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Corporations Regulations 2001

Authoritative Version
  • - F2021C00834
  • In force - Superseded Version
  • View Series
SR 2001 No. 193 Regulations as amended, taking into account amendments up to Treasury Laws Amendment (Miscellaneous and Technical Amendments) Regulations 2021
Principal Regulations. These Regulations repeal the Corporations Regulations 1990 and the Partnerships and Associations Application Order 1999 (No. 1)
Administered by: Treasury
Registered 24 Aug 2021
Start Date 01 Jul 2021
End Date 24 Aug 2021
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. 166

Compilation date:                              1 July 2021

Includes amendments up to:            F2021L00848

Registered:                                         24 August 2021

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 1 July 2021 (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.................................................. 47

7.7A.11AA........... Compliance records required to be kept by fee recipients. 48

Division 4—Conflicted remuneration                                                                49

Subdivision 1—Benefits in relation to life risk insurance products that are conflicted remuneration                                                                                                         49

7.7A.11A.............. What this Subdivision is about......................................... 49

7.7A.11B............... Circumstances in which benefits in relation to life risk insurance products are conflicted remuneration..................................................................... 49

7.7A.11C............... Circumstances in which benefits in relation to information about life risk insurance products are not conflicted remuneration......................................... 50

7.7A.11D.............. Circumstances in which benefits in relation to dealings in life risk insurance products are not conflicted remuneration..................................................... 52

Subdivision 2—Monetary benefits that are not conflicted remuneration 53

7.7A.12................. What subdivision is about................................................. 53

7.7A.12B............... Stamping fees................................................................... 54

7.7A.12C............... Time‑sharing schemes...................................................... 56

7.7A.12D.............. Brokerage fees.................................................................. 56

7.7A.12E............... Fees paid by clients for dealing services........................... 57

7.7A.12EA............ Application of ban on conflicted remuneration—purchase or sale of financial advice business.......................................................................................... 57

Subdivision 3—Monetary benefits that relate to life risk insurance products                58

7.7A.12EB............ Life risk insurance products—clawback requirements related to cancellation etc.    58

7.7A.12EC............ Life risk insurance products—clawback requirements related to reduction of policy cost.......................................................................................... 58

Subdivision 4—Other monetary and non‑monetary benefits that are not conflicted remuneration                                                                                                         59

7.7A.12F............... What subdivision is about................................................. 59

7.7A.12G.............. General insurance............................................................. 59

7.7A.12H.............. Basic banking and general insurance products.................. 59

7.7A.12I................ Mixed benefits.................................................................. 59

7.7A.13................. Non‑monetary benefit given in certain circumstances not conflicted remuneration: prescribed amount.............................................................................. 60

7.7A.14................. Non‑monetary benefit given in certain circumstances not conflicted remuneration: education or training course.............................................................. 60

7.7A.15................. Non‑monetary benefit given in certain circumstances not conflicted remuneration: other education and training benefit........................................... 61

7.7A.15A.............. Non‑monetary benefit given in certain circumstances not conflicted remuneration—education and training in conducting a financial services business... 61

Subdivision 4A—Ban on conflicted remuneration (rebates)                         61

7.7A.15AJ............. What Subdivision is about................................................ 61

7.7A.15AK............ Obligations of covered person.......................................... 62

Subdivision 6—Application provisions relating to the Corporations Amendment (Life Insurance Remuneration Arrangements) Act 2017                               62

7.7A.16G.............. Definitions........................................................................ 62

7.7A.16H.............. Life risk insurance products substantially related to existing products     63

Subdivision 7—Asset‑based fees on borrowed amounts                                 63

7.7A.17................. Financial services licensees............................................... 63

7.7A.18................. Authorised representatives................................................ 63

Division 6—Exemptions from application of Part 7.7A of the Act    64

7.7A.40................. Exemption from application of Part 7.7A of the Act......... 64

Part 7.8Other provisions relating to conduct etc connected with financial products and financial services, other than financial product disclosure     65

Division 2—Dealing with clients’ money                                                          65

Subdivision A—Money other than loans                                                            65

7.8.01A................. Wholesale client money.................................................... 65

7.8.01.................... Obligation to pay money into an account.......................... 65

7.8.02.................... Accounts maintained for section 981B of the Act............. 68

7.8.02A................. Accounts maintained for the purposes of section 981B of the Act—special rules for retail clients................................................................................ 71

7.8.03.................... How money to be dealt with if licensee ceases to be licensed etc             71

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........................... 72

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....................................... 73

