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 1 - Preliminary  

SECTION 980A  

980A   MATTERS COVERED BY THIS PART  

This Part contains:

(a) provisions (see Divisions 2 to 7 ) relating to conduct etc. of financial services licensees; and

(b) miscellaneous provisions (see Division 8 ) relating to other conduct connected with financial products and financial services.

It does not deal with financial product disclosure (which is dealt with in Part 7.9 ).

SECTION 980B  

980B   GENERAL APPROACH TO OFFENCE PROVISIONS  

Division 9 contains provisions creating offences by reference to various rules contained in Divisions of this Part. However, it does not create all the offences relating to those rules, as some offences are created by subsection 1311(1) . Where offences are created by subsection 1311(1) in relation to a rule, this is indicated by a note at the end of the provision containing the rule.

Division 2 - Dealing with clients ' money  

Subdivision A - Money other than loans  

SECTION 981A   MONEY TO WHICH SUBDIVISION APPLIES  

981A(1)    
This Subdivision applies (subject to subsections (2), (3) and (4)) to money paid to a financial services licensee (the licensee ) in the following circumstances:

(a) the money is paid in connection with:

(i) a financial service that has been provided, or that will or may be provided, to a person (the client ); or

(ii) a financial product held by a person (the client ); and

(b) the money is paid:

(i) by the client; or

(ii) by a person acting on behalf of the client; or

(iii) to the licensee in the licensee's capacity as a person acting on behalf of the client.

981A(2)    
This Subdivision does not apply to money paid as mentioned in subsection (1) to the extent that:

(a) the money is paid by way of remuneration payable to the licensee, or the licensee is entitled to deduct such remuneration from the money; or

(b) the money is paid:

(i) to reimburse the licensee for payments made to acquire, or acquire an increased interest in, a financial product; or

(ii) to discharge a liability incurred by the licensee in respect of the acquisition of a financial product or an increased interest in a financial product, or to indemnify the licensee in respect of such a liability; or

(c) the money is paid to acquire, or acquire an increased interest in, a financial product from the licensee, whether by way of issue or sale by the licensee; or

(ca) the licensee is a licensed trustee company, and the money is paid to the licensee in connection with traditional trustee company services provided by the licensee; or

(d) Subdivision B (loan money) applies to the money.

Note: Money excluded by paragraph (c) is covered by section 1017E .

981A(3)    
If a person pays money to a financial services licensee in order for it to be deposited to the credit of a deposit product held by the person or another person with the licensee, that payment does not constitute money to which this Subdivision applies.

981A(4)    
The regulations may:

(a) exempt money paid in specified circumstances from some or all of the provisions of this Subdivision; or

(b) declare that this Subdivision applies in relation to money paid in specified circumstances as if specified provisions of this Subdivision were omitted, modified or varied as set out in the regulations.

981A(5)    
An exemption in regulations made for the purposes of paragraph (4)(a) may be made subject to conditions specified in, or imposed in accordance with, the regulations. The regulations may provide for consequences of a contravention of a condition.

SECTION 981B   OBLIGATION TO PAY MONEY INTO AN ACCOUNT  

981B(1)    
The licensee must ensure that money to which this Subdivision applies is paid into an account that satisfies these requirements:

(a) the account is:

(i) with an Australian ADI; or

(ii) of a kind prescribed by regulations made for the purposes of this paragraph;

and is designated as an account for the purposes of this section of this Act; and

(b) the only money paid into the account is:

(i) money to which this Subdivision applies (which may be money paid by, on behalf of, or for the benefit of, several different clients); or

(ii) interest on the amount from time to time standing to the credit of the account; or

(iii) interest, or other similar payments, on an investment made in accordance with regulations referred to in section 981C , or the proceeds of the realisation of such an investment; or

(iv) other money permitted to be paid into the account by the regulations; and

(c) if regulations made for the purposes of this paragraph impose additional requirements - the requirements so imposed by the regulations; and

(d) if the licence conditions of the licensee ' s licence impose additional requirements - the requirements so imposed by the licence conditions.

The money must be paid into such an account on the day it is received by the licensee, or on the next business day.

981B(2)    
The licensee may, for the purposes of this section, maintain a single account or 2 or more accounts.

981B(3)    

A person contravenes this subsection if the person contravenes subsection (1).

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

SECTION 981C   REGULATIONS MAY DEAL WITH VARIOUS MATTERS RELATING TO ACCOUNTS MAINTAINED FOR THE PURPOSES OF SECTION 981B  

981C(1)    
The regulations may deal with all or any of the following in relation to accounts, or a class of accounts, maintained for the purposes of section 981B :

(a) the circumstances in which payments may be made out of an account (including the circumstances in which money may be withdrawn and invested, and the kinds of investment that may be made);

(b) the minimum balance to be maintained in an account;

(c) how interest on an account is to be dealt with;

(d) how interest or other earnings on an investment of money withdrawn from an account, or the proceeds of the realisation of such an investment, are to be dealt with.

981C(2)    

A person contravenes this subsection if the person contravenes regulations made for the purposes of subsection (1).

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

SECTION 981D   MONEY RELATED TO DERIVATIVES MAY BE USED FOR GENERAL MARGINING ETC. PURPOSES  

981D(1)    
Despite anything in regulations made for the purposes of section 981C , if:

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

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

the money concerned may also be used for the purpose of meeting obligations incurred by the licensee in connection with margining, guaranteeing, securing, transferring, adjusting or settling dealings in derivatives by the licensee (including dealings on behalf of people other than the client).

981D(2)    

However, if the money is derivative retail client money, subsection (1) only applies to an obligation if:

(a) the entry into of the derivative referred to in paragraph (1)(a) or (b) was or will be cleared through an authorised clearing and settlement facility; and

(b) the licensee incurred the obligation, in connection with the derivative, under the operating rules of the facility.

SECTION 981E   PROTECTION OF MONEY FROM ATTACHMENT ETC.  

981E(1)    
This section applies to:

(a) money to which this Subdivision applies that has been paid to the licensee, both while it is in an account maintained for the purposes of section 981B and before and after it is paid into such an account; and

(b) other money in such an account as permitted by paragraph 981B(1) (b); and

(c) investments made in accordance with regulations made for the purposes of section 981C .

981E(2)    
Money and investments to which this section applies are not capable:

(a) of being attached or otherwise taken in execution; or

(b) of being made subject to a set-off, security interest or charging order, or to any process of a similar nature;

except at the suit of a person who is otherwise entitled to the money or investment.

SECTION 981F  

981F   REGULATIONS MAY DEAL WITH HOW MONEY TO BE DEALT WITH IF LICENSEE CEASES TO BE LICENSED ETC.  

The regulations may include provisions dealing with how money in an account maintained for the purposes of section 981B , or an investment of such money, is to be dealt with if:

(a)    the licensee ceases to be a financial services licensee; or

(b)    the licensee becomes insolvent, within the meaning of the regulations; or

(c)    the licensee merges with another financial services licensee; or

(d)    the licensee ceases to carry on some or all of the activities authorised by their licence.

SECTION 981G  

981G   ACCOUNT PROVIDER NOT LIABLE MERELY BECAUSE OF LICENSEE ' S CONTRAVENTION  

Nothing in this Subdivision, or in regulations made for the purposes of this Subdivision, makes the body (not being the licensee) that the account is with under paragraph 981B(1)(a) subject to any liability merely because of a failure by the licensee to comply with any of the provisions of this Subdivision or those regulations.

SECTION 981H   MONEY TO WHICH SUBDIVISION APPLIES TAKEN TO BE HELD IN TRUST  

981H(1)    

Subject to subsection (3), money to which this Subdivision applies that is paid to the licensee:

(a) by the client; or

(b) by a person acting on behalf of the client; or

(c) in the licensee ' s capacity as a person acting on behalf of the client;

is taken to be held in trust by the licensee for the benefit of the client.

981H(2)    
(Repealed by No 141 of 2003, s 3, Sch 2 [ 63].)

981H(3)    
The regulations may:

(a) provide that subsection (1) does not apply in relation to money in specified circumstances; and

(b) provide for matters relating to the taking of money to be held in trust (including, for example, terms on which the money is taken to be held in trust and circumstances in which it is no longer taken to be held in trust).

Subdivision AA - Client money reporting rules  

SECTION 981J   CLIENT MONEY REPORTING RULES  

981J(1)    
ASIC may, by legislative instrument, make rules (the client money reporting rules ) dealing with matters as permitted by this Subdivision, for purposes relating to derivative retail client money.

981J(2)    
The regulations may provide that the client money reporting rules:

(a) cannot impose requirements (or certain kinds of requirements) in relation to certain classes of persons or money; or

(b) can only impose requirements (or certain kinds of requirements) in relation to certain classes of persons or money in certain circumstances.

SECTION 981K   MATTERS THAT MAY BE DEALT WITH IN CLIENT MONEY REPORTING RULES  

981K(1)    
The client money reporting rules may impose any of the following kinds of requirements:

(a) requirements to report information (see also paragraph (2)(b));

(b) reconciliation requirements (see also paragraph (2)(c));

(c) requirements that are incidental or related to the requirements mentioned in paragraph (a) or (b).

