Draft Corporations Amendment Regulations released for consultation

The Parliamentary Secretary to the Treasurer, Chris Pearce, has
released a package of draft Corporations Amendment Regulations for public

These regulations will implement some of the more
technical amendments to address issues that were identified during the
Corporate and Financial Services Regulation Review
process last year. 

The amendments seek to minimise regulatory burden in the provision of
financial services through such things as changes to aspects of
disclosure. The regulations also
make several other amendments drafted in response to market
developments and a series of amendments to correct errors or anomalies
in the current Corporations Regulations  2001.

It is proposed that Corporations Regulation 2N.2.01 be amended to remove the obligation on public companies to notify ASIC each year of the top 20 shareholders.

The draft regulations relating to FSR include provisions that :

  • if a client clearly rejects a product and/or advice, a Financial Services Guide and a Statement of Advice do not have to be provided in respect of that product and/or advice;
  • a Financial Services Guide can be combined with a disclosure document under Chapter 6D, similar to the provision which enables a Financial Services Guide and Product Disclosure Statement to be combined;
  • the requirement to update a Financial Services Guide where the change would relate to information that is not materially adverse be removed, provided there is disclosure on how access can be made to the updated information;
  • ‘badging’ does not constitute general advice so long as the relevant modification is not to such an extent that a reasonable person would consider the person who has placed their logo on the document to have provided, endorsed or otherwise assumed responsibility for any financial product advice in the document. The person placing their logo on the document must also not have exercised any form of control over the content of the document.
  • there be relief from the dollar disclosure provisions in relation to a general insurance PDS. Where a cost or benefit is specific to a particular insured, a general insurer will be able to satisfy the dollar disclosure provisions if such costs and benefits are disclosed, in dollar amounts, in the policy schedule.
    Where dollar disclosure occurs in the policy schedule, general insurers would still be required to
    disclose the relevant cost or benefit in the PDS by providing a range, a percentage or a description.
    Where a general insurer concludes that they cannot disclose a cost or benefit in dollar amounts in
    the PDS or the policy schedule, then they would have to apply to ASIC for relief.
  • regulated entities would be allowed to incorporate information into the SOA by reference to other sources.
  • regulated entities may incorporate the following information into their PDS by reference:
    • information about any other significant characteristics or features of the product or of the
    rights, terms, conditions and obligations attaching to the product; and
    • any other information that might influence a decision to acquire a product.
    Product providers could only incorporate such information by reference where:
    • the information is publicly available on a website or in another document; and
    • the PDS includes a statement that refers to the particular information that is available publicly
    from another source, provides details of the information and states that the client has the right
    to obtain a copy of any or all of the information previously given.
  • the amendment of  section 941D, which deals with the timing for the provision of an FSG, so that when a financial service is provided an FSG may be provided (at the time that a PDS is provided), without the need for oral disclosure, provided that:
    • the relevant financial service is the provision to the client of a financial product and/or advice
    relating to that financial product; and
    • a PDS for the product has been given to the client, or will be given to the client no later than
    the time the FSG is given; and
    • the entitlement to any remuneration (including commissions) or other benefits in respect of
    the service is extinguished if the client exercises the cooling-off rights attaching to the

Submissions should be received by the  Treasury by 23 April 2007.

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