Subdivision AA—Client money reporting rules                                               73

7.8.05A................. Definitions for Subdivision AA of Division 2................. 73

7.8.05B.................. Enforceable undertakings.................................................. 74

7.8.05C.................. Client money reporting infringement notices.................... 74

7.8.05D................. Effect of client money reporting infringement notice provisions              75

7.8.05E.................. Statement of reasons must be given.................................. 75

7.8.05F.................. Contents of client money reporting infringement notice.... 76

7.8.05G................. Amount of penalty payable to the Commonwealth........... 77

7.8.05H................. Compliance with client money reporting infringement notice.. 77

7.8.05J................... Extension of client money reporting infringement notice period              78

7.8.05K.................. Effect of compliance with client money reporting infringement notice     78

7.8.05L.................. Application to withdraw client money reporting infringement notice       79

7.8.05M................. Withdrawal of client money reporting infringement notice by ASIC       80

7.8.05N................. Notice of withdrawal of client money reporting infringement notice        80

7.8.05P.................. Withdrawal of notice after compliance.............................. 80

7.8.05Q................. Publication of details of client money reporting infringement notice        81

Subdivision B—Loan money                                                                                 82

7.8.06.................... Statement setting out terms of loan etc.............................. 82

Division 3—Dealing with other property of clients                                    83

7.8.06A................. Property exempt from Division 3 of Part 7.8 of the Act... 83

7.8.06B.................. Wholesale client property.................................................. 83

7.8.07.................... How property to which Division 3 of Part 7.8 of the Act to be dealt with               83

Division 4—Special provisions relating to insurance                                86

7.8.08.................... Debts of financial services licensee in relation to premiums etc               86

Division 4A—Special provisions relating to margin lending facilities 90

Subdivision A—Responsible lending conduct for margin lending facilities 90

7.8.08A................. Limit of margin lending facility taken to be increased....... 90

7.8.08B.................. Exemption from requirement to make unsuitability assessment               91

7.8.09.................... Reasonable inquiries etc about retail client: inquiries........ 92

7.8.09A................. Modification of section 985G of the Act.......................... 93

7.8.10.................... Circumstances in which margin lending facility is unsuitable  93

7.8.10A................. Margin lending facility taken not to be unsuitable............. 93

Division 6—Financial records, statements and audit                                94

Subdivision B—Financial records of financial services licensees               94

7.8.11.................... Particular categories of information to be shown in records 94

7.8.11A................. Particular categories of information to be shown in records: records of non‑monetary benefit that is not conflicted remuneration.................................... 94

7.8.11B.................. Information to be shown in records: records of rebates in relation to conflicted remuneration.......................................................................................... 95

7.8.12.................... Requirements in relation to financial records of financial services licensees            96

Subdivision C—Financial statements of financial services licensees         97

7.8.12A................. Modification of section 989B of the Act........................... 97

7.8.13.................... Auditor’s report with annual profit and loss statement and balance sheet                99

7.8.13A................. Compliance certificate with profit and loss statement and balance sheet   99

7.8.14.................... Contents of annual profit and loss statement and balance sheet and applicable accounting procedures........................................................................ 99

7.8.14A................. Lodgement of annual profit and loss statement and balance sheet            100

Subdivision D—Appointment etc. of auditors                                                 100

7.8.14B.................. Modification of section 990B of the Act......................... 100

7.8.15.................... Appointment of auditor by financial services licensee.... 101

7.8.16.................... When person is ineligible to act as auditor of financial services licensee  103

Division 7—Other rules about conduct                                                           106

7.8.17.................... Priority to clients’ orders................................................ 106

7.8.18.................... Instructions to deal through licensed markets................. 106

7.8.19.................... Records of instructions to deal on licensed markets and foreign markets 107

7.8.20.................... Dealings with non‑licensees........................................... 108

7.8.20A................. Dealings involving employees of financial service licensees—risk insurance products........................................................................................ 111

7.8.21.................... Dealings involving employees of financial services licensees  111

Division 8—Miscellaneous                                                                                     113

7.8.21A................. Anti‑hawking provisions if no Product Disclosure Statement is required                113

7.8.21B.................. Anti‑hawking provisions if no Product Disclosure Statement is required—carbon units, Australian carbon credit units and eligible international emissions units  113

7.8.22.................... Hours for hawking certain financial products................. 113

7.8.22A................. Modification of Part 7.8.................................................. 114

7.8.23.................... Return of financial product: transfer between superannuation entities or RSAs       114

7.8.24.................... Right of return not to apply............................................. 115