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 7.8A - DESIGN AND DISTRIBUTION REQUIREMENTS RELATING TO FINANCIAL PRODUCTS FOR RETAIL CLIENTS  

Division 1 - Preliminary  

SECTION 994A   MEANING OF SOME TERMS RELATING TO DESIGN AND DISTRIBUTION REQUIREMENTS  

994A(1)    
In this Act:

excluded conduct
means:

(a) a dealing in a financial product that consists of arranging for a retail client to apply for or acquire the product, where the arranging is undertaken:

(i) by a person, or by an associate of a person; and

(ii) for the purpose of implementing personal advice that the person has given to the retail client; or

(b) providing personal advice.

retail product distribution conduct
, in relation to a financial product, means any of the following:

(a) dealing in the product in relation to a retail client;

(b) giving under Part 6D.2 a disclosure document in relation to an offer of the product to a retail client;

(c) giving under Part 7.9 a Product Disclosure Statement for the product to a retail client;

(d) providing financial product advice in relation to the product to a retail client.

review period
for a target market determination means each of the following:

(a) the period starting on the day the determination is made and ending on the earlier of:

(i) the day that a review of the determination under section 994C is started; and

(ii) the last day of the maximum period specified in the determination under paragraph 994B(5)(e) ;

(b) a period starting on the day after a review of the determination under section 994C is finished and ending on the earlier of:

(i) the day on which the next review of the determination under section 994C is started; and

(ii) the last day of the maximum period specified in the determination under paragraph 994B(5)(f) .

994A(2)    
In this Part:

complaint
, in relation to a financial product, means a complaint made to a regulated person about the product, which is covered by a dispute resolution system complying with subsection 912A(2) .

dealing
in a financial product has the meaning given by section 766C , subject to the following:

(a) paragraphs 766C(1)(d) and (e) do not apply;

(b) despite subsection 766C(3) , a person deals in a financial product if the dealing is a regulated sale of the product on the person ' s own behalf;

(c) paragraph 766C(4)(c) does not apply if the dealing is an offer of securities that needs disclosure to investors under Part 6D.2 .

regulated person
, in relation to a financial product, means:

(a) the seller of the financial product, if a sale takes place in circumstances described in subsection 707(2) , (3) or (5) or 1012C(5) , (6) or (8) ; or

(b) a regulated person as defined in section 1011B (modified so that the references to financial products include references to securities); or

(c) a person prescribed, in relation to the product, by regulations made for the purposes of this paragraph.

reporting period
means:

(a) for information about the number of complaints about a financial product - a period specified under paragraph 994B(5)(g) , in the target market determinationfor the product, as a reporting period for that kind of information; or

(b) for other kinds of information that must be reported under subsection 994F(5) - a period specified under subparagraph 994B(5)(h)(ii) , in the target market determination for the product, as a reporting period for those other kinds of information.

994A(3)    
Section 1010C (references to offer, purchase and sale) applies for the purposes of this Part.

SECTION 994AA   MEANING OF FINANCIAL PRODUCT - PART 7.8A  

994AA(1)    

In this Part, financial product includes a financial product within the meaning of Division 2 of Part 2 of the ASIC Act.

Note: Whether a target market determination is required to be made in relation to financial products covered by this extended definition is determined under section 994B , including any regulations made for the purposes of paragraph 994B(3)(f) .

994AA(2)    
In determining the meaning of a term used in a provision of this Part (other than this section), treat a reference in this Act to a financial product as being a reference to a financial product within the meaning of subsection (1) of this section.

Division 2 - Target market determinations for financial products  

SECTION 994B   TARGET MARKET DETERMINATIONS FOR FINANCIAL PRODUCTS  

Requirement to make a target market determination

994B(1)    
Subject to subsection (3) , a person must make a target market determination for a financial product if:

(a)    under Part 6D.2 , the person is required to prepare a disclosure document for the product; or

(b)    under Part 7.9 , the person is required to prepare a Product Disclosure Statement for the product; or

(ba)    

the product is not a financial product (as defined in Division 3 of Part 7.1 ) and:

(i) the person issues the product to another person as a retail client; or

(ii) the person sells the product under a regulated sale; or

(c)    regulations made for the purpose of this paragraph require the person to make a target market determination for the product.

