Explanatory Statement

ASIC Corporations (Financial Services Guides) Instrument 2022/910

This is the Explanatory Statement for ASIC Corporations (Financial Services Guides) Instrument 2022/910.

The Explanatory Statement is approved by the Australian Securities and Investments Commission (ASIC).

Summary

1.       ASIC Corporations (Financial Services Guides) Instrument 2022/910 (the Instrument) grants relief to authorised representatives of a financial services licensee who deal in general insurance products and bundled consumer credit insurance products and provide claims handling and settling services (CHSS) from the requirement to provide a Financial Services Guide (a FSG).

Purpose of the instrument

2.       The purpose of the Instrument is to exempt authorised representatives that are authorised by the licensee to deal in a financial product and provide CHSS from the requirement to provide a FSG under subsection 941B(1) of the Corporations Act 2001 when certain conditions are met.

3.       The Instrument will:

(a)     reduce disproportionately burdensome regulatory requirements in relation to the provision of a FSG for distributors of general insurance products who also provide CHSS and

(b)     ensure that consumers continue to receive the same level of protection when purchasing general insurance products through distributors that they would receive if they dealt directly with the product issuer.

Consultation

4.       Before making this Instrument, ASIC undertook targeted consultation with a range of stakeholders from industry, Treasury and consumer representative bodies on the need for relief.

5.       These stakeholders were also consulted on the scope of the proposed relief, including the limited circumstances in which the relief would apply and any conditions the relief should be subject to.

Operation of the instrument

6.       Section 2 of the Instrument provides that the Instrument commences on the day after it is registered on the Federal Register of Legislation. Section 6 of the Instrument provides that the instrument will be repealed after a period of five years.

7.       Subsection 5(1) of the Instrument exempt authorised representatives from the requirement to provide a FSG under subsection 941B(1) of the Corporations Act 2001.

8.       Subsection 5(2) limits the exemption to instances where the following conditions are satisfied:

(a)     the authorised representative is authorised by the licensee to deal in a financial product and provide CHSS on behalf of the licensee;

(b)     the authorised representative is not authorised by the licensee to provide any other financial services;

(c)     the authorised representative only deals in general insurance products or bundled consumer credit insurance products;

(d)     the licensee has taken reasonable steps to ensure that the authorised representative draws the client’s attention to the availability of a dispute resolution system for client complaints and the client is given information about who the authorised representative acts for and any remuneration that the authorised representative may receive.

Legislative instrument and primary legislation  

9.       The subject matter and policy implemented by this Instrument is appropriate for a legislative instrument because:

(a)     the relief instrument utilises powers given by Parliament to ASIC that allow ASIC to exempt a class of persons from the operation of part of the Act to provide a tailored and flexible regulatory environment that is fit for purpose for certain financial products; and

(b)     the matters contained in the instrument are a specific amendment designed to ensure the application of primary legislation remained flexible to adapt to market developments. The instrument applies in a way consistent with the intended policy and the enabling provisions in the primary legislation.

10.     Prior to the repeal of the Instrument, ASIC will undertake a review of the Instrument and consult with Treasury on options for amending, remaking or repealing the Instrument.

Duration of the instrument

11.     The five-year duration of the Instrument is appropriate because it gives ASIC and Treasury time to consider the merits of incorporating the relief into the primary legislation and, if required, make recommendations for the Government to consider amendments to the primary law or regulations.

Legislative authority

12.     This Instrument is made under section 951B of the Corporations Act 2001.

13.     The Instrument is a disallowable legislative instrument.

Statement of Compatibility with Human Rights  

14.     The Explanatory Statement for a disallowable legislative instrument must contain a Statement of Compatibility with Human Rights under subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011. A Statement of Compatibility with Human Rights is in the Attachment.

Attachment

Statement of Compatibility with Human Rights

This Statement of Compatibility with Human Rights is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.  

ASIC Corporations (Financial Services Guides) Instrument 2022/910

Overview

1.       ASIC Corporations (Financial Services Guides) Instrument 2022/910 (the Instrument) exempt authorised representatives that are authorised by the licensee to deal in a financial product and provide claims handling and settling services from the requirement to provide a Financial Services Guide under subsection 941B(1) of the Corporations Act 2001 when certain conditions are met.

Assessment of human rights implications

2.       This instrument does not engage any of the applicable rights or freedoms.

Conclusion

3.       This instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.