     (a)  by reason only of having been appointed as an auditor of that body corporate or of a related body corporate; or

                     (b)  for any purpose relating to taxation, a public officer of a body corporate; or

                     (c)  by reason only of being or having been authorised to accept on behalf of the body corporate or a related body corporate:

                              (i)  service of process; or

                             (ii)  any notices required to be served on the body corporate or related body corporate.

Division 7Other rules about conduct

7.8.17  Priority to clients’ orders

             (1)  For paragraph 991B(3)(b) of the Act, if a participant in a licensed market:

                     (a)  enters into a transaction; and

                     (b)  complies with all of the participant’s obligations in relation to the transaction under the market integrity rules and the operating rules of the licensed market;

subsection 991B(2) of the Act does not apply in relation to the transaction.

             (2)  Subject to subregulation (3), for paragraph 991B(3)(b) of the Act, subsection 991B(2) of the Act does not apply to a transaction if, at the time that the instruction is issued, the financial services licensee is not a participant in the licensed market on which the particular financial product is being traded.

             (3)  Subregulation (2) does not apply if:

                     (a)  the financial services licensee deals, or has dealt, in a financial product traded on that market:

                              (i)  on the licencee’s own behalf (whether directly or through an agent or other representative); or

                             (ii)  on behalf of a client; or

                     (b)  an associate of the financial services licensee is a participant in the market mentioned in that subregulation.

7.8.18  Instructions to deal through licensed markets

             (1)  For section 991C of the Act, this regulation applies in relation to all instructions received by a financial services licensee to deal in financial products through licensed markets, except to the extent that the market integrity rules, or the operating rules of a licensed market in relation to which the financial services licensee is a participant, otherwise provide.

             (2)  Subject to subregulation (3), the financial services licensee must transmit, in the sequence in which they are received, all instructions to deal in a class of financial products at or near the market price for financial products of that class prevailing immediately before execution of the instructions.

             (3)  If:

                     (a)  a financial services licensee proposes to deal in a class of financial products on the financial services licensee’s own account; and

                     (b)  the person by whom or on whose instructions the instructions for the dealing are to be transmitted is aware of instructions of a client of the financial services licensee to deal in that class of financial products at or near the market price for a financial product of that class prevailing at that time (being instructions that have not been transmitted);

that person must not transmit, and must not give instructions to any other person to transmit, the instructions to give effect to the proposal of the financial services licensee to deal in that class of financial products before the instructions of the client are transmitted.

             (4)  If:

                     (a)  during a particular period, a financial services licensee transmits instructions (whether or not those instructions consist of, or include, instructions giving effect to a proposal of the financial services licensee to deal in the class of financial products concerned on the financial services licensee’s own account) to deal in a class of financial products at or near the market price for a financial product of that class prevailing immediately before execution of the instructions; and

                     (b)  dealings in that class of financial products are effected pursuant to those instructions;

the financial services licensee must allocate the dealings to those instructions:

                     (c)  in the sequence in which the dealings were effected; and

                     (d)  in the sequence in which the financial services licensee transmitted the instructions.

             (5)  A financial services licensee (licensee 1), or a director, partner, officer or employee of a financial services licensee, must not disclose to any other financial services licensee, or to a person engaged or employed in the business of licensee 1 or any other financial services licensee, instructions of a client to deal in a class of financial products, except:

                     (a)  to the extent necessary to execute the instructions; or

                     (b)  as required by this Act or any other law.

             (6)  In this regulation, a reference to the transmission by a financial services licensee of instructions to deal in a class of financial products is a reference:

                     (a)  if the financial services licensee has direct access to the licensed market on which the instructions are to be executed—to the transmission of the instructions to that licensed market; or

                     (b)  if the financial services licensee has access to the licensed market on which the instructions are to be executed only through another financial services licensee—to the transmission of the instructions to that other financial services licensee.

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

             (1)  For section 991D of the Act, this regulation applies in relation to:

                     (a)  instructions received by a financial services licensee to deal in financial products, on behalf of a client, through licensed markets or through other financial markets (whether inside or outside Australia); and

                     (b)  instructions received by a financial services licensee to deal in financial products, on the financial service licensee’s own account, through licensed markets or through other financial markets (whether inside or outside Australia).

             (2)  The financial services licensee must keep records setting out brief particulars of the following matters:

                     (a)  the instructions;

                     (b)  if the instructions were received on behalf of a client—the client;

                     (c)  the person who gave the instructions to the financial services licensee;

                     (d)  the date and time of receipt of the instructions, and the person who received the instructions;

                     (e)  the date and time of transmission of the instructions, and the person who transmitted the instructions;

                      (f)  the date and time of execution of the instructions.

             (3)  For subregulation (2), if:

                     (a)  a financial services licensee transmits for execution on a financial market outside Australia and the external Territories instructions to deal in financial products; and

                     (b)  it is not reasonably practicable for the financial services licensee to set out the date and time of execution of those instructions in its records;

the financial services licensee must set out the date and time as precisely as is reasonably practicable.

             (4)  The financial services licensee must keep records relating to instructions given by a client to deal in financial products in a manner that makes the records identifiable separately from records relating to instructions to deal in financial products on the financial services licensee’s own account.

             (5)  The financial services licensee must keep the records mentioned in subregulation (2) for at least 5 years after the particulars are created.

7.8.20  Dealings with non‑licensees

             (1)  For subsection 991E(1) of the Act:

                     (a)  section 991E of the Act does not apply in relation to the sale or purchase of financial products mentioned in paragraph 764A(1)(a) of the Act by the body corporate by which the financial products were made available if the financial products are made available in accordance with Chapters 5C and 6D of the Act; and

                     (b)  section 991E of the Act does not apply to the sale or purchase of financial products mentioned in paragraph 764A(1)(b) of the Act by the body corporate by which the financial products were made available if the financial products are made available in accordance with Chapters 5C, 7 and 8A of the Act; and

                     (c)  section 991E of the Act does not apply to the sale or purchase of financial products mentioned in paragraph 764A(1)(bb) of the Act by the body corporate by which the financial products were made available if the financial products are made available in accordance with Chapters 7 and 8A of the Act.

Note:          Paragraph 764A(1)(a) of the Act covers securities (within the meaning of Part 7.1 of the Act). Paragraph 764A(1)(b) of the Act covers managed investment products. Paragraph 764A(1)(bb) of the Act covers foreign passport fund products.

          (1A)  Subject to subregulation (1B), for subsection 991E(1) of the Act, the subsection does not apply to a transaction if, at the time of the transaction, the financial services licensee is not a participant in the licensed market on which the particular financial product is being traded.

