Explanatory Statement

Issued by authority of the Assistant Treasurer

Treasury Laws Amendment (Professional Standards Schemes) Regulation 2015

Australian Securities and Investments Commission Act 2001
Competition and Consumer Act 2010
Corporations Act 2001

Section 1364(1) of the Corporations Act 2001 (the Corporations Act), section 172 of the Competition and Consumer Act 2010 (the CCA) and section 251(1) of the Australian Securities and Investments Commission Act 2001 (the ASIC Act) each provide that the Governor-General may make regulations prescribing matters required or permitted by the Acts to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Acts.

The Treasury Laws Amendment (Professional Standards Schemes) Regulation 2015 (the Regulation) makes amendments to the Corporations Regulations 2001, the Competition and Consumer Regulations 2010 and the Australian Securities and Investments Commission Regulations 2001 principally to prescribe new professional standards schemes at the Commonwealth level.

Provision is made in the ASIC Act, the Corporations Act, and the CCA for the prescription of state and territory schemes. The effect of prescription is to limit occupational liability under certain federal legislation in the same way it is limited under relevant state legislation.

Professional Standards legislation in each state and territory operates, where applicable, to limit the civil liability of professionals and others while still maintaining appropriate protection for consumers of professional services through such measures as compulsory insurance cover and complaints procedures.

The Regulation amends the Competition and Consumer Regulations 2010 by removing reference to the existing scheme and prescribing a new reference for members of the CPA Australia Limited Professional Standards Scheme in New South Wales.

The prescription of the scheme has the effect of limiting the occupational liability of members of the schemes relating to an action for contravention of section 18 of the Australian Consumer Law (schedule 2 to the CCA) in the same way as occupational liability is limited under State and Territory laws.

The Regulation also amends the Australian Securities and Investments Commission Regulations 2001 and the Corporations Regulations 2001 by removing reference to the existing schemes and prescribing professional standards schemes for:

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Members of the CPA Australia Professional Standards Scheme in New South Wales;

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Members of the Institute of Chartered Accountants Schemes in New South Wales, Victoria, Queensland, Western Australia, South Australia, the Australian Capital Territory and the Northern Territory;

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Members of Law Societies Schemes in New South Wales, Queensland, Western Australia and South Australia;

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Members of the Law Institute Scheme in Victoria; and

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Members of the Bar Association Schemes in New South Wales, Victoria, Queensland, Western Australia and South Australia.

The prescription of these schemes has the effect of limiting the occupational liability of members of the scheme relating to an action for contravention of section 12DA of the ASIC Act, or section 1041H of the Corporations Act in the same way as occupational liability is limited under State and Territory laws.

The Commonwealth has not consulted on this measure. The Professional Standards Council seeks the opinion of independent actuarial consultants and calls for public comment on professional standards schemes via public notification in major newspapers circulating throughout the relevant jurisdictions prior to approving schemes. Further consultation was not considered necessary.

Details of the Regulation are included in the Attachment.

The Regulation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

There are no statutory pre-conditions that need to be satisfied before the power to make the Regulation may be exercised.

The Regulation commences on the day after it is registered.

ATTACHMENT

Details of the Treasury Laws Amendment (Professional Standards Schemes) Regulation 2015

Section 1 - Name of Regulation

This section provides that the title of the Regulation is the Treasury Laws Amendment (Professional Standards Schemes) Regulation 2015 (the Regulation).

Section 2 - Commencement

This section provides that the Regulation commences the day after it is registered.

Section 3 - Authority

This section provides that the Regulation is made under the Corporations Act 2001 (the Corporations Act), the Competition and Consumer Act 2010 (the CCA) and the Australian Securities and Investments Commission Act 2001 (the ASIC Act).

Section 4 - Schedules

This section provides that each instrument that is specified in a Schedule to the Regulation is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument has effect according to its terms.

Amendments

Schedule 1 - Professional standards schemes

The overarching aim of professional standards schemes and liability caps is to maintain affordable levels of professional indemnity insurance, as well as to improve professional standards and consumer protection.

Professionals who are members of approved schemes are provided with an incentive (capped liability) to lift their standards and better manage their risks through a requirement to hold adequate levels of insurance and undertake risk management practices and professional development. Consumers are intended to benefit from schemes because they put downward pressure on insurance premiums, by limiting the liability of professionals and their insurers and, in the event of a claim, the prospects of recovery may be enhanced because the professional is required to hold insurance at levels that they otherwise may not have taken out in the absence of a scheme.

Generally, civil liability claims against professionals are governed by State law. All States have specific legislation which governs the prescription of professional standards schemes.

Each State has established a council to assess and approve State scheme applications. Each council has common membership and sits simultaneously; subsequently the councils are identified as one entity, the 'Professional Standards Council' (the Council). Occupational associations, for example barristers, make an application to the Council for approval of schemes. Once approved by the Council the schemes are published by the relevant State in their Government Gazette.

The Regulation amends the Competition and Consumer Regulations 2010, to prescribe the following professional standards schemes:

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The CPA Australia Limited Professional Standards Scheme.

The Regulation has the effect of limiting the occupational liability of members of the schemes relating to an action for contravention of section 18 of the Australian Consumer Law (schedule 2 to the CCA).

The Regulation also amends the Australian Securities and Investments Commission Regulations 2001 and the Corporations Regulations 2001 by removing reference to the existing schemes and prescribing professional standards schemes for:

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The CPA Australia Limited Professional Standards Scheme;The Institute of Chartered Accountants in Australia Professional Standards Scheme (NSW);

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The Institute of Chartered Accountants in Australia Professional Standards Scheme (Victoria);

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The Institute of Chartered Accountants in Australia Professional Standards Scheme (Queensland);

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The Institute of Chartered Accountants in Australia Professional Standards Scheme (WA).

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The Institute of Chartered Accountants in Australia Professional Standards Scheme (SA);

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The Institute of Chartered Accountants in Australia Professional Standards Scheme (ACT);

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The Institute of Chartered Accountants in Australia Professional Standards Scheme (NT);

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The Law Society of New South Wales Scheme;

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The Law Institute of Victoria Limited Scheme;

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The Queensland Law Society Scheme;

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The Law Society of Western Australia Scheme;

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The Law Society of South Australia Professional Standards Scheme;

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The New South Wales Bar Association Scheme;

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The Victorian Bar Professional Standards Scheme;

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The Bar Association of Queensland Scheme;

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The Western Australian Bar Association Scheme; and

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The South Australian Bar Association Scheme.

The Regulation has the effect of limiting the occupational liability of members of the schemes relating to an action for contravention of section 12DA of the ASIC Act which deals with misleading or deceptive conduct in relation to financial services and section 1041H of the Corporations Act which deals with market misconduct and other misconduct relating to financial products and financial services.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Treasury Laws Amendment (Professional Standards Schemes) Regulation 2015

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The purpose of the Treasury Laws Amendment (Professional Standards Schemes) Regulation 2015 is to prescribe new professional standards schemes at the Commonwealth level;

Human rights implications

This Legislative Instrument does not engage any of the applicable human rights or freedoms.

Conclusion

This Legislative Instrument is compatible with human rights because, to the extent that it may limit those rights, it does so where justified by legitimate reasons and only to the extent required by those reasons as well as subject to a range of appropriate protections.