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 7.1 - PRELIMINARY  

Division 1 - Object of Chapter and outline of Chapter  

SECTION 760A  

760A   OBJECT OF CHAPTER  

The main object of this Chapter is to promote:

(a)    confident and informed decision making by consumers of financial products and services while facilitating efficiency, flexibility and innovation in the provision of those products and services; and

(aa)    

the provision of suitable financial products to consumers of financial products; and

(b)    fairness, honesty and professionalism by those who provide financial services; and

(c)    fair, orderly and transparent markets for financial products; and

(d)    the reduction of systemic risk and the provision of fair and effective services by clearing and settlement facilities.

SECTION 760B  

760B   OUTLINE OF CHAPTER  

An outline of this Chapter is set out in the table below.

Part-by-Part outline of Chapter 7
	Part...	Covers...
1	7.1	meaning of some terms relating to financial services and markets
2	7.2	licensing of financial markets
		other matters relating to financial markets
2A	7.2A	supervision of financial markets
3	7.3	licensing of clearing and settlement facilities
		other matters relating to clearing and settlement facilities
4	7.4	limitation on ownership of certain licensees
		individuals who are disqualified from being involved in certain licensees
5	7.5	compensation regimes for financial markets
5A	7.5A	regulation of derivative transactions and derivative trade repositories
5B	7.5B	regulation of financial benchmarks
6	7.6	licensing of providers of financial services
		other related matters (e.g. restrictions on use of terminology; agreements with unlicensed persons relating to provision of financial services)
7	7.7	disclosure requirements for financial services licensees and their authorised representatives
		disclosure requirements for certain people who are not required to be licensed
7A	7.7A	best interests obligations
		charging ongoing fees to clients
		ban on conflicted remuneration and other remuneration
8	7.8	other conduct requirements for financial services licensees (e.g. dealing with client money and property; financial records, statements and audit)
		special provisions relating to insurance
		special provisions relating to margin lending facilities
8A	7.8A	design and distribution requirements relating to financial products
9	7.9	financial product disclosure requirements
		other requirements relating to issue, sale and purchase of financial products
9A	7.9A	intervention powers in relation to financial products
10	7.10	market misconduct and other prohibited conduct relating to financial products and services
10A	7.10A	authorisation and regulation of an external dispute resolution scheme for financial complaints
		additional provisions relating to superannuation complaints
11	7.11	title to, and transfer of, certain securities and other financial products
12	7.12	qualified privilege in certain situations
		other miscellaneous matters

Division 2 - Meaning of some terms relating to financial services and markets  

SECTION 761A  

761A   MEANING OF SOME TERMS RELATING TO FINANCIAL SERVICES AND MARKETS  

In this Act:

AFCA
(short for the Australian Financial Complaints Authority) means the operator of the AFCA scheme.

AFCA regulated superannuation scheme
means:

(a) the scheme provided for by the Australian Defence Force Cover Act 2015 ; and

(b) if, under the AFCA scheme, an exempt public sector superannuation scheme may elect to join the AFCA scheme, and such a superannuation scheme so elects - that superannuation scheme.

AFCA scheme
means the external dispute resolution scheme for which an authorisation under Part 7.10A is in force.

AFCA staff member
means:

(a) a director, officer or employee of AFCA; or

(b) a person engaged as a consultant to, or to perform services for, AFCA for the purposes of the AFCA scheme.

annuity policy
means a life policy in relation to an annuity that is declared to be a superannuation policy under regulations made for the purposes of paragraph (b) of the definition of superannuation policy in the Schedule to the Life Insurance Act 1995 .

authorised clearing and settlement facility
means:

(a) a licensed CS facility; or

(b) a clearing and settlement facility that satisfies the following requirements:

(i) the operator of the facility is authorised to operate the facility in the foreign country in which the operator ' s principal place of business is located;

(ii) any requirements specified in regulations made for the purposes of this subparagraph.

binder
means an authorisation given to a person by a financial services licensee who is an insurer to do either or both of the following:

(a) enter into contracts that are risk insurance products on behalf of the insurer as insurer;

(b) provide a claims handling and settling service, on behalf of the insurer as insurer, in relation to risk insurance products;

but does not include an authorisation of a kind referred to in paragraph (a) that is limited to effecting contracts of insurance by way of interim cover unless there is also in existence an authority given by the insurer to the person to enter into, on behalf of the insurer and otherwise than by way of interim cover, contracts of insurance.

CGS depository interest
means a depository interest (within the meaning of the Commonwealth Inscribed Stock Act 1911 ) that can be transferred through a licensed CS facility.

death benefit decision-maker
means any of the following persons:

(a) the trustee of:

(i) a regulated superannuation fund; or

(ii) an AFCA regulated superannuation scheme; or

(iii) an approved deposit fund;

(b) an insurer in relation to a superannuation complaint;

(c) an RSA provider.

derivative retail client money
: money paid as mentioned in subsection 981A(1) is derivative retail client money if:

(a) either:

(i) the financial service referred to in subparagraph 981A(1)(a)(i) is or relates to a dealing in a derivative; or

(ii) the financial product referred to in subparagraph 981A(1)(a)(ii) is a derivative; and

(b) the financial service or product would be provided to the client as a retail client if:

(i) the service or product were provided to the client when the money is paid; and

(ii) section 761GA (about sophisticated investors) did not apply.

derivative trade data
means:

(a) information about derivative transactions, or about positions relating to derivative transactions; or

(b) information (including statistical data) that is created or derived from information referred to in paragraph (a).

financial services law
means:

(a) a provision of this Chapter or of Chapter 5C , 5D , 6 , 6A , 6B , 6C , 6D , 8A or 8B ; or

(b) a provision of Chapter 9 as it applies in relation to a provision referred to in paragraph (a); or

(c) a provision of the Passport Rules for this jurisdiction; or

(d) a provision of Division 2 of Part 2 of the ASIC Act; or

(e) any other Commonwealth, State or Territory legislation that covers conduct relating to the provision of financial services (whether or not it also covers other conduct), but only in so far as it covers conduct relating to the provision of financial services; or

(f) in relation to a financial services licensee that is a licensed trustee company (in addition to paragraphs (a) to (e)) - any rule of common law or equity that covers conduct relating to the provision of financial services that are traditional trustee company services (whether or not it also covers other conduct), but only in so far as it covers conduct relating to the provision of such services.

foreign exchange contract
means a contract:

(a) to buy or sell currency (whether Australian or not); or

(b) to exchange one currency (whether Australian or not) for another (whether Australian or not).

funeral benefit
:

(a) means a benefit that consists of the provision of funeral, burial or cremation services, with or without the supply of goods connected with such services; but

(b) does not include a scheme or arrangement for the provision of benefits consisting of the payment of money, on the death of a person, for the purpose of meeting the whole or a part of the expenses of and incidental to the funeral, burial or cremation of the person.

insurer
, in relation to a superannuation complaint, means the life company (within the meaning of the Life Insurance Act 1995 ) that is a party to the policy to which the complaint relates.

licensed derivative trade repository
means a derivative trade repository the operation of which is authorised by an Australian derivative trade repository licence.

life policy fund
means a regulated superannuation fund, or an AFCA regulated superannuation scheme, for the purpose of which the trustee maintains, in relation to at least some of the members of the fund:

(a) individual life policies covering each of those members; or

(b) a single life policy covering all of those members.

relevant personal circumstances
, in relation to advice provided or to be provided to a person in relation to a matter, are such of the person ' s objectives, financial situation and needs as would reasonably be considered to be relevant to the advice.

sale
, in relation to an annuity policy, includes any activity undertaken, or representation made:

(a) at the time of, or preliminary to, the entry into the policy, so that the policy as so entered into extends to a particular person; and

(b) at the time of, or preliminary to, the variation of the policy, so that the policy as so varied affects a particular person.

title document
for a financial product means a certificate or other document evidencing ownership of the financial product.