          (1B)  Subregulation (1A) does not apply if:

                     (a)  the financial services licensee deals, or has dealt, in a financial product traded on that market:

                              (i)  on the licensee’s own behalf (whether directly or through an agent or other representative); or

                             (ii)  on behalf of a client; or

                     (b)  an associate of the financial services licensee is a participant in the market mentioned in that subregulation.

             (2)  For subsection 991E(2) of the Act:

                     (a)  a disclosure referred to in paragraph 991E(1)(c) of the Act must be given by the financial services licensee to the non‑licensee:

                              (i)  in writing; and

                             (ii)  if the transaction is an on‑market transaction—in relation to the particular transaction, a class of on‑market transactions which includes the transaction, or all on‑market transactions; and

                     (b)  a consent referred to in paragraph 991E(1)(d) of the Act:

                              (i)  may be given orally, or in writing, by the non‑licensee; and

                             (ii)  is effective until it is revoked, either orally or in writing, by the non‑licensee; and

                     (c)  if the non‑licensee gives an oral consent to the financial services licensee, or revokes a consent orally, the financial services licensee must:

                              (i)  make a written record of the consent or revocation; and

                             (ii)  provide a copy of the written record to the non‑licensee within 10 business days after the day on which the consent is given or revoked.

             (3)  For subsection 991E(3) of the Act, a brokerage, commission or other fee is permitted in respect of a transaction between a financial services licensee and a non‑licensee only if:

                     (a)  the financial services licensee is a participant in a licensed market; and

                     (b)  the financial services licensee has complied with all of the financial services licensee’s obligations in relation to the transaction under the market integrity rules and the operating rules of the relevant licensed market; and

                     (c)  the market integrity rules or the operating rules permit a brokerage, commission or fee to be charged to non‑licensees of the same kind as the non‑licensee; and

                     (d)  the non‑licensee has authorised the financial services licensee to charge the non‑licensee in respect of the transaction; and

                     (e)  the financial services licensee discloses to the non‑licensee the amount of the brokerage, commission or fee, or the basis on which it will be calculated, before the non‑licensee gives the authorisation mentioned in paragraph (d); and

                      (f)  the amount of the brokerage, commission or fee is reasonable having regard to the amount that would have been charged by the financial services licensee to the non‑licensee if the financial services licensee had entered the transaction with the non‑licensee as agent and not on its own behalf.

             (4)  For subregulation (3):

                     (a)  an authorisation given to the financial services licensee by the non‑licensee:

                              (i)  may be given orally, or in writing, by the non‑licensee; and

                             (ii)  is effective until it is revoked, either orally or in writing, by the non‑licensee; and

                     (b)  if the non‑licensee gives an oral authorisation to the financial services licensee, or revokes an authorisation orally, the financial services licensee must:

                              (i)  make a written record of the authorisation or revocation; and

                             (ii)  provide a copy of the written record to the non‑licensee within 10 business days after the day on which the authorisation is given or revoked; and

                     (c)  a disclosure of the amount of the brokerage, commission or fee, or the basis on which it will be calculated must be given by the financial services licensee to the non‑licensee:

                              (i)  in writing: and

                             (ii)  if the transaction is an on‑market transaction—in relation to the particular transaction, a class of on‑market transactions that includes the transaction, or all on‑market transactions.

             (5)  For subsection 991E(7) of the Act, a financial services licensee must:

                     (a)  keep records of the following matters relating to each financial products transaction entered into by the financial services licensee on the financial service licensee’s own behalf:

                              (i)  a description of the financial products transaction;

                             (ii)  the date and time of receipt of the instructions for the financial products transaction;

                            (iii)  the date and time of transmission of the instructions to the licensed market concerned;

                            (iv)  the date and time of execution of the instructions;

                             (v)  the source of the funds, or financial products, used to effect the financial products transaction; and

                     (b)  keep the records in a manner that makes the records identifiable separately from records of the financial services licensee.

Note:          Other requirements for record‑keeping are in Division 6 of Part 7.8 of the Act.

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

                   For subsection 991F(1) of the Act, a financial services licensee and one or more employees of the financial services licensee may, on their own behalves, jointly acquire a financial product if it is a risk insurance product as defined in section 761A of the Act.

7.8.21  Dealings involving employees of financial services licensees

             (1)  For subsection 991F(2) of the Act, that subsection does not have effect in relation to:

                     (a)  a bank; or

                     (b)  a body corporate that gives credit in good faith to a person (not being a director of the body corporate) employed by the body corporate, or by another body corporate that is related to the first body corporate, to enable the person to acquire financial products that are:

                              (i)  fully paid shares in the body corporate; and

                             (ii)  to be held in beneficial ownership by the person.

          (1A)  For subsection 991F(2) of the Act, that subsection does not have effect in relation to a financial services licensee that gives credit in good faith to a person employed by:

                     (a)  the financial services licensee; or

                     (b)  a person related to the financial services licensee;

to enable the person to acquire an insurance product in relation to a credit facility provided by the financial services licensee to the person.

Example:    Mortgage insurance is an insurance product in relation to a credit facility.

             (2)  For subsection 991F(3) of the Act, a body corporate that is related to a financial services licensee may act as the agent of an employee of the financial services licensee, in respect of the acquisition mentioned in that subsection, only if:

                     (a)  before the acquisition, the employee has informed the related body corporate that the employee is acquiring, or agreeing to acquire, the financial product on the employee’s own behalf; and

                     (b)  the financial services licensee has in place arrangements with the related body corporate to allow the licensee to be informed of, and to gain access to records relating to, the acquisition.

             (3)  For subsection 991F(3) of the Act, a body corporate may act as the agent of a person who is an employee of a financial services licensee that is a participant in a licensed market and is so employed in connection with a business of dealing in financial products, in respect of an acquisition mentioned in that subsection, if:

                     (a)  the body corporate holds an Australian financial services licence; and

                     (b)  the body corporate is a participant in the same licensed market as the licensee; and

                     (c)  the employer has given consent in writing to the particular acquisition before the acquisition takes place; and

                     (d)  the employee gives the employer a copy of the confirmation of the transaction.

             (4)  For subsection 991F(3) of the Act, a person who is:

                     (a)  an employee of a financial services licensee that is a participant in a licensed market; and

                     (b)  employed in connection with a business of dealing in financial products;

may, on the person’s own behalf, acquire, or agree to acquire, a financial product that is able to be traded on that licensed market, without the licensee’s acting as an agent in respect of the transaction, if the person’s employment is not directly connected with the licensee’s business of dealing in financial products on that licensed market.