981K(2)    
The client money reporting rules may also deal with matters incidental or related to requirements referred to in subsection (1), including any of the following:

(a) the classes of money in relation to which particular requirements apply;

(b) for requirements to report information:

(i) to whom information is required to be reported; and

(ii) the information that is required to be reported;

(c) for reconciliation requirements:

(i) the information that is required to be reconciled; and

(ii) how reconciliations are required to be reviewed or approved, including who is required to review or approve reconciliations; and

(iii) to whom reconciliations are required to be submitted;

(d) the financial services licensees who are required to comply with requirements imposed by the rules;

(e) the manner and form in which persons must comply with requirements imposed by the rules;

(f) the circumstances in which persons are, or may be, relieved from complying with requirements in the rules that would otherwise apply to them;

(g) the keeping of records, or the provision of records or other information, relating to accounts maintained for the purposes of section 981B ;

(h) the keeping of records, or the provision of records or other information, relating to compliance with (or determining whether there has been compliance with) the rules;

(i) any matters that the regulations provide, for the purposes of this paragraph, may be dealt with in the client money reporting rules;

(j) any other matters that the provisions of this Act provide may be dealt with in the client money rules.

981K(3)    
(Repealed by No 17 of 2019, s 3, Sch 1 [ 91] (effective 13 March 2019).)

SECTION 981L   ASIC TO CONSULT BEFORE MAKING RULES  

981L(1)    
ASIC must not make a client money reporting rule unless ASIC has consulted the public about the proposed rule.

981L(2)    
Without limiting the ways in which ASIC may comply with the obligation in subsection (1) to consult the public about a proposed rule, ASIC is taken to comply with that obligation if ASIC, on its website:

(a) makes the proposed rule, or a description of the content of the proposed rule, available; and

(b) invites the public to comment on the proposed rule.

981L(3)    
A failure to consult as required by subsection (1) does not invalidate a client money reporting rule.

SECTION 981M   COMPLYING WITH CLIENT MONEY REPORTING RULES  

981M(1)    
Financial services licensees must comply with the client money reporting rules.

Note: This subsection is a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

981M(2)    
If there is an inconsistency between the client money reporting rules, and any of the following other rules:

(a) the market integrity rules;

(b) the derivative transaction rules;

(c) the derivative trade repository rules;

those other rules prevail to the extent of the inconsistency.

Note: If there is an inconsistency between the client money reporting rules and the operating rules of a licensed market or of a licensed CS facility, the client money reporting rules prevail: see subsections 793B(2) and 822B(2) .

SECTION 981N   ALTERNATIVES TO CIVIL PROCEEDINGS  

981N(1)    
The regulations may provide for a person who is alleged to have contravened subsection 981M(1) (complying with client money reporting rules) to do one or more of the following as an alternative to civil proceedings:

(a) pay a penalty to the Commonwealth;

(b) undertake or institute remedial measures (including education programs);

(c) accept sanctions other than the payment of a penalty to the Commonwealth;

(d) enter into a legally enforceable undertaking.

981N(2)    

The penalty payable under regulations made under paragraph (1)(a) in relation to an alleged contravention of a provision of client money reporting rules must not exceed:

(a) for an individual - 3,000 penalty units; and

(b) for a body corporate - 15,000 penalty units.

981N(3)    
Without limiting regulations that may be made for the purposes of paragraph (1)(d), those regulations may provide for one or more of the following kinds of undertakings:

(a) an undertaking to take specified action within a specified period;

(b) an undertaking to refrain from taking specified action;

(c) an undertaking to pay a specified amount within a specified period to the Commonwealth or to some other specified person.

SECTION 981P  

981P   COMPLIANCE WITH REQUIREMENTS TO PROVIDE DATA OR OTHER INFORMATION TO ASIC: PROTECTION FROM LIABILITY  

If:

(a) a financial services licensee, or a person acting on behalf of a financial services licensee:

(i) provides data or information to ASIC; or

(ii) otherwise allows ASIC access to data or information; and

(b) the licensee or person does so, in good faith, in compliance with a requirement imposed by or under a provision of the client money reporting rules;

the licensee or person is not liable to an action or other proceeding, whether civil or criminal, for or in relation to the conduct mentioned in paragraph (a).

Subdivision B - Loan money  

SECTION 982A   MONEY TO WHICH THIS SUBDIVISION APPLIES  

982A(1)    
Subject to subsection (2) , this Subdivision applies to money paid to a financial services licensee (the licensee ) by way of a loan from a person (the client ) in connection with activities authorised by the licensee's licence.

982A(2)    
If a person pays money to a financial services licensee:

(a)    in order for it to be deposited to the credit of a deposit product held by the person or another person with the licensee; or

(b)    on condition that it is to be repaid to the person by the licensee, as a debt, pursuant to the terms of a debenture or other financial product issued by the licensee;

that payment does not constitute money to which this Subdivision applies.

SECTION 982B   OBLIGATION TO PAY MONEY INTO AN ACCOUNT  

982B(1)    
The licensee must ensure that money to which this Subdivision applies is paid into an account that satisfies these requirements:

(a)    the account is:

(i) with an Australian ADI; or

(ii) of a kind prescribed by regulations made for the purposes of this paragraph;

and is designated as an account for the purposes of this section of this Act; and

(b)    the only money paid into the account is:

(i) money to which this Subdivision applies (which may be money lent by several different persons); or

(ii) interest on the amount from time to time standing to the credit of the account.

The money must be paid into such an account on the day it is received by the licensee, or on the next business day.

982B(2)    
The licensee may, for the purposes of this section, maintain a single account or 2 or more accounts.

SECTION 982C   LICENSEE TO GIVE CLIENT STATEMENT SETTING OUT TERMS OF LOAN ETC.  

Obligation to give client a statement

982C(1)    
The licensee must, in accordance with the regulations, give the client a statement setting out:

(a)    the terms and conditions on which the loan is made and accepted; and

(b)    the purpose for which, and the manner in which, the licensee is to use the money.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

Obligation to keep money in account until receive acknowledgment of receipt of statement

982C(2)    
The licensee must not take money out of the account before the client has given the licensee a written acknowledgment that the client has received the statement required by subsection (1).

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

SECTION 982D  

982D   PERMITTED USE OF LOAN  

The licensee must only use the money:

(a)    for the purpose, and in the manner, set out in the statement given under section 982C ; or

(b)    for another purpose, or in another manner, agreed on in writing by the licensee and the client after the licensee gave the client the statement.

Note: Failure to comply with this section is an offence (see subsection 1311(1) ).

Subdivision C - Powers of Court  

SECTION 983A   COURT MAY FREEZE CERTAIN ACCOUNTS  

983A(1)    
The Court may, by order, restrain dealings in respect of specified accounts with financial institutions that a person holds or maintains (whether in Australia or elsewhere), subject to such terms and conditions as the Court imposes, if subsection (2) or (3) applies in relation to the person.

983A(2)    
This subsection applies to a person if, on application by ASIC, the Court is satisfied that the person holds, or has at any time held, an Australian financial services licence and that:

(a)    there are reasonable grounds for believing that there is a deficiency in an account maintained by the person for the purposes of section 981B or 982B , whether the account is maintained in this jurisdiction or elsewhere; or

(b)    there has been undue delay, or unreasonable refusal, on the person ' s part in paying, applying or accounting for money as provided for by this Division, by a condition of the licence, or by the operating rules of a licensed market or a licensed CS facility in which the person is or has been a participant; or

(c)    without limiting the generality of paragraph (a) or (b), the person has contravened section 981B or 982B .

983A(3)    
This subsection applies to a person if, on application by ASIC, the Court is satisfied that the person holds, or has at any time held, an Australian financial services licence and that:

(a)    the licence has been revoked or suspended; or

(b)    the person is incapable, through mental or physical incapacity, of managing his or her affairs; or

(c)    the person no longer carries on a financial services business; or

(d)    the person has died.

SECTION 983B   INTERIM ORDER FREEZING ACCOUNTS  

983B(1)    
Before considering an application under section 983A , the Court may, if it considers it desirable to do so, grant an interim order that is an order of the kind applied for and is expressed to apply until the application is determined.

983B(2)    
The Court must not require ASIC or any other person, as a condition of granting an order under subsection (1), to give an undertaking as to damages.

SECTION 983C  

983C   DUTY OF PERSON TO WHOM ORDER DIRECTED TO MAKE FULL DISCLOSURE  

If an order made under section 983A is directed to a financial institution, the institution must:

(a)    disclose to ASIC every account kept at the institution in the name of the person to whom the order relates, and any account that the institution reasonably suspects is held or kept at the institution for the benefit of that person; and

(b)    permit ASIC to make a copy of, or to take an extract from, any account of the person to whom the order relates or any of the institution ' s books relating to that person.

Note: Failure to comply with this section is an offence (see subsection 1311(1) ).

