ASIC has released policy and regulatory guidance to assist issuers and advisers of margin lending facilities comply with new licensing, conduct and disclosure requirements, following the passage of the Corporations Legislation Amendment (Financial Modernisation) Act 2009 (the Act).
The Act, amongst other things, makes margin lending facilities a financial product and requires that issuers and advisers of margin lending facilities hold an Australian Financial Services Licence (AFSL).
In addition, the regime imposes new responsible lending requirements on issuers of margin lending facilities and clarifies responsibility for providing notification of margin calls.
Under the Act, issuers and advisers will have a 12-month transition period from commencement of the Act until the new requirements take effect (commencement of the relevant sections have not yet been proclaimed). During the first six months of the transition period, existing margin lenders and advisers of margin loans will be required to apply for an AFSL authorisation.
A number of ASIC’s existing regulatory guides have been amended to take into account the inclusion of margin lending facilities as a financial product.
The updated policy and regulatory guidance comprise:
- Updates to Regulatory Guide 2 AFS Licensing Kit: Part 2 — Preparing your AFS licence application(RG 2) and Regulatory Guide 3AFS Licensing Kit: Part 3 — Preparing your additional proofs (RG 3)
- Update to Regulatory Guide 146Licensing: Training of financial product advisers(RG 146);
- Update to Regulatory Guide 166Licensing: Financial requirements (RG 166)
- Update to Pro Forma 209 Australian financial services licence conditions(PF 209)
- Regulatory impact statement