Commonwealth Numbered Regulations

CORPORATIONS AMENDMENT REGULATIONS 2003 (NO. 10) 2003 NO. 368 - SCHEDULE 1

(regulation 3)

[1] Subregulation 1.0.02 (1), definitions of medical indemnity insurance product and medical practitioner

substitute

medical indemnity insurance product means an arrangement:
(a) under which medical indemnity cover is provided to:

(i)

a medical practitioner as defined in section 4 of the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 ; or

(ii)

a registered health professional prescribed by the Medical Indemnity (Prudential Supervision and Product Standards) Regulations 2003 for a provision of Part 3 of the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 ; and

(b)

to which the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 applies.

[2] Subparagraphs 7.1.06 (1) (a) (iv) and (v)

substitute

(iv)

that is not a financial product mentioned in paragraph 763A (1) (a) of the Act; and

(v)

that is not a financial product mentioned in paragraph 764A (1) (a), (b), (ba), (f), (g), (h) or (j) of the Act; and

(vi)

that is not a financial product mentioned in paragraph 764A (1) (i) of the Act, other than a product the whole or predominant purpose of which is, or is intended to be, the provision of credit;

[3] Paragraph 7.1.06 (1) (f)

substitute

(f) a mortgage:

(i)

that secures obligations under a credit contract (other than a lien or charge arising by operation of any law or by custom); and

(ii)

that is not a financial product mentioned in paragraph 763A (1) (a) of the Act; and

(iii)

that is not a financial product mentioned in paragraph 764A (1) (a), (b), (ba), (f), (g), (h) or (j) of the Act; and

(iv)

that is not a financial product mentioned in paragraph 764A (1) (i) of the Act, other than a product the whole or predominant purpose of which is, or is intended to be, the provision of credit;

[4] Subregulation 7.1.06A (1)

omit

subparagraphs 7.1.06 (1) (a) (iv) and (v)

insert

subparagraphs 7.1.06 (1) (a) (iv), (v) and (vi), and 7.1.06 (1) (f) (ii), (iii) and (iv)

[5] After regulation 7.1.07F

insert

7.1.07G Specific things that are not financial products: electronic funds transfers
For paragraph 765A (1) (y) of the Act, a non-cash payment facility is not a financial product if:
(a) the issuer is:

(i)

a body corporate that is an ADI (within the meaning of the Banking Act 1959 ); or

(ii)

an operator of a payment system; and

(b) under the facility, as instructed by the client, the issuer makes money available (or causes it to be made available) to a person nominated by the client:

(i)

within 2 business days of receiving the client's instruction; or

(ii)

within the time reasonably required to complete the transaction subject to any constraints imposed by law; and

(c)

under the facility the funds are transferred by electronic means for collection by, or for the credit of, the payer or another person; and

(d)

the issuer and the payer do not have a standing arrangement to transfer funds in this manner.

Example
Telegraphic transfers and international money transfers offered by banks and remittance dealers.

[6] After regulation 7.1.17A

insert

7.1.17B Retail clients and wholesale clients: aggregation of amounts for price or value of financial product
(1) For paragraph 761G (10) (a) of the Act, this regulation applies in relation to a class of financial products that:
(a) are provided by the same product issuer to:

(i)

a particular person; or

(ii)

an associate of the person; or

(iii)

a body corporate controlled and wholly owned by the person; and

(b)

are provided at or about the same time.

(2) The price for the provision of the financial products may be calculated by:

(a)

calculating the total price for the provision of all of the financial products in the class; and

(b)

treating the total price as the price for the provision to the particular person of a single financial product.

(3) The value of the financial products may be calculated by:

(a)

calculating the total value of all of the financial products in the class; and

(b)

treating the total value as the value of a single financial product provided to the particular person.