             (5)  Subject to subregulation (6), for subsection 991F(3) of the Act, the subsection does not apply unless:

                     (a)  the particular financial product that is acquired or proposed to be acquired is a financial product traded on a market in which the financial services licensee is not a participant at the time of the acquisition or the proposed acquisition; or

                     (b)  the particular financial product is a derivative the value of which is derived from a financial product mentioned in paragraph (a).

             (6)  Subregulation (5) does not apply if:

                     (a)  the financial services licensee deals, or has dealt, in a financial product traded on that market:

                              (i)  on the licensee’s own behalf (whether directly or through an agent or other representative); or

                             (ii)  on behalf of a client; or

                     (b)  an associate of the financial services licensee is a participant in the market mentioned in that subregulation.

Division 8Miscellaneous

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

                   For paragraph 992C(1)(c), Part 7.8 of the Act applies as if the following subsection was inserted after subsection 992A(3):

     “(3AA)  Paragraphs 992A(3)(c), (d) and (e) do not apply to a person that offers a financial product mentioned in paragraph 1012D(7A)(a) if the regulated person complies with the requirements of paragraphs 1012D(7A)(b) to (e) in respect of the product.”

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

                   For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies in relation to a carbon unit, an Australian carbon credit unit or an eligible international emissions unit as if paragraphs 992A(3)(c), (d) and (e) (including the note) read as follows:

                    “(c)  informed that:

                            “(i)  for a carbon unit, the person should consider all information about the financial product that is published on the website of the Clean Energy Regulator as mentioned in section 202 of the Clean Energy Act 2011 before becoming bound to acquire a financial product; and

                             (ii)  for an Australian carbon credit unit, the person should consider all information about the financial product that is published on the website of the Clean Energy Regulator as mentioned in section 162 of the Carbon Credits (Carbon Farming Initiative) Act 2011 before becoming bound to acquire a financial product; and

                            (iii)  for an eligible international emissions unit, the person should consider all information about the financial product that is published on the website of the Clean Energy Regulator as mentioned in section 61 of the Australian National Registry of Emissions Units Act 2011 before becoming bound to acquire a financial product; and

                     (d)  clearly informed of the importance of using that information when making a decision to acquire a financial product; and

                     (e)  given the option of having the information on that website read out to that person.

Note:          Failure to comply with this subsection is an offence (see subsection 1311(1)).”.

7.8.22  Hours for hawking certain financial products

                   For paragraph 992A(3)(a) of the Act, the prescribed hours are from 8 am to 9 pm on a day in the State or Territory in which the person to whom the offer is made is located, excluding:

                     (a)  any Sunday; and

                     (b)  New Year’s Day; and

                     (c)  Australia Day; and

                     (d)  Good Friday; and

                     (e)  the Monday following Good Friday (Easter Monday); and

                      (f)  Anzac Day; and

                     (g)  Christmas Day; and

                     (h)  26 December (Boxing Day).

7.8.22A  Modification of Part 7.8

             (1)  For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies as if paragraph 992A(3)(e) of the Act were modified so as to read:

                            ‘(e)  given:

                                          (i)  the name and contact details of the product issuer; and

                                         (ii)  an indication of the nature of the information contained in the Product Disclosure Statement relating to the product; and

                                        (iii)  the option of receiving, by way of oral communication, any information that is required to be included in a Product Disclosure Statement for the product.’.

             (2)  For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies as if the following subsection were added after subsection 992A(3A) of the Act:

                 ‘(3B)  A regulated person must not influence a client’s decision to elect not to receive the information mentioned in paragraph (3)(e) (other than by asking the client if he or she wishes to do so).’.

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

             (1)  For paragraph 992A(4)(b) of the Act, this regulation applies in relation to a superannuation product or an RSA product that has been issued to the holder of the product as a result of a transfer between superannuation entities or RSAs.

             (2)  It is a requirement of the exercise of the right to return the superannuation product or RSA product that, if the money to be repaid includes:

                     (a)  restricted non‑preserved benefits; or

                     (b)  preserved benefits;

the holder of the superannuation product, or the RSA holder, must nominate a superannuation fund, approved deposit fund or RSA into which the money representing restricted non‑preserved benefits or preserved benefits is to be repaid.

             (3)  For paragraph 992A(4)(b) of the Act, if the right of return is exercised, the responsible person must return the money as directed.

7.8.24  Right of return not to apply

                   For subparagraph 992A(4)(c)(i) of the Act, the following subclasses of financial products are excluded from subsection 992A(4) of the Act:

                     (a)  a financial product offered or issued under a distribution reinvestment plan or switching facility;

                     (b)  a financial product the acquisition of which is an additional contribution required by an existing agreement or contract;

                     (c)  a financial product issued as consideration for an offer made under a takeover bid under Chapter 6 of the Act;

                     (d)  an interim contract of insurance within the meaning of subsection 11(2) of the Insurance Contracts Act 1984;

                     (e)  a superannuation product that is issued in relation to:

                              (i)  a non‑public offer superannuation entity; or

                             (ii)  a public offer superannuation entity mentioned in paragraph 7.6.01(1)(b), (c) or (d);

                      (f)  a risk insurance product that is:

                              (i)  of less than 12 months duration; and

                             (ii)  a renewal of an existing product on the terms and conditions to which the product is currently subject.

7.8.25  Variation of amount to be repaid

                   For paragraph 992A(4)(b) of the Act, if a financial product is subject to a distribution, the amount that would otherwise be repaid on the exercise of the right to return the financial product may be reduced by the amount of that distribution.

7.8.26  Exemption from application of section 992A of the Act

                   For paragraph 992C(1)(a) of the Act, section 992A of the Act does not apply to a person to the extent that the person is offering a financial product for issue or sale in relation to:

                     (a)  a litigation funding scheme mentioned in regulation 5C.11.01; or

                     (b)  a litigation funding arrangement mentioned in regulation 5C.11.01.