SECTION 983D   FURTHER ORDERS AND DIRECTIONS  

983D(1)    
If an order is made under section 983A or 983B , the Court may, on application by ASIC or a person whom the order affects, make a further order that does one or more of the following:

(a)    deals with such ancillary matters as the Court thinks necessary or desirable;

(b)    directs that specified amounts in an account affected by the first-mentioned order be paid to ASIC or a person nominated by ASIC;

(c)    varies or discharges the first-mentioned order or an order under this section.

983D(2)    
An order under this section may be made subject to such terms and conditions as the Court imposes.

SECTION 983E   POWER OF COURT TO MAKE ORDER RELATING TO PAYMENT OF MONEY  

983E(1)    
An order made under section 983D may include directions to a person to whom money is ordered to be paid directing that the person:

(a)    must pay the money into a separate account; or

(b)    is authorised to prepare a scheme for distributing the money to persons who claim, within 6 months after the person receives the money, to be entitled to the money and satisfy the person that they are so entitled; or

(c)    if the money received is insufficient to pay all proved claims, may, despite any rule of law or equity to the contrary, apportion the money among the claimants in proportion to their proved claims and show in the scheme how the money is so apportioned.

983E(2)    
If a person prepares a scheme for a distribution of money under subsection (1), the person must apply to the Court for approval of the scheme and for directions in respect of it.

983E(3)    
The Court may, in relation to money held in a separate account under subsection (1), give such directions as the Court thinks fit as to:

(a)    the persons to whom that money is to be paid, and in what amounts the whole or any portion of that money is to be paid; and

(b)    the payment of the balance of the money (if any) remaining in the account.

Division 3 - Dealing with other property of clients  

SECTION 984A   PROPERTY TO WHICH DIVISION APPLIES  

984A(1)    
Subject to subsection (2), this Division applies to property other than money (for example, share certificates) given to a financial services licensee (the licensee ) in the following circumstances:

(a)    the property is given in connection with:

(i) a financial service that has been provided, or that will or may be provided, to a person (the client ); or

(ii) a financial product held by a person (the client ); and

(b)    the property is given:

(i) by the client; or

(ii) by a person acting on behalf of the client; or

(iii) for the benefit of the client; and

(c)    the licensee is accountable for the property.

984A(2)    
The regulations may:

(a)    exempt property given in specified circumstances from some or all of the provisions of this Division; or

(b)    declare that this Division applies in relation to property given in specified circumstances as if specified provisions of this Division were omitted, modified or varied as set out in the regulations.

The circumstances that may be specified include (but are not limited to) that the property was given in connection with a specified class of financial product or financial service.

984A(3)    
An exemption in regulations made for the purposes of paragraph (2)(a) may be made subject to conditions specified in, or imposed in accordance with, the regulations. The regulations may provide for consequences of a contravention of a condition.

SECTION 984B   HOW PROPERTY TO WHICH THIS DIVISION APPLIES IS TO BE DEALT WITH  

984B(1)    
Subject to subsection (2) , the licensee must ensure that property to which this Division applies is only dealt with in accordance with:

(a)    the requirements (if any) specified in regulations made for the purposes of this paragraph; and

(b)    subject to those requirements:

(i) the terms and conditions on which the property was given to the licensee; and

(ii) any subsequent instructions given by the client.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

984B(2)    
If:

(a)    the financial service referred to in subparagraph 984A(1)(a)(i) is or relates to a dealing in a derivative; or

(b)    the financial product referred to in subparagraph 984A(1)(a)(ii) is a derivative;

the property concerned may also be used for the purpose of meeting obligations incurred by the licensee in connection with margining, guaranteeing, securing, transferring, adjusting or settling dealings in derivatives by the licensee (including dealings on behalf of people other than the client).

984B(3)    

However, if the financial service or product, in connection with the property given, would be provided to the client as a retail client if:

(a)    the service or product were provided to the client when the property is given; and

(b)    section 761GA (about sophisticated investors) did not apply; and

then subsection (2) only applies to an obligation if:

(c)    the entry into of the derivative referred to in paragraph (2)(a) or (b) was or will be cleared through an authorised clearing and settlement facility; and

(d)    the licensee incurred the obligation, in connection with the derivative, under the operating rules of the facility.

Division 4 - Special provisions relating to insurance  

SECTION 985A   MEANING OF CONTRACT OF INSURANCE AND INSURED  

985A(1)    
In this Division:

contract of insurance
includes a contract of life insurance.

Note: Contract of life insurance has a meaning affected by subsection (2) .

insured
, in relation to a contract of life insurance, means a person (other than the insurer) who is entitled to a benefit under the contract, whether that person is the life insured or some other person.

Note: Intending insured has a corresponding meaning.

985A(2)    
For the purposes of this Division, if:

(a)    

a life policy would not ordinarily be regarded as a contract of life insurance; and

(b)    

liability under the policy is borne by a company registered under section 21 of that Act; and

(c)    the policy was entered into after the commencement of section 9D of the Insurance (Agents and Brokers) Act 1984 as in force before the commencement of this Chapter;

the policy is taken to be a contract of life insurance.

SECTION 985B   STATUS OF AMOUNTS PAID TO FINANCIAL SERVICES LICENSEES IN RESPECT OF CONTRACTS OF INSURANCE  

985B(1)    
If:

(a)    a contract of insurance is arranged or effected by a financial services licensee; and

(b)    the licensee is not the insurer;

payment to the licensee of money payable (whether in respect of a premium or otherwise) by the insured under or in relation to the contract is a discharge, as between the insured and the insurer, of the liability of the insured to the insurer in respect of that money.

985B(2)    
Payment to a financial services licensee by or on behalf of an intending insured of money (whether in respect of a premium or otherwise) in respect of a contract of insurance to be arranged or effected by the licensee with an insurer (not being the licensee) is a discharge, as between the insured and the insurer, of any liability of the insured under or in respect of the contract, to the extent of the amount of the payment.

985B(3)    
Payment by an insurer to a financial services licensee of money payable to an insured, whether in respect of a claim, return of premiums or otherwise, under or in relation to a contract of insurance, does not discharge any liability of the insurer to the insured in respect of that money.

985B(4)    
An agreement, so far as it purports to alter or restrict the operation of subsection (1), (2) or (3), is void.

985B(5)    
Subsection (4) does not make void an agreement between a financial services licensee and an insured in so far as the agreement allows the licensee to set off against money payable to the insured money payable by the insured to the licensee in respect of premiums.

SECTION 985C   REGULATIONS MAY IMPOSE OTHER REQUIREMENTS ETC. IF FINANCIAL SERVICES LICENSEE IS NOT THE INSURER  

985C(1)    
The regulations may impose requirements to be complied with by a financial services licensee in relation to, or make other provision dealing with, a situation specified in subsection (2) that arises in relation to a contract or proposed contract of insurance under which the licensee is not the insurer.

985C(2)    
The situations are as follows:

(a)    the licensee receives an amount as a premium or instalment of premium;

(b)    the licensee does not receive an amount as a premium or instalment of premium by a particular time;

(c)    the licensee is not aware of the amount of a premium or instalment of premium that is to be paid;

(d)    the licensee receives money from the insured or intending insured but the risk or part of the risk has not been accepted by a particular time;

(e)    the licensee receives money from the insurer for payment to or on behalf of the insured.

SECTION 985D   FINANCIAL SERVICES LICENSEES ETC. NOT TO DEAL IN GENERAL INSURANCE PRODUCTS FROM UNAUTHORISED INSURERS ETC.  

985D(1)    
A financial services licensee, or an authorised representative of a financial services licensee, must not deal in a general insurance product if the insurer for the product, or (if there is more than one insurer for the product) each insurer for the product, is not at least one of the following:

(a)    a general insurer within the meaning of the Insurance Act 1973 ;

(b)    a Lloyd ' s underwriter within the meaning of that Act;

(c)    a person in respect of whom a determination is in force, under subsection 7(1) of that Act, that subsection 9(1) or 10(1) or (2) of that Act does not apply (the effect of which is the effect referred to in paragraph 9(1)(c) , 10(1)(c) or 10(2)(c) of that Act (as the case requires)).

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

985D(2)    
Subsection (1) does not apply in relation to a general insurance product if, because of section 3A of the Insurance Act 1973 , undertaking liability under the contract of insurance concerned is not, or would not be, insurance business for the purposes of that Act.

Note: A defendant bears an evidential burden in relation to the matters in subsection (2) (see subsection 13.3(3) of the Criminal Code ).

985D(3)    
Paragraph (1)(b) ceases to apply after section 93 of the Insurance Act 1973 has ceased to have effect.

985D(4)    
An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability , see section 6.1 of the Criminal Code .

Division 4A - Special provisions relating to margin lending facilities  

Subdivision A - Responsible lending conduct for margin lending facilities  

SECTION 985EA  

985EA   APPLICATION OF THIS SUBDIVISION  

This Subdivision applies to a financial services licensee (the provider ) in relation to:

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

(b)    the increasing of the limit of a margin lending facility that was issued to a retail client.

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.