SECTION 761B   MEANING OF ARRANGEMENT  

761B(1)    
For the purposes of this Chapter, arrangement means a contract, agreement, understanding, scheme or other arrangement (as existing from time to time):

(a)    whether formal or informal, or partly formal and partly informal; and

(b)    whether written or oral, or partly written and partly oral; and

(c)    whether or not enforceable, or intended to be enforceable, by legal proceedings and whether or not based on legal or equitable rights.

761B(2)    
For the purposes of this Part, if:

(a)    an arrangement (as defined in subsection (1) ), when considered by itself, does not constitute a derivative, or some other kind of financial product; and

(b)    that arrangement, and one or more other arrangements, if they had instead been a single arrangement, would have constituted a derivative or other financial product; and

(c)    it is reasonable to assume that the parties to the arrangements regard them as constituting a single scheme;

the arrangements are to be treated as if they together constituted a single arrangement.

SECTION 761C  

761C   MEANING OF CARRY ON A FINANCIAL SERVICES BUSINESS  
(Repealed by No 76 of 2023, s 3, Sch 2[290] (effective 20 October 2023).)

SECTION 761CAA   MEANING OF CLAIMANT INTERMEDIARY  

761CAA(1)    
A person is a claimant intermediary if the person:

(a)    carries on a business of representing persons insured under insurance products in pursuing claims under those products; and

(b)    represents those persons insured for a benefit given as consideration for that service, whether a monetary benefit or otherwise and whether given to the person providing the services or another person nominated by that person.

761CAA(2)    
The regulations may prescribe circumstances in which a person is not a claimant intermediary despite subsection (1) .

SECTION 761CA  

761CA   MEANING OF CLASS AND KIND OF FINANCIAL PRODUCTS AND FINANCIAL SERVICES  

The regulations may include provisions identifying, or providing for the identification of, what constitutes a class or kind of financial products or financial services for the purposes of a provision or provisions of this Act.

SECTION 761D   MEANING OF DERIVATIVE  

761D(1)    

Subject to subsections (2) , (3) and (4) , a derivative is an arrangement in relation to which the following conditions are satisfied:

(a)    under the arrangement, a party to the arrangement must, or may be required to, provide at some future time consideration of a particular kind or kinds to someone; and

(b)    that future time is not less than the number of days, prescribed by regulations made for the purposes of this paragraph, after the day on which the arrangement is entered into; and

(c)    the amount of the consideration, or the value of the arrangement, is ultimately determined, derived from or varies by reference to (wholly or in part) the value or amount of something else (of any nature whatsoever and whether or not deliverable), including, for example, one or more of the following:

(i) an asset;

(ii) a rate (including an interest rate or exchange rate);

(iii) an index;

(iv) a commodity.

761D(2)    

Without limiting subsection (1) , anything declared by the regulations to be a derivative is a derivative . A thing so declared is a derivative despite anything in subsections (3) and (4) .

761D(3)    

Subject to subsection (2) , none of the following is a derivative even if covered by subsection (1) :

(a)    an arrangement in relation to which subparagraphs (i), (ii) and (iii) are satisfied:

(i) a party has, or may have, an obligation to buy, and another party has, or may have, an obligation to sell, tangible property (other than Australian or foreign currency) at a price and on a date in the future; and

(ii) the arrangement does not permit the seller ' s obligations to be wholly settled by cash, or by set-off between the parties, rather than by delivery of the property; and

(iii) neitherusual market practice, nor the rules of a licensed market or a licensed CS facility, permits the seller ' s obligations to be closed out by the matching up of the arrangement with another arrangement of the same kind under which the seller has offsetting obligations to buy;

but only to the extent that the arrangement deals with that purchase and sale;

(b)    a contract for the future provision of services;

(c)    anything that is covered by a paragraph of subsection 764A(1) , other than paragraph (c) of that subsection;

(d)    

anything declared by the regulations not to be a derivative.

761D(4)    

Subject to subsection (2) , an arrangement under which one party has an obligation to buy, and the other has an obligation to sell, property is not a derivative merely because the arrangement provides for the consideration to be varied by reference to a general inflation index such as the Consumer Price Index.

SECTION 761DA   MEANING OF INSURANCE CLAIMS MANAGER  

761DA(1)    
A person is an insurance claims manager if:

(a)    the person carries on a business of providing claims handling and settling services on behalf of one or more insurers; and

(b)    where the person, as part of that business, also provides goods or other services - providing claims handling and settling services on behalf of one or more insurers is the primary part of the business.

761DA(2)    
The regulations may prescribe:

(a)    circumstances in which, for the purposes of subsection (1) , providing claims handling and settling services on behalf of one or more insurers is taken to be the primary part of a business carried on by a person; and

(b)    circumstances in which, for the purposes of subsection (1) , providing claims handling and settling services on behalf of one or more insurers is taken not to be the primary part of a business carried on by a person.

SECTION 761E   MEANING OF ACQUIRE, ISSUE AND PROVIDE  

761E(1)   General.  

This section defines when a financial product is issued to a person. It also defines who the issuer of a financial product is. If a financial product is issued to a person:

(a)    the person acquires the product from the issuer; and

(b)    the issuer provides the product to the person.

Note: Some financial products can also be acquired from, or provided by, someone other than the issuer (e.g. on secondary trading in financial products).

761E(2)   Issuing a financial product.  

Subject to this section, a financial product is issued to a person when it is first issued, granted or otherwise made available to a person.

761E(3)    

Subject to this section, a financial product specified in the table is issued to a person when the event specified for that product occurs:

(Table)

(Table)

When particular financial products are issued
Item	Financial product	Event
1	superannuation product	the person becomes a member of the fund concerned
2	RSA	the account concerned is opened in the person's name
3	derivative	the person enters into the legal relationship that constitutes the financial product
4	margin lending facility	the person enters into the legal relationship that constitutes the margin lending facility, as the client under the facility

761E(3A)    
For the avoidance of doubt, none of the following are taken to give rise to the issue of a financial product to a person (the client ):

(a)    the client making a further contribution to a superannuation fund of which the client is already a member;

(aa)    

an employer of the client making a further contribution, for the benefit of the client, to a superannuation fund of which the client is already a member;

(b)    the client making a further deposit into an RSA maintained in the client's name;

(ba)    

(Repealed)

(c)    the client making a further payment under a life insurance investment product;

(d)    the client making a further deposit into a deposit product;

(e)    the client engaging in conduct specified in regulations made for the purposes of this paragraph in relation to a financial product already held by the client.

761E(4)   Issuer of a financial product.  

Subject to this section, the issuer , in relation to a financial product issued to a person (the client ), is the person responsible for the obligations owed, under the terms of the facility that is the product:

(a)    to, or to a person nominated by, the client; or

(b)    if the product has been transferred from the client to another person and is now held by that person or another person to whom it has subsequently been transferred - to, or to a person nominated by, that person or that other person.