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

Division 1Preliminary

7.9.01  Interpretation

             (1)  In this Part:

amount includes a nil amount.

annuity has the same meaning as in regulation 1.05 of the SIS Regulations.

contact details, in relation to a superannuation entity, means:

                     (a)  the name of the superannuation entity and, if relevant, of the sub‑plan; and

                     (b)  a contact address for the superannuation entity; and

                     (c)  a contact person and telephone number for the contact person.

contact person, in relation to a superannuation entity, means a named individual, or a person holding a designated office or position, who is available to receive and deal with inquiries or complaints by product holders (as the case may be).

contribution includes a benefit that is rolled over or transferred to a fund.

exit charge means a charge that:

                     (a)  is made against:

                              (i)  a product holder’s benefits in a fund or financial product; or

                             (ii)  a product holder or another person on the product holder’s behalf; and

                     (b)  is only made when a payment is:

                              (i)  made in respect of a product holder; or

                             (ii)  transferred.

fund information:

                     (a)  in relation to a superannuation product, means information:

                              (i)  relating to the management, financial condition and investment performance of either or both of a superannuation entity and any relevant sub‑plan (within the meaning of section 1017DA of the Act); and

                             (ii)  required to be given under this Division; and

                     (b)  in relation to an RSA product, means information:

                              (i)  relating to the management, financial condition and investment performance of an RSA; and

                             (ii)  required to be given under this Division.

fund reporting period means a reporting period for fund information.

Government co‑contribution means a Government co‑contribution payable under the Superannuation (Government Co‑contribution for Low Income Earners) Act 2003.

legal personal representative has the meaning given by section 10 of the SIS Act.

lost member has the meaning given by the SIS regulations.

lost RSA holder has the meaning given by the RSA regulations.

net amount of Government co‑contribution received means all amounts of Government co‑contributions credited to the member of a superannuation fund (other than a self‑managed superannuation fund) or an RSA holder, less any amounts deducted by the superannuation provider or providers to reimburse it or them for repaying a co‑contribution amount to the Commissioner of Taxation, during the reporting period.

net earnings means the investment return on the assets of a fund after payment of transaction costs, government charges, taxes and duties and charges relating to the management of investment of fund assets.

prescribed net earnings rate, in relation to a fixed‑rate option offered by a capital guaranteed fund for a period, means the net earnings rate declared, in advance, by the fund.

remuneration, for an Australian financial services licensee or an authorised representative, means a payment that:

                     (a)  is made to the Australian financial services licensee or authorised representative because a superannuation interest is issued to a member; and

                     (b)  is not made under an agreement by which the member, or another person on the member’s behalf, has retained the Australian financial services licensee or authorised representative on a fee‑for‑service basis.

Note:          Also see subregulation (5).

RSA has the meaning given by section 8 of the Retirement Savings Accounts Act 1997.

sub‑fund, in relation to a capital guaranteed fund, means a segment of a public offer superannuation fund that has the following characteristics:

                     (a)  the sub‑fund has separately identifiable assets and separately identifiable beneficiaries;

                     (b)  the interest of each beneficiary of the sub‑fund is determined by reference only to the conditions governing that sub‑fund;

                     (c)  there is no transfer of assets, benefits or money between the sub‑fund and another sub‑fund without a transfer of a corresponding beneficial interest;

                     (d)  the insurance and administration costs of the sub‑fund are attributable only to that sub‑fund.

superannuation provider means any of the following:

                     (a)  the trustee of a complying superannuation fund, within the meaning of subsection 995‑1(1) of the Income Tax Assessment Act 1997;

                     (b)  the provider of an RSA, within the meaning of section 12 of the Retirement Savings Accounts Act 1997;

                     (c)  the trustee of a constitutionally protected fund, within the meaning of subsection 995‑1(1) of the Income Tax Assessment Act 1997.

transaction cost means:

                     (a)  brokerage paid because of an investment transaction; or

                     (b)  a cost arising from maintenance of a property investment; or

                     (c)  stamp duty on an investment transaction.

unfunded defined benefits fund means a defined benefits fund under which all or some of the amounts that will be required for the payment of a benefit are not paid into the fund until the member concerned becomes entitled to receive the benefit.

withdrawal benefit has the same meaning as in the SIS Regulations.

             (2)  In this Part, unless the contrary intention appears, a reference to a member is taken to mean:

                     (a)  in relation to a superannuation entity—a person who:

                              (i)  is a member of the entity; or

                             (ii)  receives a pension from the entity; or

                            (iii)  has deferred his or her entitlement to receive a benefit from the entity; and

                     (b)  in relation to an approved deposit fund—a depositor in the fund; and

                     (c)  in relation to a pooled superannuation trust—a unit‑holder.

             (3)  In a Division of this Part, a reference to a fund is a reference to a fund of the kind to which the Division applies.

             (5)  For the definition of remuneration, payment is taken to have been given to an Australian financial services licensee or an authorised representative for issuing an interest to a member if:

                     (a)  issuing the interest is taken into account to increase the payment given to the Australian financial services licensee or authorised representative for other matters (for example, bonus commission); or

                     (b)  the payment is given after the interest is issued and only if the member remains a member of the fund (for example, trailing commission).

7.9.02  Sub‑plans

             (1)  This regulation applies if the trustee of a regulated superannuation fund proposes to make a determination as to whether a sub‑plan should be made.

             (2)  In making a determination, the trustee must have regard to all relevant matters, including each of the following:

                     (a)  whether there is a common factor in a segment of the fund (for example, whether a group of members of the fund have the same employer);

                     (b)  whether the governing rules of the fund provide for a particular segment to be a sub‑plan.

             (3)  For subsection 1017C(9) of the Act, the sub‑plan is a relevant sub‑plan.

             (4)  For paragraph 761E(7)(a) of the Act, if:

                     (a)  a person is a member of a superannuation fund in relation to a sub‑plan; and

                     (b)  either:

                              (i)  the person’s membership changes to membership in relation to another sub‑plan; or

                             (ii)  the person holds interests in 2 or more sub‑plans at the same time;

the change to membership in relation to the other sub‑plan is taken to be the issue of a new interest in the superannuation fund.

             (5)  For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act is modified in its application in relation to the fund (including a sub‑plan) as set out in Part 1 of Schedule 10A.

7.9.02A  Alternative ways of giving Statement

             (1)  For subsection 1015C(4) of the Act, the following are alternative ways of giving a Statement to a person:

                     (a)  making the 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 Statement;

                     (b)  making the 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 Statement.

             (2)  If a provision of the Act or these Regulations imposes additional requirements in relation to a matter in subregulation (1), the alternative way of giving a Statement is subject to the requirements.

Note:          Regulation 7.9.02B is an example of an additional requirement.

7.9.02B  Product Disclosure Statement in electronic form

             (1)  For paragraph 1015C(5)(b) of the Act, a 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.

             (2)  A 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 statement.

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

Subdivision 2.1Preliminary

7.9.03  Application of Division 2

                   This Division applies in relation to superannuation products and RSA products.