SECTION 985F  

985F   ASSESSMENT OF UNSUITABILITY OF MARGIN LENDING FACILITY  

For the purposes of paragraph 985E(1)(c) , the provider must make an assessment that:

(a)    specifies the period the assessment covers; and

(b)    assesseswhether the margin lending facility will be unsuitable for the retail client if the facility is issued or the limit is increased in that period.

Note: The provider is not required to make the assessment if the margin lending facility is not issued or the limit is not increased.

SECTION 985G   REASONABLE INQUIRIES ETC. ABOUT THE RETAIL CLIENT  

Requirement to make inquiries and take steps to verify

985G(1)    
For the purposes of paragraph 985E(1)(d) , the provider must, before making the assessment:

(a)    make reasonable inquiries about the retail client ' s financial situation; and

(b)    take reasonable steps to verify the retail client ' s financial situation; and

(c)    make any inquiries prescribed by the regulations about any matter prescribed by the regulations; and

(d)    take any steps prescribed by the regulations to verify any matter prescribed by the regulations.

985G(2)    
The regulations may prescribe particular inquiries or steps that must be made or taken, or do not need to be made or taken, for the purposes of paragraph (1)(a) or (b).

When not required to take steps to verify

985G(3)    
Despite subsection (1), if:

(a)    a financial services licensee that is authorised to provide financial product advice in relation to margin lending facilities has prepared a statement of advice for the retail client; and

(b)    the statement of advice was prepared no more than 90 days before the critical day; and

(c)    the statement of advice recommends that:

(i) the retail client acquire the particular margin lending facility; or

(ii) the limit of the particular margin lending facility be increased; and

(d)    the limit of the facility, or the increase in the limit of the facility, is not greater than the limit, or the increase in the limit, recommended in the statement of advice; and

(e)    the statement of advice includes the information that was used for the purposes of preparing the statement of advice;

then the provider is not required, for the purposes of paragraph (1)(b) or (d), to verify that information.

SECTION 985H   WHEN MARGIN LENDING FACILITY MUST BE ASSESSED AS UNSUITABLE  

Requirement to assess the margin lending facility as unsuitable

985H(1)    
The provider must assess that the margin lending facility will be unsuitable for the retail client if the margin lending facility will be unsuitable for the retail client under subsection (2).

Note 1: This subsection is a civil penalty provision (see section 1317E ).

Note 2: Even if the margin lending facility will not be unsuitable for the retail client under subsection (2), the provider may still assess that the margin lending facility will be unsuitable for the retail client for other reasons.

985H(2)    
The margin lending facility will be unsuitable for the retail client if, at the time of the assessment, it is likely that:

(a)    if the facility is issued or the limit increased in the period covered by the assessment, and the facility were to go into margin call, the retail client:

(i) would be unable to comply with the retail client ' s financial obligations under the terms of the facility; or

(ii) could only comply with substantial hardship; or

(b)    if the regulations prescribe circumstances in which a margin lending facility is unsuitable - those circumstances will apply to the margin lending facility if the facility is issued or the limit increased in the period covered by the assessment.

Information to be used to make the assessment

985H(3)    
For the purposes of determining under subsection (2) whether the margin lending facility will be unsuitable, only information that satisfies both of the following paragraphs is to be taken into account:

(a)    the information is about the retail client ' s financial situation, or any other matter prescribed by regulations under paragraph 985G(1)(c) or (d) ;

(b)    at the time of the assessment:

(i) the provider had reason to believe that the information was true; or

(ii) the provider would have had reason to believe that the information was true if it had made the inquiries or verification under section 985G .

SECTION 985J   GIVING THE RETAIL CLIENT THE ASSESSMENT  

Requirement to give assessment if requested

985J(1)    
If, before the margin lending facility is issued or the limit is increased, the retail client requests a copy of the assessment from the provider, the provider must give the retail client a written copy of the assessment before issuing the facility or increasing the limit.

Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

Note 2: This subsection is a civil penalty provision (see section 1317E ).

Note 3: The provider is not required to give the retail client a copy of the assessment if the margin lending facility is not issued or the limit is not increased.

985J(2)    
If, during the period that:

(a)    starts on the critical day referred to in subsection 985E(1) ; and

(b)    ends 7 years after that day;

the retail client requests a copy of the assessment from the provider, the provider must give the retail client a written copy of the assessment:

(c)    if the request is made within 2 years of the critical day - before the end of 7 business days after the day the provider receives the request; and

(d)    otherwise - before the end of 21 business days after the day the provider receives the request.

Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

Note 2: This subsection is a civil penalty provision (see section 1317E ).

Manner of giving assessment

985J(3)    
The provider must give the retail client the copy of the assessment in the manner (if any) prescribed by the regulations.

No payment for assessment

985J(4)    
The provider must not request or demand payment of an amount for giving the retail client a copy of the assessment.

Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

Note 2: This subsection is a civil penalty provision (see section 1317E ).

Strict liability

985J(5)    
An offence based on subsection (1), (2) or (4) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code .

SECTION 985K   UNSUITABLE MARGIN LENDING FACILITIES  

Requirement not to issue unsuitable margin lending facilities etc.

985K(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;

if the facility is unsuitable for the retail client under subsection (2).

Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

Note 2: This subsection is a civil penalty provision (see section 1317E ).

When a margin lending facility will be unsuitable

985K(2)    
The margin lending facility is unsuitable for the retail client if, at the timeit is issued or the limit is increased:

(a)    it is likely that, if the facility were to go into margin call, the retail client:

(i) would be unable to comply with the retail client ' s financial obligations under the terms of the facility; or

(ii) could only comply with substantial hardship; or

(b)    if the regulations prescribe circumstances in which a margin lending facility is unsuitable - those circumstances apply to the margin lending facility.

Information to be used for the purposes of subsection (2)

985K(3)    
For the purposes of determining under subsection (2) whether the margin lending facility will be unsuitable, only information that satisfies both of the following paragraphs is to be taken into account:

(a)    the information is about the retail client ' s financial situation, or any other matter prescribed by regulations under paragraph 985G(1)(c) or (d) ;

(b)    at the time the margin lending facility is issued or the limit is increased:

(i) the provider had reason to believe that the information was true; or

(ii) the provider would have had reason to believe that the information was true if it had made the inquiries or verification under section 985G .

Regulations in relation to unsuitability of margin lending facility

985K(4)    
The regulations may prescribe particular situations in which a margin lending facility is taken not to be unsuitable for a retail client, despite subsection (2).

Increase in limit of standard margin lending facility

985K(5)    
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 in relation to increase in limit

985K(6)    
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 (5); or

(b)    not to be increased.

Subdivision B - Notice of margin calls under margin lending facilities  

SECTION 985L  

985L   ISSUE OF MARGIN LENDING FACILITY MUST NOT BE CONDITIONAL ON AGREEMENT TO RECEIVE COMMUNICATIONS THROUGH AGENT  

A financial services licensee must not require, as a condition of issuing a margin lending facility to a retail client, that the retail client enter into an agreement of the kind referred to in subsection 985M(2) (which deals with agreements about communications in relation to margin lending facilities).

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

SECTION 985M   NOTIFICATION OF MARGIN CALLS  

Provider must notify retail client of margin call

985M(1)    
A financial services licensee (the provider ) that has issued a margin lending facility to a retail client must, when the facility goes into margin call, take reasonable steps to notify the retail client under the facility of the margin call in accordance with this section.

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

When provider must notify retail client ' s agent, and agent must notify retail client, of margin call

985M(2)    
However, if there is an agreement between the provider, the retail client, and another financial services licensee (the agent ) that the agent will receive communications from the provider in relation to the margin lending facility on behalf of the retail client, then:

(a)    the provider must take reasonable steps to notify the agent (instead of the retail client) of the margin call in accordance with this section; and

(b)    the agent must take reasonable steps to notify the retail client of the margin call in accordance with this section.

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

When and how notice must be given

985M(3)    
A notice under this section must be given:

(a)    at a time determined by ASIC; or

(b)    if no time is determined by ASIC - as soon as practicable.

985M(4)    
A notice under this section must be given:

(a)    if a manner in which the notice is to be given has been agreed between the person who is required to give the notice and the person to whom the notice is required to be given - in that manner; or

(b)    if there is no agreement and ASIC has determined the manner in which the notice is to be given - in that manner; or

(c)    otherwise - in a reasonable manner.

ASIC may determine when and how notice must be given

985M(5)    
ASIC may determine:

(a)    the time by which, and manner in which, a provider must notify a client or agent of a margin call under this section; and

(b)    the time by which, and manner in which, an agent must notify a client of a margin call under this section.

985M(6)    
A determination made under subsection (5):

(a)    must be in writing; and

(b)    

is a legislative instrument.

Division 5 - Obligations to report  

SECTION 986A  

986A   REPORTING IN RELATION TO MONEY TO WHICH SUBDIVISION A OR B OF DIVISION 2 APPLIES OR PROPERTY TO WHICH DIVISION 3 APPLIES  

The regulations may impose reporting requirements to be complied with by a financial services licensee in relation to money to which Subdivision A or B of Division 2 applies or property to which Division 3 applies.