Note: For example, the issuer of a direct debit facility is the financial institution with which the account to be debited is held, rather than the persons to whom payments can be made using the facility.

761E(4A)    
For the purposes of subsection (4) , if the financial product issued to the client is an interest in a notified foreign passport fund, the operator of the fund is the person responsible for the obligations mentioned in that subsection that are owed under the terms of the facility that is the product.

761E(5)    
Subject to subsection (7) , each person who is a party to a financial product that:

(a)    is a derivative; and

(b)    is not entered into, or acquired, on a financial market;

is taken to be an issuer of the product.

Note 1: Under paragraph (1)(a) , each person who is a party to the derivative will also acquire the financial product at the time of its issue as specified in subsection (3) .

Note 2: Although each party to the derivative is an issuer, whether any particular party has disclosure or other obligations under this Chapter will depend on the circumstances (e.g. whether the issue occurs in the course of a business of issuing financial products and whether any of the other parties is a retail client).

761E(6)    
Subject to subsection (7) , the issuer of a financial product that:

(a)    is a derivative; and

(b)    is entered into, or acquired, on a financial market;

is taken to be:

(c)    if the product is entered into, or acquired, on the market through an arrangement made by a financial services licensee acting on behalf of another person - the financial services licensee; or

(d)    if the product is entered into, or acquired, on the market through an arrangement made by an authorised representative of a financial services licensee acting on behalf of another person (not being the licensee) - the financial services licensee; or

(e)    if neither paragraph (c) nor (d) applies - the market operator.

761E(7)    

The regulations may make provision determining all or any of the following:

(a)    the meaning of issue (and/or related parts of speech, including issuer ) in relation to a class of financial products;

(b)    the meaning of acquire (and/or related parts of speech) in relation to a class of financial products;

(c)    the meaning of provide (and/or related parts of speech) in relation to a class of financial products.

Regulations made for the purposes of this subsection have effect despite anything else in this section.

SECTION 761EA   MEANING OF MARGIN LENDING FACILITY , MARGIN CALL AND ASSOCIATED EXPRESSIONS  

761EA(1)    
A margin lending facility is:

(a) a standard margin lending facility; or

(b) a non-standard margin lending facility; or

(c) a facility of a kind that has been declared by ASIC to be a margin lending facility under subsection (8);

unless the facility is of a kind that has been declared by ASIC not to be a margin lending facility under subsection (9).

Standard margin lending facilities

761EA(2)    
A standard margin lending facility is a facility under the terms of which:

(a) credit is, or may be, provided by a person (the provider ) to a natural person (the client ); and

(b) the credit provided is, or must be, applied wholly or partly:

(i) to acquire one or more financial products, or a beneficial interest in one ormore financial products; or

(ii) to repay, wholly or partly, another credit facility (within the meaning of subparagraph 765A(1)(h)(i) ), the credit provided under which was applied, wholly or partly, to acquire one or more financial products, or a beneficial interest in one or more financial products; and

(c) the credit provided is, or must be, secured by property (the secured property ); and

(d) the secured property consists, or must consist, wholly or partly of one or more marketable securities, or a beneficial interest in one or more marketable securities; and

(e) if the current LVR of the facility exceeds a ratio, percentage, proportion or level (however described) determined under the terms of the facility, then:

(i) the client becomes required to take action; or

(ii) the provider becomes entitled to take action; or

(iii) another person becomes required or entitled to take action;

in accordance with the terms of the facility to reduce the current LVR of the facility.

761EA(3)    
The current LVR of a standard margin lending facility at a particular time is the ratio, percentage, proportion or level (however described) that:

(a) is determined under the terms of the facility; and

(b) under the terms of the facility, represents a particular relationship between:

(i) the amount of the debt owing by the client, or credit provided by the provider, or both, under the facility at that time; and

(ii) the value of the secured property determined at that time under the terms of the facility.

761EA(4)   [ " margin call " in relation to standard margin lending facility]  

A standard margin lending facility is in margin call when paragraph (2)(e) applies in relation to the facility.

Non-standard margin lending facilities

761EA(5)    
A non-standard margin lending facility is a facility under the terms of which:

(a) a natural person (the client ) transfers one or more marketable securities, or a beneficial interest in one or more marketable securities (the transferred securities ) to another person (the provider ); and

(b) the provider transfers property to the client (the transferred property ) as consideration or security for the transferred securities; and

(c) the transferred property is, or must be, applied wholly or partly to acquire one or more financial products, or a beneficial interest in one or more financial products; and

(d) the client has a right, in the circumstances determined under the terms of the facility, to be given marketable securities equivalent to the transferred securities; and

(e) if the current LVR of the facility exceeds a ratio, percentage, proportion or level (however described) determined under the terms of the facility, then:

(i) the client becomes required to take action; or

(ii) the provider becomes entitled to take action; or

(iii) another person becomes required or entitled to take action;

in accordance with the terms of the facility to reduce the current LVR of the facility.

761EA(6)    
The current LVR of a non-standard margin lending facility at a particular time is the ratio, percentage, proportion or level (however described) that:

(a) is determined under the terms of the facility; and

(b) under the terms of the facility, represents a particular relationship between:

(i) an amount determined at that time under the terms of the facility by reference to the value of the transferred property and any amount owing by the client to the provider; and

(ii) the value of the transferred securities determined at that time under the terms of the facility.

761EA(7)    
A non-standard margin lending facility is in margin call when paragraph (5)(e) applies in relation to the facility.

ASIC declarations in relation to margin lending facilities

761EA(8)    
ASIC may declare that a particular kind of facility is a margin lending facility . The declaration must give the meanings of margin call and limit in relation to that kind of facility.

761EA(9)    
ASIC may declare that a particular kind of facility is not a margin lending facility .

761EA(10)    
A declaration made under subsection (8) or (9):

(a) must be in writing; and

(b) is a legislative instrument.

Meaning of limit of a margin lending facility

761EA(11)    
The limit of a margin lending facility:

(a) in relation to a standard margin lending facility - means the maximum amount of credit that may be provided by the provider to the client under the facility; and

(b) in relation to a non-standard margin lending facility - means the maximum amount of property that may be transferred by the provider to the client under the facility; and

(c) in relation to a facility of a kind that ASIC has declared to be a margin lending facility under subsection (8) - has the meaning given in the declaration.

SECTION 761F   MEANING OF PERSON - GENERALLY INCLUDES A PARTNERSHIP  

761F(1)   [ Application to partnership]  

This Chapter applies to a partnership as if the partnership were a person, but it applies with the following changes:

(a) obligations that would be imposed on the partnership are imposed instead on each partner, but may be discharged by any of the partners;

(b) any contravention of a provision of this Chapter, or a provision of this Act that relates to a requirement in a provision of this Chapter, that would otherwise be a contravention by the partnership is taken (whether for the purposes of criminal or civil liability) to have been a contravention by each partner who:

(i) aided, abetted, counselled or procured the relevant act or omission; or

(ii) was in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the partner).

761F(2)   [ Effect of change in partners]  

For the purposes of this Chapter, a change in the composition of a partnership does not affect the continuity of the partnership.