Note:          See paragraphs 764A(1)(g) and (h) of the Act.

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

7.9.04  Product Disclosure Statement to be provided later

             (1)  For section 1012F of the Act, the following superannuation products are specified:

                     (a)  a superannuation interest issued by the trustee of a regulated superannuation fund that is not a public offer superannuation fund, other than:

                             (ii)  a financial product taken to be issued because of regulation 7.1.04E; or

                            (iii)  an annuity or pension taken to be issued because of subregulation 7.9.02(4); or

                            (iv)  an interest in a self‑managed superannuation fund that is not acquired at the time that the fund is established;

                     (b)  a pension issued by a superannuation fund the rules of which do not allow a member to receive accumulated benefits in a form other than a pension from that fund;

                     (c)  a superannuation interest issued by the trustee of a successor fund in relation to the transfer of benefits in the fund;

                     (d)  a superannuation interest issued by the trustee of a regulated superannuation fund as a result of complying with a commutation authority issued to the trustee under Subdivision 136‑B in Schedule 1 to the Taxation Administration Act 1953.

             (2)  For paragraph 1020G(1)(c) of the Act:

                     (a)  section 1012B of the Act is modified in its application in relation to the specified superannuation product as set out in Part 17 of Schedule 10A; and

                     (b)  section 1012I of the Act is modified in its application in relation to the specified superannuation product as set out in Part 17 of Schedule 10A.

Subdivision 2.3Product Disclosure Statement for retirement savings account

7.9.05  Situation in which Product Disclosure Statement is not required

                   For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act is modified in its application in relation to an RSA product as set out in Part 2 of Schedule 10A.

Subdivision 2.4Additional obligations for eligible rollover funds

7.9.06A  Relevant superannuation entities

                   For the definition of relevant superannuation entity in subsection 1016A(1) of the Act, a public offer superannuation entity is specified.

7.9.06B  Application forms

             (1)  For paragraph 1016A(2)(f) of the Act, the following situation in which a restricted issue occurs is prescribed:

                     (a)  the financial product is a superannuation product;

                     (b)  the interest is issued by the trustee of a public offer superannuation entity in relation to the payment of benefits to the entity:

                              (i)  from an EPSSS; and

                             (ii)  in accordance with an application made under the provisions of section 243 of the SIS Act, as applied by subregulation (2) (the applied provisions);

                     (c)  if the application is the first application under the applied provisions made to the trustee of the public offer superannuation entity by the trustee of the EPSSS on behalf of any person—the application is an eligible application.

             (2)  For paragraph (1)(b), section 243 of the SIS Act applies in relation to the payment of benefits from the EPSSS to a public offer superannuation entity as if:

                     (a)  a reference in that section to a transferor fund were a reference to the EPSSS; and

                     (b)  a reference in that section to an eligible rollover fund were a reference to the public offer superannuation entity.

Subdivision 2.5Product Disclosure Statement for insurance options

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

                   For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act is modified in its application in relation to a superannuation entity or an RSA as set out in Part 3 of Schedule 10A.

Division 2AProduct Disclosure Statement for warrants

7.9.07A  Warrants

             (1)  This regulation applies in relation to warrants.

             (2)  For paragraph 1020G(2)(a) of the Act, section 1010A of the Act is modified by adding after subsection 1010A(1):

                 ‘(1A)  Despite subsection (1), this Part applies in relation to a financial product to which regulation 7.9.07A of the Corporations Regulations 2001 applies.’.

             (3)  For paragraph 761E(7)(a) of the Act, if the financial product is entered into, or acquired, on a financial market through an arrangement made by a financial services licensee acting on behalf of another person:

                     (a)  the financial services licensee is not taken to be the issuer of the financial product; and

                     (b)  the warrant issuer is taken to be the issuer of the financial product.

             (4)  For paragraph 761E(7)(a) of the Act, if the financial product is entered into, or acquired, on a financial market through an arrangement made by an authorised representative of a financial services licensee acting on behalf of another person (not being the licensee):

                     (a)  the financial services licensee is not taken to be the issuer of the financial product; and

                     (b)  the warrant issuer is taken to be the issuer of the financial product.

             (5)  For paragraph 1013F(2)(f) of the Act:

                     (a)  information that is, or is required to be, disclosed to the market in relation to the underlying thing from which a warrant derives its value, including information published by a market operator in relation to financial products (including warrants and types of warrants) in the form of market data or educational material which is generally made available to the public by the market operator is a matter that may be taken into account for section 1013F of the Act; and

                     (b)  other information that a market operator is required to disclose to the market, in accordance with the Act, including:

                              (i)  information that was required to be disclosed to the market operator; and

                             (ii)  information that the operator was required to disclose in order to meet its obligations under the Act;

                            is a matter that may be taken into account for section 1013F of the Act; and

                     (c)  information that is generally made available to the public by a market operator in relation to financial products, including information published about a warrant that is entered into or acquired on a financial market in the form of market data or educational material, is a matter that may be taken into account for section 1013F of the Act.

             (6)  For paragraph 1017B(3)(c) of the Act, a way in which the warrant issuer may notify a holder of a matter to which that paragraph applies is by giving the relevant information to the operator of the financial market on which the warrant was entered into or acquired.

             (7)  For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies in relation to a warrant as if the words ‘but not more than 3 months after, the change or event occurs’ in item 1 of the table in subsection 1017B(5) of the Act were omitted.

             (8)  In this regulation:

warrant issuer, in relation to a warrant, means the person who:

                     (a)  determines the terms of the warrant, including the rights and conditions of the warrant; and

                     (b)  is responsible for obligations owed under the terms of the warrant.

Division 2BProduct Disclosure Statement for market‑traded derivatives

7.9.07B  Product Disclosure Statements for certain market‑traded derivatives

             (1)  For paragraph 1020G(1)(c) of the Act, subregulations (2) and (3) apply if:

                     (a)  the standard terms and conditions relating to a type of derivative are:

                              (i)  specified by the market operator; and

                             (ii)  made generally available to the public; and

                     (b)  the financial services licensee in relation to the derivative is taken to be the issuer of the derivative under subsection 761E(6) of the Act; and

                     (c)  a retail client for the derivative has agreed to the terms and conditions as applicable to the financial product or products that are the subject of the transaction.

             (2)  Subsection 1013D(1) of the Act is modified in its application to the derivative as if the information required by paragraphs 1013D(1)(b), (c), (d) and (f) were required to be included as general information about the type of derivative, including, for example:

                     (a)  general information about exercise prices for the type of derivative; and

                     (b)  general information about expiry dates for the type of derivative; and

                     (c)  general information about exercise styles for the type of derivative.