SECTION 986B  

986B   REPORTING IN RELATION TO DEALINGS INDERIVATIVES  

The regulations may impose reporting requirements to be complied with by a financial services licensee in relation to dealings in derivatives on behalf of other people.

Division 6 - Financial records, statements and audit  

Subdivision A - Preliminary  

SECTION 987A   APPLICATION OF DIVISION  

987A(1)    
This Division applies in relation to a financial services licensee and a financial services business carried on by the licensee, whether that business is carried on in this jurisdiction or elsewhere.

987A(2)    
This Division does not affect, and is to be taken never to have affected, the operation of Chapter 2M in relation to a company that is a financial services licensee or in relation to a financial services business that is carried on by such a company.

Subdivision B - Financial records of financial services licensees  

SECTION 988A   OBLIGATION TO KEEP FINANCIAL RECORDS  

988A(1)    
A financial services licensee must (subject to subsection (2)):

(a)    keep financial records that correctly record and explain the transactions and financial position of the financial services business carried on by the licensee; and

(b)    keep those records in accordance with the requirements of this Subdivision; and

(c)    comply with the requirements of this Subdivision in relation to conversion of records into the English language (see subsection 988C(2) ).

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

988A(2)    
The licensee does not contravene a requirement of this Subdivision merely because some or all of the records are kept as a part of, or in conjunction with, the records relating to any other business that is carried on by the licensee.

Note: A defendant bears an evidential burden in relation to the matters in this subsection. See subsection 13.3(3) of the Criminal Code .

SECTION 988B  

988B   RECORDS TO BE KEPT SO THAT PROFIT AND LOSS STATEMENTS AND BALANCE SHEET CAN BE PREPARED AND AUDITED  

The records must be kept in a way that:

(a)    enables true and fair profit and loss statements, and balance sheets, of the financial services business of the licensee to be prepared from time to time; and

(b)    allows those statements and balance sheets to be conveniently and properly audited.

SECTION 988C   LANGUAGE OF RECORDS  

988C(1)    
The records must be kept in writing in the English language, or in a manner that enables them to be readily accessible and readily converted into writing in the English language.

988C(2)    
If any of the records are not kept in writing in the English language, the licensee must, if required to convert the records concerned into writing in the English language by a person who is entitled to examine the records concerned, comply with the requirement within a reasonable time.

SECTION 988D  

988D   LOCATION OF RECORDS  

If any of the records are kept outside this jurisdiction, the licensee must:

(a)    cause to be sent to and kept at a place in this jurisdiction such particulars with respect to the business dealt with in those records as will enable true and fair profit and loss statements and balance sheets to be prepared; and

(b)    if required by ASIC to produce those records at a place in this jurisdiction, comply with the requirement not later than 28 days after the requirement is made.

SECTION 988E  

988E   PARTICULAR CATEGORIES OF INFORMATION TO BE SHOWN IN RECORDS  

The records must be kept in sufficient detail to show particulars of:

(a)    all money received or paid by the licensee, including money paid to, or disbursed from, an account maintained for the purposes of section 981B or 982B ; and

(b)    all acquisitions and disposals of financial products made by the licensee, the charges and credits arising from them, and the names of the person acquiring or disposing of each of those products; and

(c)    all income received by the licensee from commissions, interest, and other sources, and all expenses, commissions, and interest paid by the licensee; and

(d)    all the assets and liabilities (including contingent liabilities) of the licensee; and

(e)    

all securities, managed investment products or foreign passport fund products that are the property of the licensee, showing by whom the securities or products, or the documents of title to the securities or products, are held and, if they are held by some other person, whether or not they are held as security against loans or advances; and

(f)    

all securities, managed investment products or foreign passport fund products that are not the property of the licensee and for which the licensee or a nominee controlled by thelicensee is accountable, showing:

(i) by whom, and for whom, the securities or products, or the documents of title to the securities or products, are held; and

(ii) the extent to which they are either held for safe custody or deposited with a third party as security for loans or advances made to the licensee; and

(g)    such other matters (if any) as are specified in regulations made for the purposes of this paragraph.

SECTION 988F  

988F   REGULATIONS MAY IMPOSE ADDITIONAL REQUIREMENTS  

The regulations may impose additional requirements to be complied with in relation to the records including, for example, requirements for things to be contained in the records, and requirements relating to the level of detail to be shown in the records.

SECTION 988G  

988G   RECORDS TAKEN TO BE MADE WITH LICENSEE'S AUTHORITY  

An entry in the records is, unless the contrary is proved, to be taken to have been made by, or with the authority of, the licensee.

Subdivision C - Financial statements of financial services licensees  

SECTION 989A  

989A   MEANING OF FINANCIAL YEAR  
(Repealed by No 76 of 2023, s 3, Sch 2 [ 488] (effective 20 October 2023).)

SECTION 989B   FINANCIAL SERVICES LICENSEE TO PREPARE AND LODGE ANNUAL PROFIT AND LOSS STATEMENT AND BALANCE SHEET  

989B(1)    
A financial services licensee must, in respect of each financial year, prepare a true and fair profit and loss statement and balance sheet in accordance with this Subdivision.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

989B(2)    

The licensee must lodge the statement and balance sheet with ASIC in a prescribed form in accordance with this Subdivision.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

989B(3)    
The licensee must, with the statement and balance sheet, lodge an auditor ' s report with ASIC containing the information and matters required by the regulations.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

SECTION 989C  

989C   REQUIREMENTS AS TO CONTENTS AND APPLICABLE ACCOUNTING PRINCIPLES  

The profit and loss statement and the balance sheet must:

(a)    contain the information that is required by the regulations; and

(b)    be prepared in accordance with any requirements in the regulations as to the accounting principles to be used.

SECTION 989CA   AUDIT TO BE CONDUCTED IN ACCORDANCE WITH AUDITING STANDARDS  

989CA(1)    
If an individual auditor, or an audit company, conducts an audit of a profit and loss statement and balance sheet for the purposes of this Subdivision, the individual auditor or audit company must:

(a)    conduct the audit in accordance with the auditing standards; and

(b)    include in the audit report on the profit and loss statement, and balance sheet, any statements or disclosures required by the auditing standards.

989CA(2)    
If an audit firm, or an audit company, conducts an audit of a profit and loss statement and balance sheet for the purposes of this Subdivision, the lead auditor for the audit or review must ensure that:

(a)    the audit is conducted in accordance with the auditing standards; and

(b)    the audit report on the profit and loss statement, and balance sheet, includes any statements or disclosures required by the auditing standards.

Fault-based offence

989CA(3)    

A person commits an offence if the person contravenes subsection (1) or (2).

Strict liability offence

989CA(4)    

A person commits an offence of strict liability if the person contravenes subsection (1) or (2).

SECTION 989D   TIME OF LODGMENT  

989D(1)    
Unless an extension is granted under subsection (3), the profit and loss statement and the balance sheet must be lodged before:

(a)    if the licensee is not a body corporate - the day that is 2 months after the end of that financial year; or

(b)    if the licensee is a body corporate - the day that is 3 months after the end of that financial year.

989D(2)    
If an extension is granted under subsection (3), the profit and loss statement and the balance sheet must be lodged before the end of the extended period.

989D(3)    
ASIC may, on application made:

(a)    by a financial services licensee and the licensee's auditor; and

(b)    before the end of the period that would otherwise apply;

approve an extension of the period for lodging the profit and loss statement and balance sheet. The extension may be of the period originally applicable or the period applicable under a previous extension.

989D(4)    
An approval under subsection (3) may be given subject to such conditions (if any) as ASIC imposes.

989D(5)    
If an approval under subsection (3) is given subject to conditions, the licensee must comply with those conditions.

Subdivision D - Appointment etc. of auditors  

SECTION 990A  

990A   SECTIONS 990B TO 990H NOT TO APPLY TO PUBLIC COMPANIES  

Sections 990B to 990H do not apply to a financial services licensee that is a public company.

SECTION 990B   APPOINTMENT OF AUDITOR BY LICENSEE  

990B(1)    
A financial services licensee must, within 1 month after beginning to hold the licence, appoint as auditor or auditors to audit the licensee ' s financial statements:

(a)    a person or persons; or

(b)    a firm or firms; or

(c)    a person or persons and a firm or firms.

Subsections (4) and (5) must be complied with in relation to the appointment.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

990B(2)    
Within 14 days after a vacancy occurs in the office of an auditor of the licensee, if there is no surviving or continuing auditor of the licensee, the licensee must appoint:

(a)    a person or persons; or

(b)    a firm or firms; or

(c)    a person or persons and a firm or firms;

to fill the vacancy. Subsections (4) and (5) must be complied with in relation to the appointment.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

990B(3)    
While a vacancy in the office of an auditor of the licensee continues, the surviving or continuing auditor or auditors (if any) may act.

990B(4)    
The licensee must not appoint as auditor a person who, or firm that, is ineligible by virtue of regulations made for the purposes of section 990C to act as auditor of the licensee.