994B(2)    
A person required by subsection (1) to make a target market determination for a financial product must do so before:

(a)    if paragraph (1)(a) , (b) or (ba) applies - any person engages in retail product distribution conduct in relation to the product; or

(b) if paragraph (1)(c) applies:

(i) the time or event specified in regulations made for the purposes of that paragraph; or

(ii) if there is no time or event so specified - any person engages in retail product distribution conduct in relation to the product.

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

Note 2: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

994B(3)    
Subsections (1) and (2) do not apply to:

(a)    a MySuper product; or

(b)    a margin lending facility; or

(c) (Repealed)

(d)    a fully paid ordinary share in a company or a foreign company (except a fully paid ordinary share covered by subsection (4) ); or

(e)    

a financial product issued, or offered for regulated sale, by an exempt body corporate of a State or Territory or by an exempt public authority; or

(f)    a financial product of a kind prescribed by regulations made for the purposes of this paragraph.

Note: Division 1A of Part 7.12 (Employee share schemes) contains a separate regime for the making of offers in connection with employee share schemes. Subsections (1) and (2) of this section do not apply in relation to securities that are issued, sold or transferred under an offer that is eligible to be made under that Division: see subsection 1100ZC(6) .

994B(4)    
Paragraph (3)(d) does not apply to a fully paid ordinary share in a company or a foreign company if:

(a)    on the issue of the share, the company intended that the share be converted into a preference share within 12 months after the date of issue; or

(b)    the company:

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

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

Requirements for target market determinations

994B(5)    
A target market determination for a financial product must:

(a)    be in writing; and

(b)    describe the class of retail clients that comprises the target market (within the ordinary meaning of the term) for the product; and

(c)    specify any conditions and restrictions on retail product distribution conduct in relation to the product ( distribution conditions ), other than a condition or restriction imposed by or under another provision of this Act; and

(d)    specify events and circumstances ( review triggers ) that would reasonably suggest that the determination is no longer appropriate; and

(e)    specify the maximum period from the start of the day the determination is madeto the start of the day the first review of the determination under section 994C is to finish; and

(f)    specify the maximum period from the start of the day a review of the determination under section 994C is finished to the start of the day the next review of the determination is to finish; and

(g)    specify a reporting period for reporting information about the number of complaints about the product (see subsection 994F(4) ); and

(h)    specify the kinds of information needed to enable the person who made the target market determination to identify promptly whether a review trigger for the determination, or another event or circumstance that would reasonably suggest that the determination is no longer appropriate, has occurred and, for each kind of information, specify:

(i) the regulated person or regulated persons that, under subsection 994F(5) , are required to report the information to the person who made the determination; and

(ii) a reporting period for reporting the information under subsection 994F(5) .

Note 1: For paragraph (c), an example of a distribution condition for a financial product is a restriction limiting the distribution of the product to specified methods of distribution.

Note 2: The requirements of this subsection also apply when a new target market determination is made as a result of a review under section 994C .

994B(6)    
A period specified under paragraph (5)(e) or (f) , and a reporting period specified under paragraph (5)(g) or subparagraph (5)(h)(ii) , must be reasonable.

994B(7)    
In determining what is reasonable for the purposes of subsection (6) , regard must be had to:

(a)    the need to identify promptly whether a review trigger for the determination, or another event or circumstance that would reasonably suggest that the determination is no longer appropriate, has occurred; and

(b)    the likelihood, nature and extent of detriment to retail clients that may result if:

(i) a review trigger for the determination, or another event or circumstance that would reasonably suggest that the target market determination is no longer appropriate, has occurred; and

(ii) the target market determination is not promptly reviewed.