             (3)  For paragraph 1013F(2)(f) of the Act:

                     (a)  information that is, or is required to be, disclosed to the market in relation to the underlying thing from which a derivative derives its value, including information published by a market operator in relation to financial products (including derivatives and types of derivatives) in the form of market data or educational material which is generally made available to the public by the market operator is a matter that may be taken into account for section 1013F of the Act; and

                     (b)  other information that a market operator is required to disclose to the market, in accordance with the Act, including:

                              (i)  information that was required to be disclosed to the market operator; and

                             (ii)  information that the operator was required to disclose in order to meet its obligations under the Act;

                            is a matter that may be taken into account for section 1013F of the Act; and

                     (c)  information that is generally made available to the public by a market operator in relation to financial products, including information published about derivatives and types of derivatives in the form of market data or educational material, is a matter that may be taken into account for section 1013F of the Act.

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

                   For paragraph 1016F(7)(a) of the Act, financial products that are derivatives are excluded from section 1016F if the operating rules of a licensed market or a licensed CS facility permit the closing out of the derivatives by the matching up of the arrangement with another arrangement of the same kind under which a person has assumed an offsetting position.

Division 2BAProduct Disclosure Statement for discretionary mutual funds

7.9.07CA  Extension of Product Disclosure Statement requirements to wholesale clients

             (1)  For paragraph 949B(1)(e) of the Act, a regulated person must give a wholesale client a Product Disclosure Statement or a Supplementary Product Disclosure Statement for a financial product if:

                     (a)  the financial product is offered or issued by a discretionary mutual fund (within the meaning given by subsections 5(5) and (6) of the Financial Sector (Collection of Data) Act 2001); and

                     (b)  the regulated person would be required to give the Statement if the product were offered or issued to a retail client.

             (2)  The Product Disclosure Statement or Supplementary Product Disclosure Statement required to be given under this regulation must be the same as that which would be given to a retail client.

Division 2CSituations where a Product Disclosure Statement is not required

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

                   For paragraph 1020G(1)(c) of the Act, section 1012D of the Act is modified by adding before subsection 1012D(10):

                 ‘(9G)  In an issue situation or a sale situation, the regulated person does not have to give the client a Product Disclosure Statement for a financial product if:

                             (a)  the financial product is a general insurance product; and

                             (b)  the product would be provided to the person as a retail client; and

                             (c)  the financial product would be provided as part of a contract of insurance that offers more than one kind of insurance cover; and

                             (d)  the regulated person reasonably believes that the client does not intend to acquire the product.

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

                   For paragraph 1020G(1)(c) of the Act, section 1012D of the Act is modified by adding before subsection 1012D(10):

                  ‘(9J)  In an issue situation or sale situation, the regulated person does not have to give the client a Product Disclosure Statement for a financial product if:

                             (a)  the situation is an offer to issue or sell the financial product; and

                             (b)  the client informs the regulated person, in the course of the contact during which the offer is made, that the client does not intend to acquire the financial product; and

                             (c)  no issue or sale results from the offer.

                  (9K)  For paragraph (9J)(c), the client must inform the regulated person explicitly but may inform the regulated person orally or in any other way.’.

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

                   For paragraph 1020G(1)(c) of the Act, section 1012D of the Act is modified by adding before subsection 1012D(10):

                  ‘(9L)  In an issue situation, the regulated person does not have to give the client a Product Disclosure Statement, if:

                             (a)  the regulated person has not given the client a Product Disclosure Statement because the regulated person did not need to give a Product Disclosure Statement at or before the time when it would otherwise be required to be given because of the operation of section 1012F or 1012G of the Act, regulation 7.9.04 or Part 17 of Schedule 10A; and

                             (b)  either:

                                          (i)  the regulated person:

                                                    (A)   has an address for the client; and

                                                    (B)   is satisfied, on reasonable grounds that the address is incorrect; and

                                                    (C)   has taken reasonable steps to locate the client but is unable to do so; or

                                         (ii)  the regulated person:

                                                    (A)   does not have an address for the client; and

                                                    (B)   is unable to obtain an address for the client; and

                                                    (C)   has taken reasonable steps to locate the client but has been unable to do so.

                  (9M)  If a regulated person does not give a client a Product Disclosure Statement in reliance on subsection (9L), and the regulated person becomes aware of the address or location of the client, the regulated person must give the client a Product Disclosure Statement as soon as practicable.’.

7.9.07FA  Product Disclosure Statement not required for certain specified products

                   For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if section 1012D of the Act were modified by inserting the following subsection after subsection 1012D(7):

‘Recommendation, issue or sale situation—when Product Disclosure Statement not required

          (7A)  In a recommendation situation, an issue situation or a sale situation, the regulated person does not have to give the client a Product Disclosure Statement for the financial product if:

                     (a)  the product is:

                              (i)  a basic deposit product; or

                             (ii)  a facility for making non‑cash payments (see section 763D) that is related to a basic deposit product; or

                            (iii)  a traveller’s cheque; and

                     (b)  the regulated person has provided information about the cost of the product (if any) to the client; and

                     (c)  the regulated person has informed the client as to whether or not any amounts will or may be payable by the holder of the product, in respect of the product, after its acquisition; and

                    (ca)  if the product is a protected account under the Banking Act 1959—the regulated person has informed the client that:

                              (i)  the account‑holder may be entitled to payment under the financial claims scheme; and

                             (ii)  payments under the scheme are subject to a limit for each depositor; and

                            (iii)  information about the financial claims scheme can be obtained from the APRA website at http://www.apra.gov.au and the APRA hotline on 1300 13 10 60; and

                     (d)  the regulated person has asked the client whether or not the client would like further information about the amounts mentioned in paragraph (c); and

                     (e)  if the client indicates that the client would like the further information about the amounts mentioned in paragraph (c)—the regulated person has provided that information.’.

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

                   For paragraph 1020G(1)(c) of the Act, section 1012D of the Act is modified by inserting after subsection 1012D(8):

        “(8A)  In a recommendation situation, an issue situation or a sale situation, the regulated person does not have to give the client a Product Disclosure Statement for the financial product if the client is not in this jurisdiction.”