990B(5)    
The licensee must not appoint a person or firm as auditor of the licensee unless that person or firm has, before the appointment, consented by written notice given to the licensee to act as auditor and has not withdrawn the consent by written notice given to the licensee.

990B(6)    
The licensee must, within 14 days after an appointment of a person or firm as auditor, lodge a written notice with ASIC stating that the licensee has made the appointment and specifying the name of the person or firms.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

990B(7)    
The regulations may include provisions (including provisions imposing obligations) dealing with matters related to the appointment of a firm as auditor, including, for example:

(a)    taking certain members of the firm to have been appointed as auditors; and

(b)    the effect of a dissolution and reconstitution of the firm; and

(c)    requiring a member of the firm who retires or withdraws to continue to act as auditor in certain circumstances; and

(d)    how a report, notice or other document is to be made or given.

990B(8)    
Regulations made for the purposes of subsection (7) may also include provisions modifying the effect of provisions of this Subdivision in relation to matters dealt with in those regulations.

990B(9)    

In this section:

person
means:

(a) an individual auditor; or

(b) an authorised audit company.

SECTION 990C  

990C   WHEN A PERSON OR FIRM IS INELIGIBLE TO ACT AS AUDITOR  

A person or firm is ineligible to act as auditor of the licensee if regulations made for the purposes of this section provide that the person or firm is ineligible so to act.

SECTION 990D   INELIGIBLE PERSON OR FIRM MUST NOT CONSENT TO ACT OR DISQUALIFY THEMSELVES ETC.  

990D(1)    
A person or firm, while ineligible to act as auditor of the licensee, must not:

(a)    consent to be appointed as auditor of the licensee; or

(b)    act as auditor of the licensee; or

(c)    prepare a report that an auditor of the licensee is to prepare under this Part.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

990D(2)    
A person must not:

(a)    if the person has been appointed auditor of the licensee - disqualify himself or herself, while the appointment continues, from acting as auditor of the licensee; or

(b)    if the person is a member of a firm that has been appointed auditor of the licensee - disqualify the firm, while the appointment continues, from acting as auditor of the licensee.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

SECTION 990E  

990E   DURATION OF APPOINTMENT OF AUDITORS  

An auditor of the licensee holds office until:

(a)    death; or

(b)    removal in accordance with section 990F ; or

(c)    resignation in accordance with sections 990G and 990H ; or

(d)    becoming prohibited by subsection 990D(1) from acting as auditor of the licensee;

whichever occurs first.

SECTION 990F  

990F   REMOVAL OF AUDITORS  

The licensee:

(a)    must remove an auditor of the licensee from office if the auditor becomes ineligible to act as auditor of the licensee; and

(b)    may, with ASIC's consent, remove an auditor of the licensee from office.

Note: Failure to comply with paragraph (a) is an offence (see subsection 1311(1) ).

SECTION 990G   RESIGNATION OF AUDITORS - REQUIREMENTS FOR RESIGNATION  

990G(1)    
An auditor of the licensee may, by written notice given to the licensee, resign as auditor of the licensee if:

(a)    the auditor has, by written notice given to ASIC, applied for consent to the resignation and, at or about the same time as the auditor gave notice to ASIC, gave written notice of the application to the licensee; and

(b)    ASIC has consented and the auditor has received notice of ASIC ' s consent.

990G(2)    
ASIC must, as soon as practicable after receiving an application from an auditor under subsection (1), notify the auditor and the licensee whether it consents to the resignation.

990G(3)    
A statement by an auditor in an application under subsection (1), or in answer to an inquiry by ASIC relating to the reasons for the application:

(a)    is not admissible in evidence in any civil or criminal proceedings in a court against the auditor other than proceedings for a contravention of section 1308 ; and

(b)    may not be made the ground of a prosecution (other than a prosecution for a contravention of section 1308 ), action or suit against the auditor.

990G(4)    
A certificate by ASIC that a statement was made in an application under subsection (1), or in answer to an inquiry by ASIC relating to the reasons for such an application, is conclusive evidence that the statement was so made.

SECTION 990H  

990H   RESIGNATION OF AUDITORS - WHEN RESIGNATION TAKES EFFECT  

The resignation of an auditor of the licensee takes effect on:

(a)    if the notice of resignation specifies a date as the date the resignation is to take effect - the date so specified; or

(b)    the date on which ASIC gives its consent to the resignation; or

(c)    if ASIC has fixed a date as the date the resignation is to take effect - the date so fixed;

whichever last occurs.

SECTION 990I   AUDITOR'S RIGHT OF ACCESS TO RECORDS, INFORMATION ETC.  

990I(1)    
An auditor of the licensee has a right of access at all reasonable times to the financial records or other records (including any register) of the licensee.

990I(2)    
An auditor of the licensee is entitled to require:

(a)    from the licensee; or

(b)    

if the licensee is a body corporate - from any director, secretary or senior manager of the licensee;

such assistance and explanations as the auditor desires for the purposes of audit.

990I(3)    

The licensee, or a director, secretary or senior manager of the licensee if it is a body corporate, must not:

(a)    refuse or fail to allow an auditor of the licensee access, in accordance with subsection (1), to financial records or other records of the licensee; or

(b)    refuse or fail to give assistance, or an explanation, to an auditor of the licensee as and when required under subsection (2); or

(c)    otherwise hinder, obstruct or delay an auditor of the licensee in the performance or exercise of the auditor's duties or powers.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

SECTION 990J   AUDITOR ' S FEES AND EXPENSES  

990J(1)    
The reasonable fees and expenses of an auditor of the licensee are payable by the licensee.

990J(2)    
The auditor may recover those fees by action against the licensee.

SECTION 990K   AUDITOR TO REPORT ON CERTAIN MATTERS  

990K(1)    

If an auditor, in the performance of duties as auditor of the licensee, becomes aware of a matter referred to in subsection (2) , the auditor must, within 7 days after becoming aware of the matter, lodge a written report on the matter with ASIC in a prescribed form and send a copy of the report to the licensee, and to each licensed market (if any) and each licensed CS facility (if any) in which the licensee is a participant.

Note: Failure to comply with this section is an offence (see subsection 1311(1) ).

990K(2)    
A report must be given in relation to any matter that, in the opinion of the auditor:

(a)    has adversely affected, is adversely affecting or may adversely affect the ability of the licensee to meet the licensee ' s obligations as a licensee; or

(b)    constitutes or may constitute a contravention of:

(i) a provision of Subdivision A or B of Division 2 (or a provision of regulations made for the purposes of such a provision); or

(ii) a provision of Division 3 (or a provision of regulations made for the purposes of such a provision); or

(iii) a provision of Subdivision B or C of this Division (or a provision of regulations made for the purposes of such a provision); or

(iv) a condition of the licensee ' s licence; or

(c)    

constitutes an attempt to unduly influence, coerce, manipulate or mislead the auditor in the conduct of the audit.

SECTION 990L   QUALIFIED PRIVILEGE FOR AUDITOR ETC.  

Qualified privilege for auditor

990L(1)    
An auditor of the licensee has qualified privilege in respect of:

(a)    a statement that the auditor makes, orally or in writing, in the course of the auditor ' s duties as auditor; or

(b)    the lodging of a report under subsection 990K(1) ; or

(c)    the sending of a report to:

(i) the licensee; or

(ii) a licensed market or a licensed CS facility;

under subsection 990K(1) ; or

(d)    a disclosure made by the auditor in response to a notice given to the auditor under subsection 225A(5) of the ASIC Act.

Note: If the auditor is an audit company, the company has qualified privilege under this subsection in respect of statements made, and reports lodged or sent, by individuals on behalf of the company if those statements and notices can be properly attributed to the company.

Qualified privilege for registered company auditor acting on behalf of audit company

990L(2)    
If the auditor of the licensee is an audit company, a registered company auditor acting on behalf of the company has qualified privilege in respect of:

(a)    a statement that the registered company auditor makes (orally or in writing) in the course of the performance, on behalf of the company, of the company's duties as auditor; or

(b)    the lodging by the registered company auditor, on behalf of the company, of a report under subsection 990K(1) ; or

(c)    the sending by the registered company auditor, on behalf of the company, of a report to:

(i) the licensee; or

(ii) a licensed market or a licensed CS facility;

under subsection 990K(1) ; or

(d)    a disclosure made by the registered company auditor in response to a notice given to the audit company under subsection 225A(5) of the ASIC Act.

Qualified privilege for subsequent publication

990L(3)    
A person has qualified privilege in respect of the publishing of a document:

(a)    prepared by an auditor of the licensee in the course of the auditor ' s duties as auditor; or

(b)    required by or under this Chapter to be lodged with ASIC (whether or not the document has been so lodged).

990L(4)    
A person has qualified privilege in respect of the publishing of a statement:

(a)    made by an auditor of the licensee as mentioned in subsection (1) ; or

(b)    a statement made by a registered company auditor as mentioned in subsection (2) .