[7] Paragraph 7.1.27 (1) (a)

substitute

(a) the holder is taken, on and after that time, to be a wholesale client in relation to the product as between the holder and:

(i)

the issuer of the product; or

(ii)

if a related body corporate of the issuer of the product provides a custodial or depository service to the holder of the product in relation to the product — the related body corporate;

for the period during which the holder holds the product; and

[8] Paragraph 7.1.29 (3) (e)

omit

related bodies corporate;

insert

associates;

[9] Paragraph 7.1.33B (1) (b)

substitute

(b)

the advice is prepared by a product issuer of the financial product or class of financial products who is not a financial services licensee;

[10] After regulation 7.1.33E

insert in Division 3

7.1.33F School banking
(1) For paragraph 766A (2) (b) of the Act, a person is taken not to provide a financial service if:
(a) the service is:

(i)

arranging for the issue, or the acquisition, of a school banking product; or

(ii)

the provision of general advice intended to influence a decision in relation to a school banking product; and

(b) the person:

(i)

is employed by a school; or

(ii)

provides the service on behalf of a school; and

(c)

the person does not receive any financial benefit for the provision of the service; and

(d)

the Product Disclosure Statement for the product discloses any commissions or other benefits that the school might receive in connection with the issue of the product.

(2) In this regulation:
"school banking product" means a basic deposit product, issued by an ADI in the following circumstances:

(a)

it is offered for issue to pupils at a school;

(b)

there is no regular account keeping fee charged for the product.

[11] After regulation 7.1.35

insert in Division 4

7.1.35A Conduct that does not constitute dealing in a financial product — lawyers acting on instructions
For subsection 766C (7) of the Act, a financial service provided by a lawyer is taken not to be dealing in a financial product if:
(a) the financial service consists of:

(i)

arranging for a person to engage in conduct referred to in subsection 766C (1) of the Act; or

(ii)

dealing as an agent or otherwise on behalf of a client, an associate of a client or a relative of a client; and

(b) the lawyer is acting:

(i)

on the instructions of the client, an associate of the client or a relative of the client; and

(ii)

in his or her professional capacity; and

(iii)

in the ordinary course of his or her activities as a lawyer; and

(c)

the financial service can reasonably be regarded as a necessary part of those activities; and

(d) the lawyer has not received, and will not receive, a benefit in connection with those activities other than:

(i)

the payment of professional charges in relation to those activities; and

(ii)

reimbursement for expenses incurred or payment on account of expenses to be incurred on behalf of the client, an associate of the client or a relative of the client;

from the client or from another person on behalf of the client.

[12] After paragraph 7.1.40 (g)

insert

(h) the service is provided by a lawyer in the following circumstances:

(i)

the financial service consists of acquiring, holding or disposing of a cash management trust interest, being an interest to which a law of a State or Territory relating to the audit of trust or controlled monies applies;

(ii) the lawyer is acting:

(A) on instructions from the client, an associate of the client or a relative of the client; and
(B) in his or her professional capacity; and
(C) in the ordinary course of his or her activities as a lawyer;

(iii)

the financial service can reasonably be regarded as a necessary part of those activities;

(iv) the lawyer has not received, and will not receive, a benefit in connection with the activities other than:

(A) the payment of professional charges related to those activities; and
(B) reimbursement for expenses incurred or payment on account of expenses to be incurred on behalf of the client, an associate of the client or a relative of the client;

from the client or from another person on behalf of the client.

[13] After paragraph 7.6.01 (1) (n),

insert

(na) a financial service provided by a person ( person 1 ) to another person ( person 2 ) in the following circumstances:

(i)

person 1 is not in this jurisdiction;

(ii)

person 2 is a wholesale client in this jurisdiction;

(iii) the service consists only of 1 or more of:

(A) the provision of financial product advice to person 2; and
(B) person 1 making a market; and
(C) the provision of a custodial or depositary service to person 2;

(iv) person 1 is:

(A) a related body corporate of a financial services licensee whose financial services licence covers the provision of the service; or
(B) a party to a business joint venture with a financial services licensee whose financial services licence covers the provision of the service;

(v)

the financial services licensee arranges for person 1 to provide the service;

(vi)

the financial service licensee's licence is subject to a condition requiring it to assume responsibility for the conduct of person 1 in the provision of the financial service mentioned in this paragraph;

[14] After paragraph 7.6.01 (1) (p), including the note

insert

(pa) a financial service provided to a wholesale client by a body that:

(i)

is not a company; and

(ii)

is established or constituted under a law of the Commonwealth or a State or Territory; and

(iii)

is required under a law of the Commonwealth or a State or Territory to carry on the business of insurance or to undertake liability under a contract of insurance; and

(iv)

is regulated for the provision of insurance under a law of the Commonwealth or a State or Territory;

[15] Subregulation 7.6.01 (7), before definition of media

insert

"business joint venture" means a contractual agreement between 2 or more parties for the purpose of carrying on a business undertaking.