761F(3)   [ Limitation]  

Subsections (1) and (2) have effect subject to:

(a) an express or implied contrary intention in a provision or provisions of this Chapter; and

(b) the regulations, which may exclude or modify the effect of those subsections in relation to specified provisions.

SECTION 761FA   MEANING OF PERSON - GENERALLY INCLUDES MULTIPLE TRUSTEES  

761FA(1)   [ Application to trust]  

This section applies in relation to a trust while the trust continues to have:

(a) 2 or more trustees; or

(b) a single trustee who was a trustee of the trust at a time when it had 2 or more trustees.

761FA(2)   [ ``notional entity'']  

Subject to subsections (3) and (4), during a period while this section applies to a trust, this Chapter applies to the trust as if the trustee or trustees of the trust from time to time during the period constituted a single legal entity (the notional entity ) that remained the same for the duration of that period.

Note: So, for example, while this section applies to a trust, a licence granted under this Chapter to the trustees of the trust will continue in force, despite a change in the persons who are the trustees.

761FA(3)   [ Where trust has two or more trustees]  

During any period or part of a period while this section applies to a trust and the trust has 2 or more trustees, this Chapter applies to the trustees as mentioned in subsection (2), but it applies with the following changes:

(a) obligations that would be imposed on the notional entity are imposed instead on each trustee, but may be discharged by any of the trustees;

(b) any contravention of a provision of this Chapter, or a provision of this Act that relates to a requirement in a provision of this Chapter, that would otherwise be a contravention by the notional entity is taken (whether for the purposes of criminal or civil liability) to have been a contravention by each trustee who:

(i) aided, abetted, counselled or procured the relevant act or omission; or

(ii) was in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the trustee).

761FA(4)   [ Where trust has only one trustee]  

During any period or part of a period while this section applies to a trust and the trust has only one trustee, this Chapter applies to the trustee as mentioned in subsection (2), but it applies with the following changes:

(a) obligations that would be imposed on the notional entity are imposed instead on that single trustee;

(b) any contravention of a provision of this Chapter, or a provision of this Act that relates to a requirement in a provision of this Chapter, that would otherwise be a contravention by the notional entity is taken (whether for the purposes of criminal or civil liability) to have been a contravention by that single trustee.

761FA(5)   [ Limitation]  

Subsections (2), (3) and (4) have effect subject to:

(a) an express or implied contrary intention in a provision or provisions of this Chapter; and

(b) the regulations, which may exclude or modify the effect of those subsections in relation to specified provisions.

SECTION 761G   MEANING OF RETAIL CLIENT AND WHOLESALE CLIENT  

Providing a financial product or financial service to a person as a retail client

761G(1)    

A financial product or a financial service is provided to a person as a retail client unless subsection (5) , (6) , (6A) or (7) , or section 761GA , provides otherwise.

Note: The references in this section to providing a financial product to a person are not to be taken to imply that the provision of a financial product is not also the provision of a financial service (see the meaning of dealing in section 766C ).

Acquiring a financial product or financial service as a retail client

761G(2)    

A person to whom a financial product or financial service is provided as a retail client is taken to acquire the product or service as a retail client.

Disposing of a financial product as a retail client

761G(3)    

If a financial product is provided to a person as a retail client, any subsequent disposal of all or part of that product by the person is a disposal by the person as a retail client.

Wholesale clients

761G(4)    

A financial product or a financial service is provided to, or acquired by, a person as a wholesale client if it is not provided to, or acquired by, the person as a retail client.

General insurance products

761G(5)    

If a financial product is, or a financial service provided to a person relates to, a general insurance product, the product or service is provided to the person as a retail client if:

(a)    either:

(i) the person is an individual; or

(ii) the insurance product is or would be for use in connection with a small business (see subsection (12) ); and

(b)    the general insurance product is:

(i) a motor vehicle insurance product (as defined in the regulations); or

(ii) a home building insurance product (as defined in the regulations); or

(iii) a home contents insurance product (as defined in the regulations); or

(iv) a sickness and accident insurance product (as defined in the regulations); or

(v) a consumer credit insurance product (as defined in the regulations); or

(vi) a travel insurance product (as defined in the regulations); or

(vii) a personal and domestic property insurance product (as defined in the regulations); or

(viii) a kind of general insurance product prescribed by regulations made for the purposes of this subparagraph.

In any other cases, the provision to a person of a financial product that is, or a financial service that relates to, a general insurance product does not constitute the provision of a financial product or financial service to the person as a retail client.

Products and services relating to superannuation and RSAs

761G(6)    

For the purposes of this Act:

(a)    

if a financial product provided to a person is a superannuation product or an RSA, the product is provided to the person as a retail client; and

(aa)    

however, if a trustee of a pooled superannuation trust provides a financial product that is an interest in the trust to a person covered by subparagraph (c)(i), the product is not provided to the person as a retail client; and

(b)    

if a financial service (other than the provision of a financial product) provided to a person who is not covered by subparagraph (c)(i) or (ii) relates to a superannuation product or an RSA, or is a superannuation trustee service, the service is provided to the person as a retail client; and

(c)    

if a financial service (other than the provision of a financial product) provided to a person who is:

(i) the trustee of a superannuation fund, an approved deposit fund, a pooled superannuation trust or a public sector superannuation scheme that has net assets of at least $10 million; or

(ii) an RSA provider;

relates to a superannuation product or an RSA, or is a superannuation trustee service, that does not constitute the provision of a financial service to the person as a retail client.

Traditional trustee company services

761G(6A)    

If a financial service provided to a person is a traditional trustee company service, the service is provided to the person as a retail client unless regulations made for the purpose of this subsection provide otherwise.

Other kinds of financial product

761G(7)    

If a financial product is not, or a financial service (other than a traditional trustee company service or a superannuation trustee service) provided to a person does not relate to, a general insurance product, a superannuation product or an RSA, the product or service is provided to the person as a retail client unless one or more of the following paragraphs apply:

(a)    the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of this paragraph as being applicable in the circumstances (but see also subsection (10) ); or

(b)    the financial product, or the financial service, is provided for use in connection with a business that is not a small business (see subsection (12) );

(c)    

the financial product, or the financial service, is not provided for use in connection with a business, and the person who acquires the product or service gives the provider of the product or service, before the provision of the product or service, a copy of a certificate given within the preceding 6 months by a qualified accountant that states that the person:

(i) has net assets of at least the amount specified in regulations made for the purposes of this subparagraph; or

(ii) has a gross income for each of the last 2 financial years of at least the amount specified in regulations made for the purposes of this subparagraph a year;

(d)    the person is a professional investor.

Offence proceedings - defendant bears evidential burden in relation to matters referred to in paragraphs (7)(a) to (d)

761G(8)    

In a prosecution for an offence based on a provision of this Chapter or Part 6D.3A , a defendant bears an evidential burden in relation to the matters in paragraphs (7)(a) to (d) as if those matters were exceptions for the purposes of subsection 13.3(3) of the Criminal Code .

Other proceedings relating to subsection (7) products - presumption in non-criminal proceedings of retail client unless contrary established

761G(9)    
If:

(a)    it is alleged in a proceeding under this Chapter (not being a prosecution for an offence), or in any other proceeding (not being a prosecution for an offence) in respect of a matter arising under this Chapter, that a particular financial product or financial service was provided to a person as a retail client; and

(b)    the product or the service is one to which subsection (7) applies;

it is presumed that the product or service was provided to the person as a retail client unless the contrary is established.