994B(8)    
A target market determination for a financial product must be such that it would be reasonable to conclude that, if the product were to be issued, or sold in a regulated sale:

(a)    to a retail client in accordance with the distribution conditions - it would be likely that the retail client is in the target market; and

(b)    to a retail client in the target market - it would likely be consistent with the likely objectives, financial situation and needs of the retail client.

994B(8A)    

A target market determination for a financial product is appropriate if it satisfies the requirements of subsection (8) .

Making target market determinations public

994B(9)    
A person who makes a target market determination must ensure that the determination is available to the public free of charge.

Note 1: Contravention of this subsection is an offence (see subsection 1311(1) ).

Note 2: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

Note 3: This subsection applies to all target market determinations, including those that have ceased to apply.

SECTION 994C   TARGET MARKET DETERMINATIONS TO BE REVIEWED  

Reviews of target market determinations

994C(1)    
A person who makes a target market determination may at any time:

(a)    review the determination; or

(b)    make a new target market determination in accordance with section 994B .

994C(2)    
A person contravenes this subsection if:

(a)    the person makes a target market determination for a financial product; and

(b)    the product is on offer for acquisition by issue, or for regulated sale, to retail clients at or after the end of the review period; and

(c)    the person did not complete a review of the determination during the review period.

Note 1: Contravention of this subsection is an offence (see subsection 1311(1) ).

Note 2: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

Distribution where target market determinations not appropriate: maker of determination

994C(3)    
If:

(a)    a person makes a target market determination for a financial product; and

(b)    the product is on offer for acquisition by issue, or for regulated sale, to retail clients at any time during a review period for the determination; and

(c)    the person knows that:

(i) a review trigger for the determination has occurred; or

(ii) an event or circumstance has occurred that would reasonably suggest that the determination is no longer appropriate;

then, from as soon as practicable, but no later than 10 business days, after the person first knew of the occurrence of the review trigger, event or circumstance, the person must not engage in retail product distribution conduct in relation to the product unless:

(d)    the person has reviewed the determination and, if the determination is no longer appropriate, made a new determination in accordance with section 994B ; or

(e)    the retail product distribution conduct is excluded conduct.

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

Note 2: In a prosecution for an offence, the defendant bears an evidential burden in relation to the matters in paragraphs (d) and (e) (see subsection 13.3(3) of the Criminal Code ).

994C(4)    
If:

(a)    a person makes a target market determination for a financial product; and

(b)    the product is on offer for acquisition by issue, or for regulated sale, to retail clients at any time during a review period for the determination; and

(c)    the person knows, or ought reasonably to know, that:

(i) a review trigger for the determination has occurred; or

(ii) an event or circumstance has occurred that would reasonably suggest that the determination is no longer appropriate;

then, from as soon as practicable, but no later than 10 business days, after the person first knew of the occurrence of the review trigger, event or circumstance, the person must not engage in retail product distribution conduct in relation to the product unless:

(d)    the person has reviewed the determination and, if the determination is no longer appropriate, made a new target market determination in accordance with section 994B ; or

(e)    the retail product distribution conduct is excluded conduct.

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 .

994C(5)    
If:

(a)    a person makes a target market determination for a financial product; and

(b)    the product is on offer for acquisition by issue, or for regulated sale, to retail clients at any time during a review period for the determination; and

(c)    the person knows that:

(i) a review trigger for the determination has occurred; or

(ii) an event or circumstance has occurred that would reasonably suggest that the determination is no longer appropriate;

the person must, as soon as practicable, but no later than 10 business days, after the person first knew of the occurrence of the review trigger, event or circumstance, take all reasonable steps to ensure that regulated persons who engage in retail product distribution conduct in relation to the product (or are expected to do so) are informed that they must not engage in retail product distribution conduct in relation to the product unless:

(d)    the determination has been reviewed since the review trigger, event or circumstance occurred and, if a new target market determination is required, it has been made; or

(e)    the retail product distribution conduct is excluded conduct.