7.9.07FC  Product Disclosure Statement not required general insurance situation

                   For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act is modified by adding after section 1014E of the Act the following section:

“1014EA  General insurance product situation in which only a supplementary product disclosure statement need be given

             (1)  This section applies if:

                     (a)  a person (the client) acquires a general insurance product (the original product) from another person (the regulated person); and

                     (b)  the client received a Product Disclosure Statement (the original PDS) relating to the product as required by the Act; and

                     (c)  the contract of insurance provides a renewable insurance cover (within the meaning of subsection 58(1) of the Insurance Contracts Act 1984); and

                     (d)  the regulated person offers to renew the client’s contract of insurance (the new product); and

                     (e)  the regulated person is required to give the client a Product Disclosure Statement (the new PDS) relating to the new product; and

                      (f)  the original PDS contains some but not all of the information that the new PDS is required to contain.

             (2)  The regulated person may give the client a new PDS.

             (3)  If the regulated person does not give the client a new PDS, the regulated person must give the client a supplementary Product Disclosure Statement that contains the additional information.

             (4)  If the regulated person gives the client a supplementary Product Disclosure Statement under subsection (3), for the purposes of this Act:

                     (a)  the original PDS is taken to be the new PDS; and

                     (b)  the new PDS is taken to have been given to the client as required by this Act.”

Division 2DPreparation and content of Product Disclosure Statements

7.9.07J  Only 1 responsible person for a Product Disclosure Statement

                   For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if section 1013A of the Act were modified by adding after subsection 1013A(3):

                 ‘(3A)  A Product Disclosure Statement for a product that is not a jointly issued product may be prepared by, or on behalf of, only 1 responsible person.’.

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

                   For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if section 1022A of the Act were varied by omitting paragraph (b) of the definition of defective in subsection (1) and the following paragraph were inserted:

                    ‘(b)  if it is a Product Disclosure Statement, a Short‑Form PDS or a Replacement Product Disclosure Statement—either:

                              (i)  it is not prepared in accordance with section 1013A; or

                             (ii)  there is an omission from the Product Disclosure Statement, Short‑Form PDS or Replacement Product Disclosure Statement of material required by section 1013C, other than material required by section 1013B or 1013G; or’.

Division 2EObligation to make information publicly available: registrable superannuation entities

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

7.9.07L  Modification of Act

                   For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if section 1017BA of the Act were modified as set out in Part 6A of Schedule 10A.

7.9.07M  Source of power for this Subdivision

                   This Subdivision is made for paragraphs 1017BA(1)(c) and (e) and subsection 1017BA(2) of the Act.

7.9.07N  Definitions

                   In this Subdivision:

lifecycle exception has the meaning given by subsection 29TC(2) of the SIS Act.

lifecycle MySuper product means a MySuper product to which a lifecycle exception applies.

lifecycle stage, of a MySuper product offered by a regulated superannuation fund, means a subclass of members of the fund who hold the MySuper product, determined on the basis of:

                     (a)  age; or

                     (b)  age and the factors mentioned in regulation 9.47 of the SIS Regulations.

offering period means:

                     (a)  for a MySuper product other than a lifecycle MySuper product:

                              (i)  if the MySuper product has been offered for less than 10 financial years and there is no predecessor product—the number of whole financial years for which the product has been offered; or

                             (ii)  if the MySuper product and a predecessor product have been offered for a total of less than 10 financial years—the number of whole financial years for which the products have been offered; or

                     (b)  for a lifecycle stage of a lifecycle MySuper product:

                              (i)  if the lifecycle stage of the MySuper product has been offered for less than 10 financial years and there is no equivalent lifecycle stage of a predecessor product—the number of whole financial years for which the lifecycle stage has been offered; or

                             (ii)  if the lifecycle stage of the MySuper product and an equivalent lifecycle stage of a predecessor product have been offered for a total of less than 10 financial years—the number of whole financial years for which the lifecycle stage of the MySuper product and the predecessor product have been offered.

                   predecessor product, in relation to a MySuper product, means a default investment option in existence on 30 June 2013 in relation to which, if a member’s accrued default amount were attributed to the MySuper product, the RSE licensee would be exempted from disclosure requirements under subregulation 9.46(2) of the SIS Regulations.

                   reporting standard means a reporting standard determined by APRA under subsection 13(1) of the Financial Sector (Collection of Data) Act 2001, as in force from time to time.

7.9.07P  Meaning of MySuper product dashboard reporting standards

                   For this Subdivision, a reporting standard is a MySuper product dashboard reporting standard if the reporting standard contains a clause stating that it relates to information that will be included in a product dashboard for a MySuper product.

7.9.07Q  Product dashboard—how information must be set out

             (1)  Information for a MySuper product must be set out in a product dashboard as follows (including the headings):

 

PRODUCT DASHBOARD

Return target

 

 

Return

 

 

Comparison between return target and return

 

 

 

 

Level of investment risk

 

 

Statement of fees and other costs

 

 

             (2)  For a lifecycle MySuper product, the information mentioned in each item of the table must be set out in relation to each lifecycle stage of the product.

7.9.07R  Product dashboard—return target

             (1)  The return target for a MySuper product other than a lifecycle MySuper product must be worked out in accordance with the MySuper product dashboard reporting standards.

             (2)  The return target for a lifecycle MySuper product must be worked out in relation to each lifecycle stage of the product in accordance with the MySuper product dashboard reporting standards.

             (3)  The period in relation to which the return target must be worked out is the period of 10 years starting at the beginning of the current financial year.

7.9.07S  Product dashboard—return

MySuper product other than lifecycle MySuper product

             (1)  The return for a MySuper product other than a lifecycle MySuper product must be worked out in accordance with the MySuper product dashboard reporting standards.

             (2)  The period in relation to which the return must be worked out is:

                     (a)  the last 10 whole financial years, if:

                              (i)  the MySuper product has been offered for at least 10 financial years; or

                             (ii)  the MySuper product and a predecessor product have been offered for a total of at least 10 financial years; or

                     (b)  the offering period.

Lifecycle MySuper product

             (3)  The return for a lifecycle MySuper product must be worked out in relation to each lifecycle stage of the product in accordance with the MySuper product dashboard reporting standards.

             (4)  The period in relation to which the return in relation to a lifecycle stage of a lifecycle MySuper product must be worked out is:

                     (a)  the last 10 whole financial years, if:

                              (i)  the lifecycle stage of the MySuper product has been offered for at least 10 financial years; or

                             (ii)  the lifecycle stage of the MySuper product and an equivalent stage of a predecessor product have been offered for a total of at least 10 financial years; or

                     (b)  the offering period.

