Corporations Act 2001

CHAPTER 7 - FINANCIAL SERVICES AND MARKETS  

Note: This Chapter applies to a CCIV in a modified form: see Division 4 of Part 8B.7 .

PART 7.8 - OTHER PROVISIONS RELATING TO CONDUCT ETC. CONNECTED WITH FINANCIAL PRODUCTS AND FINANCIAL SERVICES, OTHER THAN FINANCIAL PRODUCT DISCLOSURE  

Division 4A - Special provisions relating to margin lending facilities  

Subdivision A - Responsible lending conduct for margin lending facilities  

SECTION 985E   REQUIREMENTS BEFORE ISSUING ETC. MARGIN LENDING FACILITY  

Requirement to make assessment of unsuitability

985E(1)    
The provider must not:

(a)    issue the margin lending facility to the retail client; or

(b)    increase the limit of the margin lending facility that was issued to the retail client;

on a day (the critical day ) unless the provider has, within 90 days (or other period prescribed by the regulations) before the critical day:

(c)    made an assessment that:

(i) is in accordance with section 985F ; and

(ii) covers a period in which the critical day occurs; and

(d)    made the inquiries and verification in accordance with section 985G .

Note: This subsection is a civil penalty provision (see section 1317E ).

Increase in limit of standard margin lending facility

985E(2)    
For the purposes of paragraph (1)(b), the limit of a standard margin lending facility is taken not to be increased if:

(a)    apart from this subsection, there would be an increase in the limit; and

(b)    the increase in the limit would result from an increase in the value, determined under the terms of the facility, of the secured property under the facility (as referred to in paragraph 761EA(2)(c) ); and

(c)    the increase in the value of the secured property does not result from the client contributing additional property to the secured property.

Regulations

985E(3)    
For the purposes of paragraph (1)(b), the regulations may prescribe particular situations in which the limit of a margin lending facility is taken:

(a)    to be increased, despite subsection (2); or

(b)    not to be increased.