Division 7 - Other rules about conduct  

SECTION 991A   FINANCIAL SERVICES LICENSEE NOT TO ENGAGE IN UNCONSCIONABLE CONDUCT  

991A(1)    
A financial services licensee must not, in or in relation to the provision of a financial service, engage in conduct that is, in all the circumstances, unconscionable.

991A(2)    
If a person suffers loss or damage because a financial services licensee contravenes subsection (1), the person may recover the amount of the loss or damage by action against the licensee.

991A(3)    
An action under subsection (2) may be begun at any time within 6 years after the day on which the cause of action arose.

991A(4)    
This section does not affect any liability that a person has under any other law.

SECTION 991B   FINANCIAL SERVICES LICENSEE TO GIVE PRIORITY TO CLIENTS ' ORDERS  

991B(1)    
This section applies if:

(a)    a person (the client ) has instructed a financial services licensee to buy or sell financial products of a particular class that are able to be traded on a licensed market; and

(b)    the licensee has not complied with the instruction; and

(c)    the client is not an associate of the licensee; and

(d)    regulations made for the purposes of this paragraph do not exclude those financial products from this section.

991B(2)    
The financial services licensee must not, except as permitted by subsection (3):

(a)    enter into a transaction of purchase or sale of financial products of that class either on their own behalf or on behalf of an associate of the licensee; or

(b)    instruct another person to enter into a transaction of purchase or sale of financial products of that class on behalf of the licensee or an associate of the licensee.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

991B(3)    
Subsection (2) does not apply in relation to the entering into of a transaction, or the giving of an instruction, by the licensee if:

(a)    the client ' s instructions required the purchase or sale to be effected only on specified conditions relating to price and the licensee has been unable to comply with the instructions because of those conditions; or

(b)    the transaction, or the giving of the instruction, is permitted by regulations made for the purposes of this paragraph.

Note: A defendant bears an evidential burden in relation to the matters in this subsection. See subsection 13.3(3) of the Criminal Code .

SECTION 991C  

991C   REGULATIONS MAY DEAL WITH VARIOUS MATTERS RELATING TO INSTRUCTIONS TO DEAL THROUGH LICENSED MARKETS  

The regulations may do all or any of the following in relation to instructions received by financial services licensees to deal in financial products through licensed markets:

(a)    impose requirements relating to the order in which instructions are to be transmitted to a licensed market or to another financial services licensee who is a participant in a licensed market;

(b)    impose requirements relating to the order in which dealings that have been effected on a licensed market are to be allocated to instructions;

(c)    prohibit the disclosure of instructions in specified circumstances.

SECTION 991D  

991D   REGULATIONS MAY REQUIRE RECORDS TO BE KEPT IN RELATION TO INSTRUCTIONS TO DEAL ON LICENSED MARKETS AND FOREIGN MARKETS  

The regulations may impose requirements for the keeping of records relating to all or any of the following:

(a)    instructions received by financial services licensees to deal in financial products through licensed markets or through other financial markets (whether inside or outside Australia);

(b)    the execution of such instructions;

(c)    the transmission of such instructions.

SECTION 991E   OBLIGATIONS OF FINANCIAL SERVICES LICENSEE IN RELATION TO DEALINGS WITH NON-LICENSEES  

Obligation to disclose if acting on own behalf

991E(1)    
Subject to the regulations, a financial services licensee must not, either personally or through an authorised representative, enter into a financial product transaction on their own behalf:

(a)    that relates to a financial product that is able to be traded on a licensed market; and

(b)    that is with a person (the non-licensee ) who is not a financial services licensee or an authorised representative;

if:

(c)    the licensee has not (in accordance with any applicable regulations made for the purposes of paragraph (2)(a)) disclosed to the non-licensee the fact that the licensee will be acting on their own behalf in the proposed dealing; or

(d)    the non-licensee has not (in accordance with any applicable regulations made for the purposes of paragraph (2)(b)) consented to the licensee so acting in the proposed dealing.

If the licensee is acting through an authorised representative, the disclosure referred to in paragraph (c) may instead be given by the representative.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

991E(2)    
The regulations may deal with either or both of the following:

(a)    how a disclosure referred to in paragraph (1)(c) is to be made;

(b)    how a consent referred to in paragraph (1)(d) is to be given.

Obligation not to charge fee

991E(3)    
If a financial services licensee, either personally or through an authorised representative, enters into a transaction of sale or purchase of financial products on their own behalf:

(a)    that relates to a financial product that is able to be traded on a licensed market; and

(b)    that is with a person (the non-licensee ) who is not a financial services licensee or an authorised representative;

the licensee must only charge the non-licensee a brokerage, commission or other fee in respect of the transaction if the charge is permitted by the regulations.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

Person may rescind contract if section contravened

991E(4)    
If subsection (1) or (3) is contravened in relation to a transaction (whether or not anyone is convicted of an offence in respect of the contravention), the non-licensee may, subject to subsection (5), rescind the contract effecting the transaction, unless the contract was for the purchase of financial products by the non-licensee and the non-licensee has disposed of those products.

991E(5)    
The right under subsection (4) to rescind the contract:

(a)    can only be exercised during the period of 14 days starting on:

(i) unless subparagraph (ii) applies - the day on which the contract was entered into; or

(ii) if regulations made for the purposes of this subparagraph specify a later day - that later day; and

(b)    is to be exercised by notice in writing to the licensee.

991E(6)    
Nothing in subsections (4) and (5) affects any other right that a person has.

Regulations may require records to be kept in relation to transactions entered into by licensee on own behalf

991E(7)    
The regulations may impose requirements for the keeping of records relating to financial products transactions entered into by a financial services licensee on their own behalf.

SECTION 991F   DEALINGS INVOLVING EMPLOYEES OF FINANCIAL SERVICES LICENSEES  

991F(1)    
Subject to the regulations, a financial services licensee and an employee of the licensee must not, on their own behalves, jointly acquire a financial product.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

991F(2)    
Subject to the regulations, a financial services licensee must not give credit to an employee of the licensee, or to a person who they know is an associate of an employee of the licensee, if:

(a)    the credit is given for the purpose of enabling the person to whom the credit is given to acquire a financial product; or

(b)    the licensee knows or has reason to believe that the credit will be used for the purpose of acquiring a financial product.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

991F(3)    
Subject to the regulations, a person:

(a)    who is an employee of a financial services licensee that is a participant in a licensed market; and

(b)    who is so employed in connection with a business of dealing in financial products;

must only, on their own behalf, acquire or agree to acquire a financial product of a kind that is able to be traded on that market if the licensee acts as the agent of the person in respect of the acquisition.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

991F(4)    
In this section, a reference to an employee of a financial services licensee includes, for a licensee that is a body corporate, a reference to an officer of the body.

Division 8 - Miscellaneous  

SECTION 992A   PROHIBITION ON HAWKING OF FINANCIAL PRODUCTS  

General prohibition

992A(1)    
A person must not offer a financial product for issue or sale to another person (the consumer ), or request or invite the consumer to ask or apply for a financial product or to purchase a financial product, if:

(a)    the consumer is a retail client; and

(b)    the offer, request or invitation is made in the course of, or because of, an unsolicited contact with the consumer.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

Exceptions

992A(2)    
Subsection (1) does not apply to:

(a)    an offer, request or invitation made in the course of the giving of advice to the consumer by a person who is required under Division 2 of Part 7.7A to act in the best interests of the consumer in relation to the advice; or

(b)    

an offer of, or a request or invitation relating to, a financial product that is an add-on insurance product in relation to a product or service (the principal product or service ) that the consumer has indicated an intention to acquire from:

(i) the person making the offer, request or invitation; or

(ii) another person with whom that person has an arrangement that relates to the provision of add-on insurance products in relation to products or services that include the principal product or service; or

(c)    an offer, request or invitation of a kind prescribed by the regulations.

Note 1: A defendant bears an evidential burden in relation to the matters in this subsection. See subsection 13.3(3) of the Criminal Code .

Note 2: Subdivision DA of Division 2 of Part 2 of the Australian Securities and Investments Commission Act 2001 deals with offers, requests or invitations relating to add-on insurance products.

Note 3: Subsection (1) also does not apply in relation to an offer that is eligible to be made under Division 1A of Part 7.12 (Employee share schemes): see subsection 1100ZC(8) .

992A(3)    

However, paragraph (2)(b) does not apply if:

(a)    making the offer, request or invitation is covered by any of sections 12DU to 12DY of the Australian Securities and Investments Commission Act 2001 ; or

(b)    the offer, request or invitation is made after the end of the period of 6 weeks beginning on the end of the first day of:

(i) the add-on insurance deferral period (within the meaning of section 12DP of that Act) in relation to the consumer acquiring, or entering into a commitment to acquire, the principal product or service; or

(ii) if there is no such add-on insurance deferral period - the add-on insurance pre-deferral period (within the meaning of that section).

Meaning of unsolicited contact

992A(4)    
Contact by a person with the consumer, in connection with a financial product, is unsolicited contact with the consumer in connection with the product if:

(a)    the contact is wholly or partly in one or more of the following forms:

(i) a telephone call;

(ii) a face-to-face meeting;

(iii) any other real-time interaction in the nature of a discussion or conversation; and

(b)    either:

(i) the consumer did not consent to the contact; or

(ii) if the consumer consented to the contact - the requirements of subsection (5) are not met.

