ASIC Class Order [CO 14/1262] gives conditional relief from regulatory requirements to enable 31-day notice term deposits of up to five years to be treated as basic deposit products under the Corporations Act 2001. Background.
Section 761A of the Act provides that term deposits of between two and five years must allow an early withdrawal without prior notice in order to meet the basic deposit product definition.
Without relief, term deposits that require a notice period of 31 days for early withdrawal would not be “basic deposit products” and therefore would be subject to additional regulatory requirements under the Act, including:
- a higher level of training standards at the Tier 1 level for persons advising on term deposits under ASIC Regulatory Guide 146: Licensing: Training of financial product advisers; and
- more prescriptive disclosure obligations, including obligations to provide a Product Disclosure statement (PDS) in a recommendation, issue or sale situation and a Statement of Advice (SOA) when advisers provide personal advice to clients about term deposits.
The class order requires that ADIs which wish to take advantage of the relief to first disclose certain information to the investor.
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Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.