Note 1: There is no such presumption in relation to the provision of a product or service that is or relates to a general insurance product, a superannuation product or an RSA. Whether or not such a product, or a service relating to such a product, was provided to a person as a retail client is to be resolved as provided in subsection (5) or (6) , as the case requires.

Note 2: In criminal proceedings, a defendant bears an evidential burden in relation to the matters in paragraphs (7)(a) to (d) (see subsection (8) ).

Regulations and paragraph (7)(a)

761G(10)    
In addition to specifying an amount or amounts for the purposes of paragraph (7)(a) , the regulations may do either or both of the following:

(a)    deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products;

(b)    modify the way in which that paragraph applies in particular circumstances.

Regulations and paragraph (7)(c)

761G(10A)    
In addition to specifying amounts for the purposes of subparagraphs (7)(c)(i) and (ii) , the regulations may do either or both of the following:

(a)    deal with how net assets referred to in subparagraph (7)(c)(i) are to be determined and valued, either generally or in specified circumstances;

(b)    deal with how gross income referred to in subparagraph (7)(c)(ii) is to be calculated, either generally or in specified circumstances.

What happens if a package of general insurance products and other kinds of financial products is provided?

761G(11)    
If:

(a)    either:

(i) in a single transaction, 2 or more financial products are provided to a person; or

(ii) a single financial service provided to a person relates to 2 or more financial products; and

(b)    one or more, but not all, of the financial products are general insurance products;

subsection (5) applies to the transaction or service so far as it relates to the general insurance products, and subsection (6) or (7) , as the case requires, applies to the transaction or service so far as it relates to other financial products.

Definition

761G(12)    
In this section:

small business
means a business employing less than:

(a) if the business is or includes the manufacture of goods - 100 people; or

(b) otherwise - 20 people.

SECTION 761GA  

761GA   MEANING OF RETAIL CLIENT - SOPHISTICATED INVESTORS  

A financial product, or a financial service (other than a traditional trustee company service, a crowd-funding service or a superannuation trustee service) in relation to a financial product, is not provided by one person to another person as a retail client if:

(a)    the first person (the licensee ) is a financial services licensee; and

(b)    

the financial product is not a general insurance product, a superannuation product or an RSA; and

(c)    the financial product or service is not provided for use in connection with a business; and

(d)    the licensee is satisfied on reasonable grounds that the other person (the client ) has previous experience in using financial services and investing in financial products that allows the client to assess:

(i) the merits of the product or service; and

(ii) the value of the product or service; and

(iii) the risks associated with holding the product; and

(iv) the client ' s own information needs; and

(v) the adequacy of the information given by the licensee and the product issuer; and

(e)    the licensee gives the client before, or at the time when, the product or advice is provided a written statement of the licensee ' s reasons for being satisfied as to those matters; and

(f)    the client signs a written acknowledgment before, or at the time when, the product or service is provided that:

(i) the licensee has not given the client a Product Disclosure Statement; and

(ii) the licensee has not given the client any other document that would be required to be given to the client under this Chapter if the product or service were provided to the client as a retail client; and

(iii) the licensee does not have any other obligation to the client under this Chapter that the licensee would have if the product or service were provided to the client as a retail client.

SECTION 761H   REFERENCES TO THIS CHAPTER INCLUDE REFERENCES TO REGULATIONS OR OTHER INSTRUMENTS MADE FOR THE PURPOSES OF THIS CHAPTER  

761H(1)   [ Application]  

A reference in a provision of this Chapter to this Chapter, or to a particular provision or group of provisions of this Chapter, includes (unless a contrary intention appears) a reference to regulations, or other instruments, made for the purposes of this Chapter, or for the purposes of that provision or any of those provisions, as the case requires.

761H(2)   [ Effect]  

Subsection (1) has effect as if provisions in Part 10.2 (transitional provisions) that relate to matters dealt with in this Chapter were part of this Chapter.

Division 3 - Meaning of financial product and related terms  

Subdivision A - Preliminary  

SECTION 762A   OVERVIEW OF APPROACH TO DEFINING WHAT A FINANCIAL PRODUCT IS  

762A(1)   General definition.  

Subdivision B sets out a general definition of financial product . Subject to subsections (2) and (3), a facility is a financial product if it falls within that definition.

762A(2)   Specific inclusions.  

Subdivision C identifies, or provides for the identification of, kinds of facilities that, subject to subsection (3), are financial products (whether or not they are within the general definition).

762A(3)   Overriding exclusions.  

Subdivision D identifies, or provides for the identification of, kinds of facilities that are not financial products. These facilities are not financial products:

(a) even if they are within the general definition; and

(b) even if they are within a class of facilities identified as mentioned in subsection (2).

SECTION 762B  

762B   WHAT IF A FINANCIAL PRODUCT IS PART OF A BROADER FACILITY?  

If a financial product is a component of a facility that also has other components, this Act, in applying to the financial product, only applies in relation to the facility to the extent it consists of the component that is the financial product.

Note: So, e.g., Part 7.9 does not require disclosures to be made in relation to those other components.

SECTION 762C  

762C   MEANING OF FACILITY  

In this Act:

facility
includes:

(a) intangible property; or

(b) an arrangement or a term of an arrangement (including a term that is implied by law or that is required by law to be included); or

(c) a combination of intangible property and an arrangement or term of an arrangement.

Note: 2 or more arrangements may be taken to constitute a single arrangement: see subsection 761B(2) .

Subdivision B - The general definition  

SECTION 763A   MEANING OF FINANCIAL PRODUCT  

763A(1)    

A financial product is a facility through which, or through the acquisition of which, a person does one or more of the following:

(a)    

makes a financial investment;

(b)    

manages financial risk;

(c)    

makes non-cash payments.

763A(2)    

A particular facility that is of a kind through which people commonly make financial investments, manage financial risks or make non-cash payments is a financial product even if that facility is acquired by a particular person for some other purpose.

763A(3)    
A facility does not cease to be a financial product merely because:

(a)    the facility has been acquired by a person other than the person to whom it was originally issued; and

(b)    that person, in acquiring the product, was not making a financial investment or managing a financial risk.

SECTION 763B  

763B   MEANING OF MAKES A FINANCIAL INVESTMENT  

A person (the investor ) makes a financial investment if:

(a)    the investor gives money or money's worth (the contribution ) to another person and any of the following apply:

(i) the other person uses the contribution to generate a financial return, or other benefit, for the investor;

(ii) the investor intends that the other person will use the contribution to generate a financial return, or other benefit, for the investor (even if no return or benefit is in fact generated);

(iii) the other person intends that the contribution will be used to generate a financial return, or other benefit, for the investor (even if no return or benefit is in fact generated); and

(b)    the investor has no day-to-day control over the use of the contribution to generate the return or benefit.

Note 1: Examples of actions that constitute making a financial investment under this subsection are:

(a) a person paying money to a company for the issue to the person of shares in the company (the company uses the money to generate dividends for the person and the person, as a shareholder, does not have control over the day-to-day affairs of the company); or

(b) a person contributing money to acquire interests in a registered scheme from the responsible entity of the scheme (the scheme uses the money to generate financial or other benefits for the person and the person, as a member of the scheme, does not have day-to-day control over the operation of the scheme).