992A(5)    

For the purposes of subparagraph (4)(b)(ii) , the requirements are:

(a)    in the case of an offer of that financial product for issue or sale to the consumer, either:

(i) the consent was a consent to the person contacting the consumer for the purpose of making the offer; or

(ii) offering to the consumer that financial product for issue or sale was reasonably within the scope of the consumer ' s consent; and

(b)    in the case of a request or invitation to the consumer to ask or apply for a financial product or to purchase a financial product, either:

(i) the consent was a consent to the person requesting or inviting the consumer to ask or apply for, or to purchase, that financial product; or

(ii) requesting or inviting the consumer to ask or apply for, or to purchase, that financial product was reasonably within the scope of the consumer ' s consent; and

(c)    the consumer gave the consent before the start of the contact; and

(d)    giving the consent was a positive and voluntary act of the consumer; and

(e)    the consent was clear, and a reasonable person would have understood that the consumer consented to the contact; and

(f)    if the consent indicated the form of contact that the consumer wants - the contact is in that form; and

(g)    the consent was given:

(i) within 6 weeks before the contact occurs; or

(ii) within such longer period (not exceeding 12 weeks) as the consumer agrees to, if the issue or sale of the financial product reasonably requires a period exceeding 6 weeks to allow for a medical examination; and

(h)    the consent was not withdrawn before the contact occurs.

For the purposes of this subsection, take into account any variations that the consumer makes to the consent before the contact occurs.

992A(6)    
The consumer may vary or withdraw the consent at any time. The variation or withdrawal may take any form, regardless of the form of the consent.

992A(7)    
To avoid doubt, advertising an offer, or publishing a statement about an offer, is not unsolicited contact if:

(a)    because of subsection 734(4) , (5) , (6) , (7) , (8) or (9) , the advertisement or publication does not contravene subsection 734(2) ; or

(b)    because of paragraphs 1018A(1)(c) to (e) , or because of subsection 1018A(3) , (4) or (5) , the advertisement or publication does not contravene subsection 1018A(1) ; or

(c)    because of paragraphs 1018A(2)(c) to (f) , or because of subsection 1018A(3) , (4) or (5) , the advertisement or publication does not contravene subsection 1018A(2) .

Application of this section to superannuation products

992A(8)    
This section, and regulations made for the purposes of this section, apply to financial products that are beneficial interests in a regulated superannuation fund as if each class of beneficial interest in the fund were a separate financial product.

Strict liability

992A(9)    
An offence based on subsection (1) is an offence of strict liability.

SECTION 992AA   RIGHT OF RETURN AND REFUND FOR HAWKED FINANCIAL PRODUCTS  

992AA(1)    
If a person (the issuer ) contravenes section 992A in relation to a financial product issued or sold to another person (the consumer ), the consumer has a right of return and refund exercisable at any time during theperiod starting when the financial product was issued or sold and ending:

(a)    if, under section 1019B , the consumer has a right to return the financial product within a particular period - 1 month after the end of that period; or

(b)    otherwise - 1 month and 14 days after the financial product was issued or sold.

992AA(2)    
If the financial product is returned under subsection (1) :

(a)    if the financial product is constituted by a legal relationship between the consumer and the issuer - by force of this section, that relationship is terminated, with effect from the time of the return, without penalty to the consumer; and

(b)    by force of this section, any contract for the acquisition of the product by the consumer is terminated, with effect from the time of the return, without penalty to the consumer; and

(c)    such additional consequences (which may include the imposition of additional obligations) apply as are specified in the regulations.

992AA(3)    

However:

(a)    this section does not apply in relation to a financial product included in a class of financial products that the regulations exclude from this section; and

(b)    if the regulations provide that this section applies in relation to a class of financial products only if specified additional requirements are satisfied - this section does not apply in relation to a financial product included in that class unless those requirements are satisfied; and

(c)    in circumstances specified in the regulations, this section does not apply to any financial product.

992AA(4)    
This section, and regulations made for the purposes of this section, apply in relation to financial products that are beneficial interests in a regulated superannuation fund as if each class of beneficial interest in the fund were a separate financial product.

992AA(5)    
This section applies in addition to any other penalties for or in relation to breaches of section 992A .

SECTION 992B   EXEMPTIONS AND MODIFICATIONS BY ASIC  

992B(1)    

ASIC may:

(a)    exempt a person or class of persons from all or specified provisions of this Part; or

(b)    exempt a financial product or class of financial products from all or specified provisions of this Part; or

(c)    declare that this Part applies in relation to a person or a financial product, or a class of persons or financial products, as if specified provisions of this Part were omitted, modified or varied as specified in the declaration.

992B(2)    
(Repealed by No 141 of 2003, s 3, Sch 2 [ 67].)

992B(3)    
An exemption may apply unconditionally or subject to specified conditions. A person to whom a condition specified in an exemption applies must comply with the condition. The Court may order the person to comply with the condition in a specified way. Only ASIC may apply to the Court for the order.

992B(4)    
An exemption or declaration must be in writing and ASIC must publish notice of it in the Gazette .

992B(5)    
If conduct (including an omission) of a person would not have constituted an offence if a particular declaration under paragraph (1)(c) had not been made, that conduct does not constitute an offence unless, before the conduct occurred (in addition to complying with the gazettal requirement of subsection (4)):

(a)    

the text of the declaration was made available by ASIC on the internet; or

(b)    ASIC gave written notice setting out the text of the declaration to the person.

In a prosecution for an offence to which this subsection applies, the prosecution must prove that paragraph (a) or (b) was complied with before the conduct occurred.

992B(6)    
For the purpose of this section, the provisions of this Part include:

(a)    definitions in this Act, or in the regulations, as they apply to references in this Part; and

(b)    any provisions of Part 10.2 (transitional provisions) that relate to provisions of this Part.

Note: Because of section 761H , a reference to this Part or Part 10.2 also includes a reference to regulations or other instruments made for the purposes of this Part or Part 10.2 (as the case requires).

SECTION 992C   EXEMPTIONS AND MODIFICATIONS BY REGULATIONS  

992C(1)    
The regulations may:

(a)    exempt a person or class of persons from all or specified provisions of this Part; or

(b)    exempt a financial product or a class of financial products from all or specified provisions of this Part; or

(c)    provide that this Part applies as if specified provisions were omitted, modified or varied as specified in the regulations.

992C(2)    
For the purpose of this section, the provisions of this Part include:

(a)    definitions in this Act, or in the regulations, as they apply to references in this Part; and

(b)    any provisions of Part 10.2 (transitional provisions) that relate to provisions of this Part.

Division 9 - Enforcement  

SECTION 993A  

993A   OVERVIEW  

This Division contains provisions creating offences by reference to various rules contained in preceding Divisions of this Part. However, it does not create all the offences relating to those rules, as some offences are created by subsection 1311(1) . Where offences are created by subsection 1311(1) in relation to a rule, this is indicated by a note at the end of the provision containing the rule.

SECTION 993B   OFFENCE OF FAILING TO PAY CLIENT MONEY INTO AN ACCOUNT AS REQUIRED  

Strict liability offence

993B(1)    
A financial services licensee commits an offence if:

(a)    the licensee is required by subsection 981B(1) to pay particular money into an account in accordance with that subsection; and

(b)    the licensee does not pay the money into an account in accordance with that subsection.

993B(2)    
An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability , see section 6.1 of the Criminal Code .

Ordinary offence

993B(3)    
A financial services licensee commits an offence if:

(a)    the licensee is required by subsection 981B(1) to pay particular money into an account in accordance with that subsection; and

(b)    the licensee does not pay the money into an account in accordance with that subsection.

SECTION 993C   OFFENCE OF FAILING TO COMPLY WITH REQUIREMENTS RELATING TO CLIENT MONEY ACCOUNT  

Strict liability offence

993C(1)    
A financial services licensee commits an offence if the licensee contravenes a requirement in regulations made for the purposes of section 981C .

993C(2)    
An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability , see section 6.1 of the Criminal Code .

Ordinary offence

993C(3)    
A financial services licensee commits an offence if:

(a)    a requirement in regulations made for the purposes of section 981C applies to the licensee; and

(b)    the licensee contravenes the requirement.

SECTION 993D   FAILING TO PAY LOAN MONEY INTO AN ACCOUNT AS REQUIRED  

Failing to pay loan money into account as required

993D(1)    
A financial services licensee contravenes this subsection if:

(a)    the licensee is required by subsection 982B(1) to pay particular money into an account in accordance with that subsection; and

(b)    the licensee does not pay the money into an account in accordance with that subsection.

Fault-based offence

993D(2)    
A person commits an offence if the person contravenes subsection (1).

Strict liability offence

993D(3)    
A person commits an offence of strict liability if the person contravenes subsection (1).

Civil liability

993D(4)    
A person contravenes this subsection if the person contravenes subsection (1).

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