[16] Subparagraph 7.7.02 (4) (d) (i)

substitute

(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

[17] After subregulation 7.7.02 (5), including the note

insert

(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.

[18] Part 7.9, Subdivision 5.13, heading

substitute

Division 5AA General requirements for financial disclosure

[19] After regulation 7.9.80B

insert in Division 8

7.9.80C Product Disclosure Statement may sometimes be provided later — issue situation
(1) For paragraph 1020G (1) (a) of the Act, in an issue situation, a regulated person to whom section 1012G of the Act applies is exempted (to the extent requested by a client) from:

(a)

subparagraph 1012G (3) (a) (ii) of the Act; and

(b)

subparagraph 1012G (3) (a) (iii) of the Act in respect of the provision of information that would be required in a Product Disclosure Statement for a financial product by paragraphs 1013D (1) (c) and (g) of the Act;

in the circumstances mentioned in subregulation (2).

(2) Subregulation (1) applies if, at or before the time when a Product Disclosure Statement would have to be given to the client but for the operation of section 1012G, the regulated person:

(a)

tells the client the nature of the information that is required to be provided by subparagraphs 1012G (3) (a) (ii) and (iii) of the Act; and

(b)

tells the client that the client may elect not to receive some or all of that information; and

(c)

clearly tells the client of the importance of using the information in a Product Disclosure Statement when making a decision to acquire a product; and

(d)

does not influence the client's decision to elect not to receive the information (other than by asking the client if he or she wishes to do so).

7.9.80D Product Disclosure Statement may sometimes be provided later — recommendation situation
(1) For paragraph 1020G (1) (a) of the Act, in a recommendation situation, a regulated person to whom section 1012G of the Act applies is exempted (to the extent requested by a client) from:

(a)

subparagraph 1012G (3) (a) (ii) of the Act; and

(b)

subparagraph 1012G (3) (a) (iii) of the Act;

in the circumstances mentioned in subregulation (2).

(2) Subregulation (1) applies if, at or before the time when a Product Disclosure Statement would have to be given to the client, but for the operation of section 1012G, the regulated person:

(a)

tells the client the nature of the information that is required to be provided by subparagraphs 1012G (3) (a) (ii) and (iii) of the Act; and

(b)

tells the client that the client may elect not to receive some or all of that information; and

(c)

clearly tells the client of the importance of using the information in a Product Disclosure Statement when making a decision to acquire a product; and

(d)

tells the client that the client is not bound to acquire the financial product at or before the time when the client receives the Product Disclosure Statement; and

(e)

does not influence the client's decision to elect not to receive the information (other than by asking the client if he or she wishes to do so).

[20] Paragraph 7.9.88 (1) (e)

omit

be come

insert

become

[21] Paragraph 7.9.88 (1) (f)

omit

[22] Paragraph 7.9.89 (1) (f)

omit

[23] Subregulation 7.9.93 (2)

omit

entity fund:

insert

entity:

[24] Paragraph 7.9.93 (2) (a)

omit

5.4

insert

5.5

[25] Paragraph 7.9.93 (2) (b)

substitute

(b)

the information is to be provided with the payment split notice.

[26] Paragraph 10.2.79 (c)

substitute

(c)

subparagraph 1012D (2) (b) (i).

[27] Paragraphs 10.2.202 (1) (a), (b), (c) and (d)

before each mention of

apply

insert

yet

[28] Subregulation 12.7.06 (1)

substitute

(1) For clause 39 of Schedule 4 to the Act the provisions of subclause 36 (1) of Schedule 4 cease to apply to a body to which the Schedule applies on the earlier of:

(a)

2 years after the FSR commencement; and

(b)

if the body gives notice under paragraph 1438 (3) (b) of the Act that the body wants the new product disclosure provisions to apply in relation to specified products from a certain date — that date.