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18-345MR ASIC extends relief for non-cash payment facilities
ASIC has amended ASIC Corporations (Non-cash Payment Facilities) Instrument 2016/211 to remove an expiry date that would have seen the instrument cease operating in March 2019.
The amendment means that the instrument will continue to operate beyond March 2019.
ASIC Corporations (Non-cash Payment Facilities) Instrument 2016/211 provides relief for the following types of non-cash payment products:
- travellers’ cheques, which are exempt from the requirement to provide confirmation of transaction under the Corporations Act;
- loyalty schemes and road toll facilities, which are not subject to the financial services laws in the Corporations Act;
- prepaid mobile arrangements and some single use gift vouchers, which are exempt from the licensing, conduct and disclosure obligations in the Corporations Act; and
- low value payment products, which are exempt from the licensing, conduct and disclosure obligations in the Corporations Act but are subject to alternative disclosure and dispute resolution obligations.
ASIC originally provided this relief because it was apparent that the financial services regulatory regime was unintentionally broad in relation to these products.
ASIC is extending the operational period of the relief given in ASIC Corporations (Non-cash Payment Facilities) Instrument 2016/211 to allow for Government policy settings for retail payments products to be clarified by Treasury, ASIC, the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of Australia.
Once the Government’s policy settings have been clarified, ASIC will undertake a review of ASIC Corporations (Non-cash Payment Facilities) 2016/211 (and the guidance in Regulatory Guide 185 Non-cash payment facilities) to determine whether the instrument is operating effectively and appropriately.
- ASIC Corporations (Non-cash Payment Facilities) Instrument 2016/211
- ASIC Corporations (Amendment) Instrument 2018/752
- RG 185
The 2014 Financial System Inquiry considered the policy settings underpinning the regulation of non-cash payment facilities. The final report of the FSI recommended that the Government:
- enhance graduation of retail payments regulation by clarifying thresholds for regulation by ASIC and the Australian Prudential Regulation Authority (APRA)
- strengthen consumer protection by mandating the ePayments Code, and
- introduce a separate prudential regime with two tiers for purchased payment facilities.
On 24 September 2018 the Council of Financial Regulators (CFR) released an Issues Paper Review of Retail Payments Regulation: Stored-value Facilities as part of its review into the regulatory regime for ‘stored value facilities’, which are payment products that allow users to pre-load money for future purchases.
The CFR’s review follows recommendations relating retail payments regulation in the final report of the 2014 Financial System Inquiry and the Productivity Commission’s 2018 report following its Inquiry into Competition in the Australian Financial System. The CFR intends to provide recommendations to streamline and enhance regulation while ensuring appropriate consumer protections. A copy of the Issues Paper can be found on the CFR website.