Note 2: Examples of actions that do not constitute making a financial investment under this subsection are:

(a) a person purchasing real property or bullion (while the property or bullion may generate a return for the person, it is not a return generated by the use of the purchase money by another person); or

(b) a person giving money to a financial services licensee who is to use it to purchase shares for the person (while the purchase of the shares will be a financial investment made by the person, the mere act of giving the money to the licensee will not of itself constitute making a financial investment).

SECTION 763C  

763C   MEANING OF MANAGES FINANCIAL RISK  

A person manages financial risk if they:

(a)    manage the financial consequences to them of particular circumstances happening; or

(b)    avoid or limit the financial consequences of fluctuations in, or in the value of, receipts or costs (including prices and interest rates).

Note 1: Examples of actions that constitute managing a financial risk are:

(a) taking out insurance; or

(b) hedging a liability by acquiring a futures contract or entering into a currency swap.

Note 2: An example of an action that does not constitute managing a financial risk is employing a security firm (while that is a way of managing the risk that thefts will happen, it is not a way of managing the financial consequences if thefts do occur).

SECTION 763D   MEANING OF MAKES NON-CASH PAYMENTS  

763D(1)    

A person makes non-cash payments if they make payments, or cause payments to be made, otherwise than by the physical delivery of Australian or foreign currency in the form of notes and/or coins.

Note: Examples of actions that constitute making non-cash payments are:

(a) making payments by means of a facility for direct debit of a deposit account; or

(b) making payments by means of a facility for the use of cheques; or

(c) making payments by means of a purchased payment facility within the meaning of the Payment Systems (Regulation) Act 1998 , such as a smart card; or

(d) making payments by means of traveller ' s cheques (whether denominated in Australian or foreign currency).

763D(2)   

The following are not making non-cash payments , even if they might otherwise be covered by subsection (1) :

(a)    making payments by means of a facility in relation to which one of the following applies:

(i) there is only one person to whom payments can be made by means of the facility;

(ii) the facility is, or is of a kind, specified in the regulations as being a facility that is not to be covered by this section because of restrictions relating to the number of people to whom payments can be made by means of the facility, or relating to the number of persons who can use the facility to make payments;

(b)    making payments by means of:

(i) a letter of credit from a financial institution; or

(ii) a cheque drawn by a financial institution on itself; or

(iii) a guarantee given by a financial institution.

SECTION 763E   WHAT IF A FINANCIAL PRODUCT IS ONLY INCIDENTAL?  

763E(1)   [ ``incidental product'']  

If:

(a) something (the incidental product ) that, but for this section, would be a financial product because of this Subdivision is:

(i) an incidental component of a facility that also has other components; or

(ii) a facility that is incidental to one or more other facilities; and

(b) it is reasonable to assume that the main purpose of:

(i) if subparagraph (a)(i) applies - the facility referred to in that subparagraph, when considered as a whole; or

(ii) if subparagraph (a)(ii) applies - the incidental product, and the other facilities referred to in that subparagraph, when considered as a whole;

is not a financial product purpose;

the incidental product is not a financial product because of this Subdivision (however, it may still be a financial product because of Subdivision C ).

763E(2)   [ ``financial product purpose'']  

In this section:

financial product purpose
means a purpose of:

(a) making a financial investment; or

(b) managing financial risk; or

(c) making non-cash payments.

Subdivision C - Specific inclusions  

SECTION 764A   SPECIFIC THINGS THAT ARE FINANCIAL PRODUCTS (SUBJECT TO SUBDIVISION D)  

764A(1)    

Subject to Subdivision D , the following are financial products :

(a)    a security;

(b)    any of the following in relation to a registered scheme:

(i) an interest in the scheme;

(ii) a legal or equitable right or interest in an interest covered by subparagraph (i);

(iii) an option to acquire, by way of issue, an interest or right covered by subparagraph (i) or (ii);

(ba)    any of the following in relation to a managed investment scheme that is not a registered scheme, other than a scheme (whether or not operated in this jurisdiction) in relation to which none of paragraphs 601ED(1)(a) , (b) and (c) are satisfied:

(i) an interest in the scheme;

(ii) a legal or equitable right or interest in an interest covered by subparagraph (i);

(iii) an option to acquire, by way of issue, an interest or right covered by subparagraph (i) or (ii);

(bb)    any of the following in relation to a notified foreign passport fund:

(i) an interest in the fund;

(ii) a legal or equitable right or interest in an interest covered by subparagraph (i);

(iii) an option to acquire, by way of issue, an interest or right covered by subparagraph (i) or (ii);

(c)    a derivative;

(d)    

a contract of insurance that is not a life policy, or a sinking fund policy, but not including such a contract of insurance:

(i) to the extent that it provides for a benefit to be provided by an association of employees that is registered as an organisation, or recognised, under the Fair Work (Registered Organisations) Act 2009 for a member of the association or a dependant of a member; or

(ii) to the extent that it provides for benefits, pensions or payments described in paragraph 11(3)(c) of the Life Insurance Act 1995 ; or

(iii) to the extent that it provides for the provision of a funeral benefit; or

(iv) issued by an employer to an employee of the employer;

(e)    

a life policy, or a sinking fund policy, that is a contract of insurance, but not including such a policy:

(i) to the extent that it provides for a benefit to be provided by an association of employees that is registered as an organisation, or recognised, under the Fair Work (Registered Organisations) Act 2009 for a member of the association or a dependant of a member; or

(ii) to the extent that it provides for benefits, pensions or payments described in paragraph 11(3)(c) of the Life Insurance Act 1995 ; or

(iii) to the extent that it provides for the provision of a funeral benefit; or

(iv) issued by an employer to an employee of the employer;

(f)    

a life policy, or a sinking fund policy, that is not a contract of insurance, but not including such a policy:

(i) to the extent that it provides for a benefit to be provided by an association of employees that is registered as an organisation, or recognised, under the Fair Work (Registered Organisations) Act 2009 for a member of the association or a dependant of a member; or

(ii) to the extent that it provides for benefits, pensions or payments described in paragraph 11(3)(c) of the Life Insurance Act 1995 ; or

(iii) to the extent that it provides for the provision of a funeral benefit; or

(iv) issued by an employer to an employee of the employer;

(g)    

a superannuation product; or

(h)    

an RSA; or

(ha) (Repealed)

(i)    any deposit-taking facility made available by an ADI (within the meaning of the Banking Act 1959 ) in the course of its banking business (within the meaning of that Act), other than an RSA (RSAs are covered by paragraph (h));

(j)    a debenture, stock or bond issued or proposed to be issued by a government;

(k)    a foreign exchange contract that is not:

(i) a derivative (derivatives are covered by paragraph (c)); or

(ii) a contract to exchange one currency (whether Australian or not) for another that is to be settled immediately;

(kaa) (Repealed)

(ka)    

an Australian carbon credit unit;

(kb)    

an eligible international emissions unit;

(l)    

a margin lending facility;

(m)    

anything declared by the regulations to be a financial product.

Note: Even though something is expressly excluded from one of these paragraphs, it may still be a financial product (subject to Subdivision D ) either because:

(a) it is covered by another of these paragraphs; or

(b) it is covered by the general definition in Subdivision B .

