media release

IR 07-19 ASIC releases technical updates to financial services related policy statements and class orders

Published

ASIC has today released technical updates to three ASIC policy statements, a guidance paper, and a number of class orders relating to financial services providers to ensure users of its policy publications are working with the most current information.

The updated policy statements are:

  • [PS 168] Disclosure: Product disclosure statements (and other disclosure obligations)
  • [PS 175] Licensing: Financial product advisers – Conduct and disclosure
  • [PS 182] Dollar disclosure

The updated guidance paper is titled Licensing: The Scope of the Licensing Regime: Financial Product Advice and Dealing – an ASIC Guide (‘Advice and Deal Guide’). A list of the revised class orders is provided in the attachment to this release.

The policy statements and guides have been updated to take account of the regulations made on 15 December 2005 amending the financial services regime. These regulations implement the Federal Government’s Refinements to Financial Services Regulation (FSR) proposal paper issued on 2 May 2005.

The amendments are of a minor and technical nature and do not raise new policy issues. Background to the amending regulations and a summary of the amendments to each of the documents is provided in the attachment to this release.

ASIC will continue to monitor the currency of its publications in light of legislative changes and developments to ASIC policy, and will update them as required. For example, further updating may be necessary to reflect the implementation of the Government’s current Corporate and Financial Services Regulatory Review.

Copies of the policy statements and guidance papers can be obtained from the ASIC website via www.asic.gov.au/fsrpolicy or by calling the ASIC Infoline on 1300 300 630.

Attachment to [IR 07-19]: ASIC releases technical updates to some financial services related policy statements and class orders

Background to the December 2005 amending regulations

On 2 May 2005, the Parliamentary Secretary to the Treasurer released a Proposals Paper entitled ‘Refinements to Financial Services Regulation’. The proposals contained in the paper responded to industry concerns relating to aspects of the practical operation of Chapter 7 of the Corporations Act (as inserted by the Financial Services Reform Act 2001). The paper outlines a series of proposals including:

  • refinements to the Financial Services Guide content requirements,
  • Statement of Advice exemptions,
  • Short-form Product Disclosure Statements,
  • Simplifying oral disclosures and general advice warnings,
  • PDS exemptions for basic deposit products,
  • New ‘tailored’ PDS requirements for general insurance products, and
  • refinements to the retail/wholesale client tests

These proposals were implemented in regulations made on 15 December 2005 (Corporations Amendment Regulations 2005 (No 5)).

Policy Statement 168 Disclosure: Product disclosure statements (and other disclosure obligations) [PS 168]

The updates to [PS 168] accommodate the changes to the product disclosure framework under Part 7.9 of the Corporations Act 2001 (the Act), including, the introduction of the Short-Form Product Disclosure Statement (Short-Form PDS) and the tailored PDS regime for general insurance products.

The limited nature of the changes to [PS 168] reflects the fact that we are anticipating that further changes will be made to the product disclosure framework under the Government’s Corporate and Financial Services Regulatory Review necessitating further amendments to our policy statement.

The key amendments to [PS 168] are:

  1. A note has been added after the existing note near the table of contents to include a short explanation of the changes made to the product disclosure framework under Part 7.9 of the Act, including the Short-Form PDS and the tailored PDS regime for general insurance products. This note is intended to act as an upfront warning that changes have been to the product disclosure framework;
  2. Various textual amendments to Schedule 1 to accommodate the changes made to the disclosure framework under Chapter 7 of the Act, including reference to:
  • new Financial Services Guide (FSG) and Statement of Advice (SOA) exemptions;
  • the Short-Form PDSs; and
  • the tailored general insurance PDS; and

c. A new schedule has been inserted into [PS 168] (see Schedule 2 at [PS 160.103A]). Schedule 2 summarises the requirements applying to the Short-Form PDS (paragraphs 1-9) and the tailored general insurance PDS (paragraphs 10-15);

Policy Statement 175 Licensing: Financial product advisers – Conduct and disclosure [PS 175]

The update to PS 175 mainly accommodates the new exemptions from the obligation to provide a FSG or SOA.

The key amendments to [PS 175] are:

  1. Amendments to [PS 175.12] and inclusion of new [PS 175.12A] to reflect the additional policy guidance in QFS 158 stating that the mere possession by an adviser of personal information about the client does not necessarily mean that any advice given will be personal advice (see ASIC Information Release [IR 05-45]);
  2. Various textual amendments to refer to and explain the Short-Form PDS. They include amendments to [PS 175.24], [PS 175.31] and [PS 175.68A]-[PS 175.68B] (which explain when you can combine a FSG with a PDS);
  3. Various textual amendments to reflect the changes made to the disclosure of remuneration, commission and other benefits in an FSG. Amendments include: changes to [PS 175.37]-[PS 175.39] and [PS 175.69(i)-(j)];
  4. Various textual amendments to reflect the FSG relief for secondary service providers in reg 7.7.02(7);
  5. Amendment to [PS 175.61] to reflect the new FSG exemptions (ie where a PDS and ‘statement’ is given, and for cash managements trusts);
  6. Amendments to the note to [PS175.126] to make it clear that ASIC’s previous guidance in IR 04-61 ASIC provides guidance on Statements of Advice needs to be read in the light of [PS175], in particular the specific material in [PS175.126] about disclosing the advice and its basis;
  7. Amendments to [PS 175.118] and [PS 175.151], and inclusion of new paragraph [PS 175.117A], to reflect that an SOA is no longer required for a cash management trust or general insurance products (excluding sickness and accident and consumer credit insurance);
  8. Amendments to [PS 175.163]-[PS 175.65] to reflect the replacement of the SOA exemption for “further market related advice” with the “further advice” exemption in new s946B (see reg 7.7.10AE); and
  9. Inclusion of a note to [PS 175.166D] to confirm that new s946B (reg 7.7.10AE) does not affect the Statement of Additional Advice relief in [CO 04/1556]. While we usually do not confirm that relief continues, we consider it is appropriate in this case because of the number of enquiries we have received about the continuation of this relief.

Policy Statement 182 Dollar disclosure [PS 182]

The key amendments [PS 182] are:

  1. A note has been added after [PS 182.8] to refer to the Short-Form PDS and the tailored PDS regime for general insurance products; and
  2. The inclusion of a box immediately before [PS 182.38] to refer to ASIC’s transitional relief from the dollar disclosure requirements for general insurance products until 30 June 2008 (see, Class Order [CO 05/683]).

Licensing: The Scope of the Licensing Regime: Financial Product Advice and Dealing (Advice and Deal Guide)

The update to the Advice and Deal Guide mainly accommodates the changes to the scope of financial product advice and the exemptions from the licensing requirement in s911A(2) of the Act.

The key amendments to the Advice and Deal guideare:

  1. Amendment to paragraph 1.4.2 (where a person does not provide financial product advice) to reflect new regulations 7.1.33G and 7.1.33H (see, paragraphs 1.4.2(n) and (o)). Regulations 7.1.33G and 7.1.33H state that certain general advice is not taken to be a financial service; and
  2. Amendments to paragraph 3.3.1 (Exemptions under s911A(2)) to reflect the new licensing exemptions in s911A(2A), (2B), (2C), (2D) and (2E) (see new paragraphs 1.4.2(z)-(zd)).

ASIC Class orders

The following ASIC Class Orders have been varied [CO 07/151]so that relief in these class orders applies to the Short-Form PDS:

  • [CO 03/237] Updated information in product disclosure statements;
  • [CO 02/260] Product Disclosure Statements — application forms created by a licensee;
  • [CO 02/262] Applications to switch managed investment products;
  • [CO 03/957] ASX managed investment warrants — disclosure and reporting exemptions; and
  • [CO 03/1092] Further relief for joint product disclosure statements.

The following class orders have been revoked [CO 07/150] because the relief they provide is no longer necessary:

  • [CO 02/149] Relief to facilitate issue of interests in relevant schemes to New Zealand investors. Class Order [CO 02/149] is no longer necessary because of the exemption from the requirement to give a PDS to a person outside of this jurisdiction in reg 7.9.07FB.
  • [CO 04/10] Statement of Advice relief for certain products able to be traded on an approved foreign market. Class Order [CO 04/10] is no longer necessary because the SOA exemption for further advice in s946B (reg 7.7.10AE) is not limited to financial products able to be traded on a financial market;
  • [CO 04/1571] Secondary services: General financial services guide relief. Class Order [CO 04/1571] is no longer necessary in light of the FSG exemption for secondary service providers in reg 7.7.02(7); and
  • [CO 05/27] Financial services guides – Tailoring relief. Class order [CO 05/27] is no longer necessary because of regs 7.7.10AA and 7.7.10AB, which allow the information in a FSG to be tailored.