Note 1: Contravention of this subsection is an offence (see subsection 1311(1) ).

Note 2: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

Distribution where target market determinations not appropriate: regulated persons

994C(6)    
If a regulated person in relation to a financial product knows that the person who made the target market determination for the product has taken steps referred to in subsection (5) , the regulated person must, as soon as practicable, but no later than 10 business days, after the regulated person first became aware that the steps had been taken, cease to engage in retail product distribution conduct in relation to the product unless:

(a)    the determination has been reviewed since a review trigger, event or circumstance mentioned in paragraph (5)(c) occurred and, if a new target market determination is required, it has been made; or

(b)    the regulated person:

(i) made all inquiries (if any) that were reasonable in the circumstances; and

(ii) after doing so, believed on reasonable grounds that the determination had been reviewed since a review trigger, event or circumstance mentioned in paragraph (5)(c) occurred and, if a new target market determination was required, it had been made; or

(c)    the retail product distribution conduct is excluded conduct.

Note 1: Contravention of this subsection is an offence (see subsection 1311(1) ).

Note 2: In a prosecution for an offence, the defendant bears an evidential burden in relation to the matters in paragraphs (a), (b) and (c) (see subsection 13.3(3) of the Criminal Code ).

994C(7)    
If a regulated person knows or ought reasonably to know that the person who made the target market determination for a financial product has taken steps referred to in subsection (5) , the regulated person must, as soon as practicable, but no later than 10 business days, after the regulated person first became aware or should have become aware that the steps had been taken, cease to engage in retail product distribution conduct in relation to the product unless:

(a)    the determination has been reviewed since a review trigger, event or circumstance mentioned in paragraph (5)(c) occurred and, if a new target market determination is required, it has been made; or

(b)    the regulated person:

(i) made all inquiries (if any) that were reasonable in the circumstances; and

(ii) after doing so, believed on reasonable grounds that the determination had been reviewed since a review trigger, event or circumstance mentioned in paragraph (5)(c) occurred and, if a new target market determination was required, it had been made; or

(c)    the retail product distribution conduct is excluded conduct.

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 .

SECTION 994D  

994D   PROHIBITION ON ENGAGING IN RETAIL PRODUCT DISTRIBUTION CONDUCT UNLESS TARGET MARKET DETERMINATION MADE  

If:

(a)    under section 994B , a person must make a target market determination for a financial product but the determination has not been made; and

(b)    the product is on offer for acquisition by issue, or for regulated sale, to retail clients;

a regulated person must not engage in retail product distribution conduct in relation to the product unless:

(c)    the regulated person made all inquiries (if any) that were reasonable in the circumstances and, after doing so, believed on reasonable grounds that:

(i) the determination had been made; or

(ii) this Part does not require a target market determination for the product; or

(d)    the retail product distribution conduct is excluded conduct.

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

Note 2: In a prosecution for an offence, the defendant bears an evidential burden in relation to the matters in paragraphs (c) and (d) (see subsection 13.3(3) of the Criminal Code ).

Note 3: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

Division 3 - Distribution of financial products  

SECTION 994E   REASONABLE STEPS TO ENSURE CONSISTENCY WITH TARGET MARKET DETERMINATIONS  

Persons who make target market determinations

994E(1)    
A person who makes a target market determination for a financial product must take reasonable steps that will, or are reasonably likely to, result in retail product distribution conduct in relation to the product (other than excluded conduct) being consistent with the determination.

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

Note 2: In a prosecution for an offence, the defendant bears an evidential burden in relation to conduct being excluded conduct (see subsection 13.3(3) of the Criminal Code ).

Note 3: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

994E(2)    
A person is not taken to have failed to take reasonable steps for the purpose of subsection (1) merely because:

(a)    retail product distribution conduct of a regulated person (other than the person) in relation to the product is inconsistent with the target market determination; or

(b)    a retail client who is not in the target market for the product acquires the product.

Regulated persons

994E(3)    
If:

(a)    a target market determination for a financial product has been made; and

(b)    the product is on offer for acquisition by issue, or for regulated sale, to retail clients; and

(c)    a regulated person engages in retail product distribution conduct in relation to the product; and

(d)    the regulated person failed to take reasonable steps that would have resulted in, or would have been reasonably likely to have resulted in, the retail product distribution conduct being consistent with the determination;

the regulated person contravenes this subsection unless the retail product distribution conduct is excluded conduct.

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

Note 2: In a prosecution for an offence, the defendant bears an evidential burden in relation to conduct being excluded conduct (see subsection 13.3(3) of the Criminal Code ).

Note 3: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

994E(4)    
A regulated person is not taken to have failed to take reasonable steps for the purpose of paragraph (3)(d) merely because a retail client who is not in the target market for the product acquires the product.

What are reasonable steps

994E(5)    
Without limiting subsections (1) and (3) , reasonable steps in relation to a person are steps that, in the circumstances, the person is reasonably able to take that will, or are reasonably likely to, result in retail product distribution conduct in relation to the financial product being consistent with the target market determination for the product, taking into account all relevant matters, including:

(a)    the likelihood of any such conduct being inconsistent with the determination; and

(b)    the nature and degree of harm that might result from an issue or regulated sale of the financial product:

(i) to retail clients who are not in the target market; or

(ii) that is inconsistent with the determination; and

(c)    what the person knows, or ought reasonably to know, about:

(i) the matters referred to in paragraphs (a) and (b); and

(ii) ways of eliminating or minimising the likelihood and the harm; and

(d)    the availability and suitability of ways to eliminate or minimise the likelihood and the harm.

994E(6)    
A regulated person is not taken to have failed to take reasonable steps for the purpose of paragraph (3)(d) if the person engages in retail product distribution conduct that:

(a)    relates to a particular retail client; and

(b)    relates to a particular financial product; and

(c)    is necessary to implement personal advice given to the client in relation to the product.

SECTION 994F   RECORD KEEPING AND NOTIFICATION OBLIGATIONS  

Record keeping by persons who make, or are required to make, target market determinations

994F(1)    
A person who makes, or who is required by this Part to make, a target market determination for a financial product must collect and keep complete and accurate records of:

(a)    the person ' s decisions in relation to the following:

(i) all target market determinations for the product;

(ii) review triggers for those target market determinations;

(iii) review periods for those target market determinations;

(iv) the requirements of subsections 994B(5) and (8) for those target market determinations; and

(b)    the reasons for those decisions.

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

Note 2: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

Note 3: There are further requirements about records in sections 1101C , 1101E and 1101F .

Record keeping by other regulated persons

994F(2)    
Subsections (3) to (6) apply if:

(a)    a target market determination has been made for a financial product; and

(b)    the product is on offer for acquisition by issue, or for regulated sale, to retail clients; and

(c)    a regulated person engages in retail product distribution conduct in relation to the product.

994F(3)    
The regulated person must collect and keep complete and accurate records of the following information ( distribution information ) in relation to the product:

(a)    the number of complaints in relation to the product that the regulated person receives;

(b)    the steps the regulated person has taken in relation to the product as required by section 994E (reasonable steps to ensure consistency with the target market determination);

(c)    if the regulated person is specified in the determination as required to report information of a specified kind to the person who made the determination (see subparagraph 994B(5)(h)(i) ) - information of that kind that the regulated person acquires;

(d)    if the regulated person is not the person that made the determination - the dates on which the regulated person reported as required by subsection (4) , (5) or (6) and the substance of the reports.

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

Note 2: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

Note 3: There are further requirements about records in sections 1101C , 1101E and 1101F .

Reporting complaint information to persons who make target market determinations

994F(4)    
If the regulated person engages in the retail product distribution conduct during a reporting period specified under paragraph 994B(5)(g) (which relates to complaints), the regulated person must, as soon as practicable, but in any case within 10 business days, after the end of the reporting period, report in writing to the person who made the target market determination:

(a)    whether the regulated person received complaints in relation to the product during the reporting period; and

(b)    if the regulated person received such complaints - the number of complaints the regulated person received.

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

Note 2: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

Reporting other information to persons who make target market determinations

994F(5)    
If:

(a)    under the target market determination for the financial product, the regulated person is required to report information of a specified kind to the person that made the determination (see subparagraph 994B(5)(h)(i) ); and

(b)    

the regulated person engages in the retail product distribution conduct in relation to the product during a reporting period for that kind of information;

the regulated person must, as soon as practicable, but in any case within 10 business days, after the end of the reporting period for information of that kind, report in writing to the person that made the determination:

(c)    all the information of that kind that the regulated person acquired during the reporting period; or

(d)    if the regulated person did not acquire information of that kind during the reporting period - that fact.

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

Note 2: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

994F(6)    
If the regulated person:

(a)    becomes aware of a significant dealing in the product; and

(b)    becomes aware that the dealing is not consistent with the target market determination;

the regulated person must, as soon as practicable, and in any case within 10 business days, report the dealing, in writing, to the person who made the determination.

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

Note 2: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

Regulations

994F(7)    
The regulations may impose requirements in relation to records relating to compliance with this Part.

994F(8)    
A person contravenes this subsection if the person refuses or fails to comply with the requirements of regulations made for the purposes of subsection (7) .

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

Note 2: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

SECTION 994G  

994G   NOTICE TO ASIC  

If:

(a)    a person makes a target market determination for a financial product; and

(b)    

the person becomes aware of a significant dealing in the product in relation to a retail client (except a dealing of a kind referred to in paragraph (a) of the definition of excluded conduct in subsection 994A(1) ); and

(c)    the person becomes aware that the dealing is not consistent with the determination;

the person must give written notice to ASIC as soon as practicable, and in any case within 10 business days, after becoming so aware.

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

Note 2: This section is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this section, see section 1317S .

Division 4 - ASIC powers  

SECTION 994H   INFORMATION TO BE PROVIDED TO ASIC  

994H(1)    
ASIC may, in writing, require:

(a)    a person who makes, or is required by this Part to make, a target market determination for a financial product; or

(b)    a regulated person who engages in retail product distribution conduct in relation to a financial product;

to provide ASIC with distribution information, relating to the financial product, that is in the person ' s possession or to which the person has access.

994H(2)    
ASIC may, in writing, require a person who makes, or is required by this Part to make, a target market determination for a financial product to provide records referred to in subsection 994F(1) relating to the product.

994H(3)    
A person who is required by ASIC to provide it with distribution information or records under subsection (1) or (2) must comply with the requirement:

(a)    by the date specified by ASIC in the requirement; or

(b)    if no date is so specified, within 10 business days after the day the person is notified by ASIC of the requirement in subsection (1) or (2) .

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

Note 2: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

SECTION 994J   STOP ORDERS  

994J(1)    
This section applies if ASIC is satisfied that a provision of Division 2, or section 994E , has been contravened in relation to a financial product.

994J(2)    
ASIC may order, in writing, that specified conduct in relation to retail clients in respect of the financial product (except excluded conduct) must not be engaged in while the order is in force. The order is not a legislative instrument.

994J(3)    
Before making an order under subsection (2), ASIC must:

(a)    hold a hearing; and

(b)    give a reasonable opportunity to any interested person to make oral or written submissions to ASIC on whether an order should be made.

994J(4)    
If ASIC considers that any delay in making an order under subsection (2) pending the holding of a hearing would be prejudicial to the public interest, ASIC may make an interim order under that subsection. The interim order may be made without holding a hearing and lasts for 21 days after the day on which it is made unless revoked before then.

994J(5)    
At any time during the hearing, ASIC may make an interim order under subsection (2) . The interim order lasts until:

(a)    ASIC makes an order under subsection (2) after the conclusion of the hearing; or

(b)    the interim order is revoked;

whichever happens first.

994J(6)    
If ASIC makes an order under subsection (2) in relation to a financial product, ASIC must serve a copy of the order on the person who made or was required to make the target market determination.

994J(7)    
The person on whom the order is served must take all reasonable steps to ensure that other people who engage in conduct to which the order applies are aware of the order.

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

Note 2: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

994J(8)    
The person on whom the order is served, or a person who is aware of the order, must not engage in conduct contrary to the order.

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

Note 2: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

Division 5 - Exemptions and modifications  

SECTION 994K  

994K   DEFINITIONS  
(Repealed by No 76 of 2023, s 3, Sch 2 [ 496] (effective 20 October 2023).)

SECTION 994L   EXEMPTIONS AND MODIFICATIONS BY ASIC  

Individuals

994L(1)    
ASIC may, by notifiable instrument:

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

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

(c)    declare that this Part applies in relation to:

(i) a specified person; or

(ii) a specified financial product;

as if specified provisions were omitted, modified or varied as specified in the declaration.

Classes

994L(2)    
ASIC may, by legislative instrument:

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

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

(c)    declare that this Part applies in relation to:

(i) a specified class of persons; or

(ii) a specified class of financial products;

as if specified provisions were omitted, modified or varied as specified in the declaration.

994L(3)    
Subsection (2) applies whether or not the legislative instrument is also expressed to apply in relation to one or more persons or products identified otherwise than by reference to membership of a class.

Conditions on exemptions

994L(4)    
An exemption may apply unconditionally or subject to specified conditions.

994L(5)    
A person to whom a condition specified in an exemption applies must comply with the condition.

994L(6)    
The Court may, on application by ASIC, order the person to comply with the condition in a specified way.

Protections

994L(7)    
If conduct (including an omission) of a person would not have constituted an offence if a particular declaration under paragraph (1)(c) or (2)(c) had not been made, that conduct does not constitute an offence unless, before the conduct occurred:

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

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

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.

994L(8)    

For the purposes of this section, the provisions of this Part include definitions in this Act as they apply to references in this Part.

Division 6 - Miscellaneous  

SECTION 994M   CIVIL LIABILITY  

994M(1)    
If:

(a)    a person (the first person ) contravenes section 994B , 994C or 994D or subsection 994E(1) or (3) ; and

(b)    another person (the client ) suffers loss or damage because of the contravention;

the client may recover the amount of the loss or damage by action against the first person, whether or not:

(c)    the first person (or anyone else) has been convicted of an offence in relation to the contravention; or

(d)    a Court has made a declaration of contravention under subsection 1317E(1) in relation to the contravention; or

(e)    a Court has ordered the first person (or anyone else) to pay the Commonwealth a pecuniary penalty under section 1317G in relation to the contravention.

994M(2)    
An action under subsection (1) may be begun at any time within 6 years after the day on which the cause of action arose.

994M(3)    
This section does not affect any liability that a person has under any other law.

SECTION 994N   ADDITIONAL POWERS OF COURT TO MAKE ORDERS  

994N(1)    
The court dealing with an action under subsection 994M(1) may, in addition to awarding loss or damage under that subsection and if it thinks it necessary in order to do justice between the parties:

(a)    make an order declaring void a contract entered into by the client who suffered loss or damage relating to a financial product; and

(b)    if it makes an order under paragraph (a) - make such other order or orders as it thinks are necessary or desirable because of that order.

994N(2)    
Without limiting paragraph (1)(b) , an order under that paragraph may include either or both of the following:

(a)    an order for the return of money paid by a person;

(b)    an order for payment of an amount of interest specified in, or calculated in accordance with, the order.

SECTION 994P   ORDERS TO REDRESS LOSS OR DAMAGE SUFFERED BY NON-PARTY CONSUMERS ETC.  

Orders

994P(1)    
If:

(a)    a person engaged in conduct (the contravening conduct ) in contravention of section 994B , 994C or 994D or subsection 994E(1) or (3) ; and

(b)    the contravening conduct caused, or is likely to cause, a class of persons to suffer loss or damage; and

(c)    the class includes persons ( non-party consumers ) who have not been a party to proceedings under this Act in relation to the contravening conduct;

the Court may, on the application of ASIC, make such order or orders (other than an award of damages) as the Court thinks appropriate against a person referred to in subsection (2) of this section.

Note: The orders that the Court may make include all or any of the orders set out in section 994Q .

994P(2)    
An order under subsection (1) may be made against the person who engaged in the contravening conduct, or a person involved in that conduct.

994P(3)    
The Court must not make an order under subsection (1) unless the Court considers that the order will:

(a)    redress, in whole or in part, the loss or damage suffered by the non-party consumers in relation to the contravening conduct; or

(b)    prevent or reduce the loss or damage suffered, or likely to be suffered, by the non-party consumers in relation to the contravening conduct.

Application for orders

994P(4)    
An application may be made under subsection (1) even if a proceeding in relation to the contravening conduct has not been instituted.

994P(5)    
An application under subsection (1) may be made at any time within 6 years after the day on which the cause of action that relates to the contravening conduct accrues.

Determining whether to make an order

994P(6)    
In determining whether to make an order under subsection (1) against a person referred to in subsection (2) , the Court may have regard to the conduct of the person, and of the non-party consumers in relation to the contravening conduct, since the contravention occurred.

994P(7)    
In determining whether to make an order under subsection (1) , the Court need not make a finding about either of the following matters:

(a)    which persons are non-party consumers in relation to the contravening conduct;

(b)    the nature of the loss or damage suffered, or likely to be suffered, by such persons.

When a non-party consumer is bound by an order etc.

994P(8)    
If:

(a)    an order is made under subsection (1) against a person; and

(b)    the loss or damage suffered, or likely to be suffered, by a non-party consumer in relation to the contravening conduct to which the order relates has been redressed, prevented or reduced in accordance with the order; and

(c)    the non-party consumer has accepted the redress, prevention or reduction;

then:

(d)    the non-party consumer is bound by the order; and

(e)    any other order made under subsection (1) that relates to that loss or damage has no effect in relation to the non-party consumer; and

(f)    despite any other provision of this Act or any other law of the Commonwealth, or a State or Territory, no claim, action or demand may be made or taken against the person by the non-party consumer in relation to that loss or damage.

SECTION 994Q  

994Q   KINDS OF ORDERS THAT MAY BE MADE TO REDRESS LOSS OR DAMAGE SUFFERED BY NON-PARTY CONSUMERS ETC.  

Without limiting subsection 994P(1) , the orders that the Court may make under that subsection against a person (the respondent ) include all or any of the following:

(a)    an order declaring the whole or any part of a contract made between the respondent and a non-party consumer referred to in that subsection, or a collateral arrangement relating to such a contract:

(i) to be void; and

(ii) if the Court thinks fit - to have been void ab initio or void at all times on and after such date as is specified in the order (which may be a date that is before the date on which the order is made);

(b)    an order:

(i) varying such a contract or arrangement in such manner as is specified in the order; and

(ii) if the Court thinks fit - declaring the contract or arrangement to have had effect as so varied on and after such date as is specified in the order (which may be a date that is before the date on which the order is made);

(c)    an order refusing to enforce any or all of the provisions of such a contract or arrangement;

(d)    an order directing the respondent to refund money or return property to a non-party consumer referred to in that subsection;

(e)    an order directing the respondent, at the respondent ' s own expense, to repair, or provide parts for, goods that have been supplied under the contract or arrangement to a non-party consumer referred to in that subsection;

(f)    an order directing the respondent, at the respondent ' s own expense, to supply specified services to a non-party consumer referred to in that subsection;

(g)    an order, in relation to an instrument creating or transferring an interest in land, directing the respondent to execute an instrument that:

(i) varies, or has the effect of varying, the first-mentioned instrument; or

(ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the first-mentioned instrument.