Contracts of insurance

764A(1A)    

If a single contract of insurance provides 2 or more kinds of cover, paragraph (1)(d) applies separately in relation to that contract, in relation to each of those kinds of cover, as if the contract only provided that kind of cover.

Note: Because of this subsection (including as it is affected by subsection (1B) ), a single contract of insurance may constitute 2 or more separate general insurance products.

764A(1B)    

If a contract of insurance provides a kind of cover in relation to 2 or more kinds of asset, subsection (1A) applies to the contract, in relation to each of those kinds of asset, as if the cover provided by the contract in relation to that kind of asset constituted a separate kind of cover.

764A(2)    

For the purpose of paragraphs (1)(d) , (e) and (f) and subsections (1A) and (1B) , contract of insurance includes:

(a)    a contract that would ordinarily be regarded as a contract of insurance even if some of its provisions are not by way of insurance; and

(b)    a contract that includes provisions of insurance in so far as those provisions are concerned, even if the contract would not ordinarily be regarded as a contract of insurance.

Declaring additional things to be financial products for specified provisions of this Chapter

764A(3)    

Subject to Subdivision D , a thing declared by regulations to be a financial product for a specified provision of this Act is a financial product for that provision.

Subdivision D - Specific exclusions  

SECTION 765A   SPECIFIC THINGS THAT ARE NOT FINANCIAL PRODUCTS  

765A(1)    

Despite anything in Subdivision B or Subdivision C , the following are not financial products :

(a) an excluded security;

(b) an undertaking by a body corporate to pay money to a related body corporate;

(c) health insurance provided as part of a health insurance business (as defined in Division 121 of the Private Health Insurance Act 2007 );

(ca) insurance provided as part of a health-related business (as defined by section 131-15 of that Act) that is conducted through a health benefits fund (as defined by section 131-10 of that Act);

(d) insurance provided by the Commonwealth;

(e) State insurance or Northern Territory insurance, including insurance entered into by:

(i) a State or the Northern Territory; and

(ii) some other insurer;

as joint insurers;

(f) insurance entered into by the Export Finance and Insurance Corporation, other than a short-term insurance contract within the meaning of the Export Finance and Insurance Corporation Act 1991 ;

(g) reinsurance;

(h) any of the following:

(i) a credit facility within the meaning of the regulations (other than a margin lending facility);

(ii) a facility for making non-cash payments, if payments made using the facility will all be debited to a credit facility covered by subparagraph (i);

(i) a facility:

(i) that is an approved RTGS system within the meaning of the Payment Systems and Netting Act 1998 ; or

(ii) for the transmission and reconciliation of non-cash payments, and the establishment of final positions, for settlement through an approved RTGS system within the meaning of the Payment Systems and Netting Act 1998 ;

(j) a facility that is a designated payment system for the purposes of the Payment Systems (Regulation) Act 1998 ;

(k) a facility for the exchange and settlement of non-cash payments between providers of non-cash payment facilities;

(l) a facility that is:

(i) a financial market; or

(ii) a clearing and settlement facility; or

(iii) a payment system operated as part of a clearing and settlement facility; or

(iv) a derivative trade repository;

(m) a contract to exchange one currency (whether Australian or not) for another that is to be settled immediately;

(n) so much of an arrangement as is not a derivative because of paragraph 761D(3)(a) ;

[ CCH Note: There is no paragraph 765A(1)(o).]

(p) an arrangement that is not a derivative because of subsection 761D(4) ;

(q) an interest in a superannuation fund of a kind prescribed by regulations made for the purposes of this paragraph;

(r) any of the following:

(i) an interest in something that is not a managed investment scheme because of paragraph (c), (e), (f), (k), (l) or (m) of the definition of managed investment scheme in section 9 ;

(ii) a legal or equitable right or interest in an interest covered by subparagraph (i);

(iii) an option to acquire, by way of issue, an interest or right covered by subparagraph (i) or (ii);

(s) any of the following in relation to a managed investment scheme (whether or not operated in this jurisdiction) in relation to which none of paragraphs 601ED(1)(a) , (b) and (c) are satisfied and that is not a registered scheme or a notified foreign passport fund:

(i) an interest in the scheme;

(ii) a legal or equitable right or interest in an interest covered by subparagraph (i);

(iii) an option to acquire, by way of issue, an interest or right covered by subparagraph (i) or (ii);

(t) a deposit-taking facility that is, or is used for, State banking;

(u) a benefit provided by an association of employees that is registered as an organisation, or recognised, under the Fair Work (Registered Organisations) Act 2009 for a member of the association or a dependant of a member;

(v) either of the following:

(i) a contract of insurance; or

(ii) a life policy or a sinking fund policy, that is not a contract of insurance;

issued by an employer to an employee of the employer;

(w) a funeral benefit;

(x) physical equipment or physical infrastructure by which something else that is a financial product is provided;

(y) a facility, interest or other thing declared by regulations made for the purposes of this subsection not to be a financial product;

(z) a facility, interest or other thing declared by ASIC under subsection (2) not to be a financial product.

ASIC declarations

765A(2)    

ASIC may declare that a specified facility, interest or other thing is not a financial product. The declaration must be in writing and ASIC must publish notice of it in the Gazette .

Regulations

765A(3)    

Despite anything in Subdivision B or C , the regulations may declare that a specified facility, interest or other thing is not a financial product for the purposes of specified provisions of this Chapter.

765A(4)    

A declaration under subsection (2) that is inconsistent with regulations made for the purposes of subsection (3) has no effect to the extent of the inconsistency, but a declaration is taken to be consistent with the regulations to the extent that the declaration is capable of operating concurrently with the regulations.

SECTION 765B  

765B   FUNERAL EXPENSES FACILITIES ARE NOT FUNERAL BENEFITS  
(Repealed by No 69 of 2023, s 3, Sch 2[101] (effective 15 September 2023).)

Division 4 - Meaning of financial service and related terms  

SECTION 766A   MEANING OF FINANCIAL SERVICE  

General

766A(1)    

Subject to paragraph (2)(b) , a person provides a financial service if they:

(a)    

provide financial product advice; or

(b)    

deal in a financial product; or

(c)    

make a market for a financial product; or

(d)    operate a registered scheme; or

(da)    operate the business and conduct the affairs of a CCIV; or

(e)    

provide a custodial or depository service; or

(ea)    

provide a crowd-funding service; or

(eb)    

provide a claims handling and settling service; or

(ec)    

provide a superannuation trustee service; or

(f)    engage in conduct of a kind prescribed by regulations made for the purposes of this paragraph.

Provision of traditional trustee company services by trustee company

766A(1A)    

Subject to paragraph (2)(b) , the provision by a trustee company of a traditional trustee company service constitutes the provision, by the company, of a financial service .

Note: Trustee companies may also provide other kinds of financial service mentioned in subsection (1) .

766A(1B)    

The regulations may, in relation to a traditional trustee company service of a particular class, prescribe the person or persons to whom a service of that class is taken to be provided. This subsection does not limit (and is not limited by) subsection (2) .

Note: A traditional trustee company service is provided to a person as a retail client unless regulations provide otherwise (see subsection 761G(6A) ).

Regulations may deal with various matters

766A(2)    
The regulations may set out:

(a)    the circumstances in which persons facilitating the provision of a financial service (for example, by publishing information) are taken also to provide that service; or

(b)    the circumstances in which persons are taken to provide, or are taken not to provide, a financial service.