7.9.07T  Product dashboard—comparison between return target and return

MySuper product other than lifecycle MySuper product

             (1)  The comparison between the return target and the return for a MySuper product other than a lifecycle MySuper product must be worked out in accordance with the MySuper product dashboard reporting standards.

             (2)  The period in relation to which the comparison must be worked out is:

                     (a)  the last 10 whole financial years, if:

                              (i)  the MySuper product has been offered for at least 10 financial years; or

                             (ii)  the MySuper product and a predecessor product, or a lifecycle stage have been offered for a total of at least 10 financial years; or

                     (b)  the offering period.

Lifecycle MySuper product

             (3)  The comparison between the return target and the return for a lifecycle MySuper product must be worked out in relation to each lifecycle stage of the product in accordance with the MySuper product dashboard reporting standards.

             (4)  The period in relation to which the comparison in relation to a lifecycle stage of a MySuper product must be worked out is:

                     (a)  the last 10 whole financial years, if:

                              (i)  the lifecycle stage of the MySuper product has been offered for at least 10 financial years; or

                             (ii)  the lifecycle stage of the MySuper product and an equivalent stage of a predecessor product have been offered for a total of at least 10 financial years; or

                     (b)  the offering period.

7.9.07U  Comparison to be set out as a graph

             (1)  A product dashboard must set out a comparison mentioned in regulation 7.9.07T as a graph.

             (2)  The graph must contain:

                     (a)  a column representing the return for each year in the comparison period; and

                     (b)  a line representing the moving average return target for the comparison period; and

                     (c)  a line representing the moving average return for the comparison period.

             (3)  The column and the lines mentioned in subregulation (2) must be identified in accordance with the MySuper product dashboard reporting standards.

             (4)  In this regulation:

comparison period means the period mentioned in subregulation 7.9.07S(3) that is applicable in the circumstances.

moving average return has the meaning given by the MySuper product dashboard reporting standards.

moving average return target has the meaning given by the MySuper product dashboard reporting standards.

7.9.07V  Product dashboard—level of investment risk

             (1)  The level of investment risk for a MySuper product other than a lifecycle MySuper product must be worked out in accordance with the MySuper product dashboard reporting standards.

             (2)  The level of investment risk for a lifecycle MySuper product must be worked out in relation to each lifecycle stage of the product in accordance with the MySuper product dashboard reporting standards.

             (3)  The level of investment risk must be expressed using the relevant risk label set out in the MySuper product dashboard reporting standards.

             (4)  The period in relation to which the level of investment risk must be worked out is the current financial year.

7.9.07W  Product dashboard—statement of fees and other costs

             (1)  The statement of fees and other costs for a MySuper product other than a lifecycle MySuper product must be worked out in accordance with the MySuper product dashboard reporting standards.

             (2)  The statement of fees and other costs for a lifecycle MySuper product must be worked out in relation to each lifecycle stage of the product in accordance with the MySuper product dashboard reporting standards.

             (3)  The period in relation to which the statement of fees and other costs must be worked out is the current financial year.

             (4)  For paragraph 1017BA(1)(c) of the Act, the period is 14 days after a change to the fees or other costs.

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

7.9.08  Accounts

             (1)  For subparagraph 1017E(2)(a)(ii) of the Act, the following accounts are prescribed:

                     (a)  an account with a foreign deposit taking institution that is regulated by a foreign regulatory body that ASIC has approved in writing for this paragraph;

                     (b)  an account with a cash management trust;

                     (c)  a statutory fund under section 29 of the Life Insurance Act 1995.

             (2)  For paragraph 1017E(2)(c) of the Act, a product provider to which subsection 1017E(2) of the Act applies must:

                     (a)  operate an account to which paragraph 1017E(2)(a) of the Act applies as a trust account; and

                     (b)  designate the account to be a trust account; and

                     (c)  hold all moneys paid into the account on trust for the benefit of the person who is entitled to the moneys.

             (3)  For paragraph 1020G(1)(c) of the Act, if money received under section 1017E of the Act is paid into an account under subregulation 7.8.01(6), Part 7.8 of the Act applies to the money.

Note:          See also subregulation 7.8.01(7).

             (4)  For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if section 1017E of the Act were modified by omitting paragraph 1017E(2)(b) and inserting the following paragraph:

                    ‘(b)  any money may be paid into the account, provided that:

                              (i)  money to which this section applies; and

                             (ii)  interest on the amount from time to time standing to the credit of the account;

                            is identified and held in accordance with all other provisions of this section; and’.

7.9.08A  Dealing with interest

                   For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if section 1017E of the Act were modified by adding after subsection 1017E(2C):

                 ‘(2D)  In relation to money to which this section applies:

                             (a)  the product provider is entitled to the interest on the account; and

                             (b)  the interest on the account is not required to be paid into the account;

                            only if the product provider discloses to the person who paid the money that the product provider is keeping the interest (if any) earned on the account.’.

7.9.08B  Crediting of payments before money is received

             (1)  For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if section 1017E of the Act were modified by adding after subsection 1017E(1):

                 ‘(1A)  This section also applies to money paid by a product provider in the following circumstances:

                             (a)  the product provider knows, or believes on reasonable grounds, that money (the client’s money) will be paid to the product provider to acquire, or acquire an increased interest in, one or more of the financial products mentioned in paragraph (1)(a) or (b) from the product provider (whether or not the acquisition would be by a person as a retail client);

                             (b)  either:

                                          (i)  the financial product or increased interest was offered in this jurisdiction; or

                                         (ii)  the application for the financial product or increased interest was made in this jurisdiction; or

                                        (iii)  the money will be received in this jurisdiction;

                             (c)  before receiving the client’s money, the product provider pays an equivalent amount of money (the product provider’s money) into an account described in subsection (2).’.

             (2)  For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if section 1017E of the Act were modified by adding after subsection 1017E(5):

                 ‘(5A)  If subsection (1A) applies:

                             (a)  the product provider is not required to comply with this section in relation to the client’s money; and

                             (b)  subsections (2A), (2B), (2C), (2D), (3), (4), (5) and (6) apply to the product provider’s money as if the money had been paid by the person who paid, or is expected to pay, the client’s money.’.

             (3)  For paragraph 1017E(3)(d) of the Act, money may be taken out of an account if:

                     (a)  the circumstances described in the modified subsection 1017E(1A) of the Act exist; and

                     (b)  after paying the product provider’s money, the product provider becomes aware, or has reasonable grounds to believe, that the client’s money will not be paid.

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

                   For subsection 1017E(2C) of the Act, if money is paid to a product provider for a financial product that is a superannuation product or an RSA product, as defined in section 761A of the Act: