Following public consultation, ASIC has finalised an Instrument to maintain relief concerning the entities to which client money can be deposited under s981B of the Corporations Act.
The Instrument replaces ASIC Class Order [CO 04/1063] Section 981B money in cash common funds due to sunset on 1 April 2017. ASIC made [CO 04/1063] to address doubt as to whether s981B of the Corporations Act and reg 7.8.1 allowed client money to be paid into a registered cash common fund operated by a trustee company.
ASIC Corporations (Client money- Cash common funds) Instrument 2016/671 enables client money received by an Australian financial service licensee to be deposited into a cash common fund, provided the fund is also a registered scheme. It is intended to provide flexibility to licensees in dealing with client money while retaining the consumer protections provided by s981B of the Corporations Act.
ASIC has also repealed Class Order [CO 00/199] Trustee companies' common funds which modified provisions of Ch 5C of the Corporations Act.
Consultation process
ASIC released Consultation Paper 256 Remaking and repealing class orders on trustee company common funds (CP 256) as part of its review of [CO 04/1063]. A draft of the Instrument was attached to CP 256.
In CP 256 ASIC, also discussed the proposal to repeal [CO 00/199].
ASIC did not receive any submissions in response to CP 256. Accordingly, ASIC has decided to proceed with the proposals outlined in CP 256.
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ASIC Corporations (Client money- Cash common funds) Instrument 2016/671
Background
Under the Legislation Act 2003, all class orders are repealed automatically or 'sunset' after a specified period of time (mostly 10 years) unless we take action to exempt or preserve them. This ensures that legislative instruments like class orders are kept up to date and only remain in force while they are fit for purpose and relevant.
All government organisations are responsible for considering whether legislative instruments they have made that are due to sunset will be relevant after their sunset date.