Exception for work ordinarily done by clerks or cashiers

766A(3)    
To avoid doubt, a person ' s conduct is not the provision of a financial service if it is done in the course of work of a kind ordinarily done by clerks or cashiers.

Meaning of operating a registered scheme

766A(4)    
For the purposes of this section, a person is not operating a registered scheme merely because:

(a)    they are acting as an agent or employee of another person; or

(b)    they are taking steps to wind up the scheme.

Overlap between financial services

766A(5)    

The fact that conduct constitutes the provision of a financial service is not to be taken to imply that the conduct does not also constitute the provision of another financial service.

Note: For example, conduct may constitute providing a superannuation trustee service and also providing another financial service (such as dealing in a financial product that is a superannuation product).

SECTION 766B   MEANING OF FINANCIAL PRODUCT ADVICE, PERSONAL ADVICE AND GENERAL ADVICE  

766B(1)    

Financial product advice means a recommendation or a statement of opinion, or a report of either of those things, that:

(a)    is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or

(b)    could reasonably be regarded as being intended to have such an influence.

766B(1A)    

However, subject to subsection (1B) , the provision or giving of an exempt document or statement does not constitute the provision of financial product advice.

766B(1B)    

Subsection (1A) does not apply for the purpose of determining whether a recommendation or statement of opinion made by an outside expert, or a report of such a recommendation or statement of opinion, that is included in an exempt document or statement is financial product advice provided by the outside expert.

766B(2)    
There are 2 types of financial product advice: personal advice and general advice.

766B(3)    

Personal advice is financial product advice that is given or directed to a person (including by electronic means) in circumstances where:

(a)    

the provider of the advice has considered one or more of the person's objectives, financial situation and needs (otherwise than for the purposes of compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 or with regulations, or AML/CTF Rules, under that Act); or

(b)    a reasonable person might expect the provider to have considered one or more of those matters.

766B(3A)    

However, the acts of asking for information solely to determine whether a person is in a target market for a financial product, and of informing the person of the result of that determination, do not, of themselves, constitute personal advice.

766B(4)    

General advice is financial product advice that is not personal advice.

766B(5)    
The following advice is not financial product advice:

(a)    advice given by a lawyer in his or her professional capacity, about matters of law, legal interpretation or the application of the law to any facts;

(b)    except as may be prescribed by the regulations - any other advice given by a lawyer in the ordinary course of activities as a lawyer, that is reasonably regarded as a necessary part of those activities;

(c)    

except as may be prescribed by the regulations - advice given by a registered tax agent or BAS agent, that is given in the ordinary course of activities as such an agent and that is reasonably regarded as a necessary part of those activities.

766B(6)    
If:

(a)    in response to a request made by a person (the inquirer ) to another person (the provider ), the provider tells the inquirer the cost, or an estimate of the likely cost, of a financial product (for example, an insurance product); and

(b)    that cost or estimate is worked out, or said by the provider to be worked out, by reference to a valuation of an item (for example, a house or car to which an insurance policy would relate), being a valuation that the provider suggests or recommends to the inquirer;

the acts of telling the inquirer the cost, or estimated cost, and suggesting or recommending the valuation, do not, of themselves, constitute the making of a recommendation (or the provision of any other kind of financial product advice) relating to the financial product.

766B(7)    
If:

(a)    in response to a request made by a person (the inquirer ) to another person (the provider ), the provider tells the inquirer information about:

(i) the cost of a financial product; or

(ii) the rate of return on a financial product; or

(iii) any other matter identified in regulations made for the purposes of this subparagraph; and

(b)    the request could also have been complied with (but was not also so complied with) by telling the inquirer equivalent information about one or more other financial products;

the act of telling the inquirer the information does not, of itself, constitute the making of a recommendation (or the provision of any other kind of financial product advice) in relation to the financial product referred to in paragraph (a) .

766B(7A)    

A recommendation or a statement of opinion, or a report of either of those things, is not financial product advice if giving the recommendation, statement of opinion or report could reasonably be regarded as a necessary part of providing a claims handling and settling service.

766B(7B)    

The regulations may prescribe:

(a)    circumstances in which giving a recommendation, statement of opinion or report could reasonably be regarded as a necessary part of providing a claims handling and settling service for the purposes of subsection (7A) ; and

(b)    circumstances in which giving a recommendation, statement of opinion or report could not reasonably be regarded as a necessary part of providing a claims handling and settling service for the purposes of subsection (7A) .

766B(8)    

Subsections (5) , (6) , (7) and (7A) are not intended to affect, in any way, the determination of whether situations not covered by those subsections do, or do not, constitute the provision of financial product advice.

766B(9)    

In this section:

exempt document or statement
means:

(a) a document prepared, or a statement given, in accordance with requirements of this Chapter, other than:

(i) a Statement of Advice; or

(ii) a document or statement of a kind prescribed by regulations made for the purposes of this subparagraph; or

(b) any other document or statement of a kind prescribed by regulations made for the purposes of this paragraph.

outside expert
, in relation to an exempt document or statement, means an expert who is not:

(a) the person by whom, or on whose behalf, the exempt document or statement was prepared; or

(b) an employee or director of that person.

SECTION 766C   MEANING OF DEALING  

766C(1)    

The the following conduct (whether engaged in as principal or agent) constitutes dealing in a financial product:

(a)    applying for or acquiring a financial product;

(b)    issuing a financial product;

(c)    

in relation to securities and interests in managed investment schemes - underwriting the securities or interests;

(d)    varying a financial product;

(e)    disposing of a financial product.

766C(2)    
Arranging for a person to engage in conduct referred to in subsection (1) is also dealing in a financial product, unless the actions concerned amount to providing financial product advice.

766C(2A)    

Despite subsections (1) and (2) , providing a crowd-funding service does not constitute dealing in a financial product.

766C(3)    
A person is taken not to deal in a financial product if the person deals in the product on their own behalf (whether directly or through an agent or other representative), unless:

(a)    the person is an issuer of financial products; and

(b)    the dealing is in relation to one or more of those products.

766C(3A)    
For the purposes of subsection (3) , a person (the agent ) who deals in a product as an agent or representative of another person (the principal ) is not taken to deal in the product on the agent ' s own behalf, even if that dealing, when considered as a dealing by the principal, is a dealing by the principal on the principal ' s own behalf.

766C(4)    
Also, a transaction entered into by a person who is, or who encompasses or constitutes in whole or in part, any of the following entities:

(a)    a government or local government authority;

(b)    a public authority or instrumentality or agency of the Crown;

(c)    

a body corporate (other than a CCIV) or an unincorporated body;

(ca)    a CCIV;

is taken not to be dealing in a financial product by that person if the transaction relates only to:

(d)    securities of that entity; or

(e)    if the entity is a government - debentures, stocks or bonds issued or proposed to be issued by that government.

766C(5)    
Paragraph (4)(c) does not apply if the entity:

(a)    carries on a business of investment in securities, interests in land or other investments; and

(b)    in the course of carrying on that business, invests funds subscribed, whether directly or indirectly, after an offer or invitation to the public (within the meaning of section 82 ) made on terms that the funds subscribed would be invested.

766C(6)    
A transaction entered into by a sub-underwriter of an issue of securities that relates only to the sub-underwriting is taken not to be dealing in a financial product.

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