Corporations Act 2001
Note: This Chapter applies to a CCIV in a modified form: see Division 4 of Part 8B.7 .
View history note
Hide history noteThe object of this Part is to provide ASIC with powers that it can use proactively to reduce the risk of significant detriment to retail clients resulting from financial products.
In this Part, financial product : (a) includes a financial product within the meaning of Division 2 of Part 2 of the ASIC Act; but (b) does not include:
(i) 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
(ii) a financial product specified in regulations made for the purposes of this subparagraph.
A product intervention order does not apply to a financial product held by a person if the person acquired, or entered into a contract for the acquisition of, the product before the order comes into force.
1023C(2)
A product intervention order does not apply to a person:
(a) in the person ' s capacity as a retail client; or
(b) who is in a class of persons specified in regulations made for the purposes of this paragraph.
1023C(3)
The regulations may provide that this Part does not apply to a financial product specified in the regulations.
Note: In a prosecution for an offence, the defendant bears an evidential burden in relation to the matters in this section (see subsection 13.3(3) of the Criminal Code ).
Making product intervention orders
1023D(1)
Subject to subsection (5) , if ASIC is satisfied that a financial product: (a) is, or is likely to be, available for acquisition by issue, or for regulated sale, to persons as retail clients (whether or not it also is, or is likely to be, available for acquisition by persons as wholesale clients); and (b) has resulted in, or will or is likely to result in, significant detriment to retail clients;
ASIC may, in accordance with this Part, order that a specified person must not engage in specified conduct in relation to the product, either entirely or except in accordance with conditions specified in the order.
Note 1: An example of conditions that may be specified in a product intervention order include that the product not be issued to a retail client unless the retail client has received personal advice.
Note 2: Section 1023E specifies matters to be taken into account in considering whether a financial product has resulted in, or will or is likely to result in, significant detriment to retail clients.
Note 3: Section 1023N also provides that product intervention orders may include requirements for notifying retail clients.
1023D(2)
An order under subsection (1) is not a legislative instrument.
1023D(3)
Subject to subsection (5) , if ASIC is satisfied that a class of financial products: (a) is, or is likely to be, available for acquisition by issue, or for regulated sale, to persons as retail clients (whether or not it also is, or is likely to be, available for acquisition by persons as wholesale clients); and (b) has resulted in, or will or is likely to result in, significant detriment to retail clients;
ASIC may, in accordance with this Part and by legislative instrument, order that a person must not engage in specified conduct in relation to the class of products, either entirely or except in accordance with conditions specified in the order.
Note 1: An example of conditions that may be specified in a product intervention order include that a product in a class of products not be issued to a retail client unless the retail client has received personal advice.
Note 2: Section 1023E specifies matters to be taken into account in considering whether a financial product has resulted in, or will or is likely to result in, significant detriment to retail clients.
Note 3: Section 1023N also provides that product intervention orders may include requirements for notifying retail clients.
Restrictions on product intervention orders
1023D(4)
A product intervention order must not specify any of the following for subsection (1) or (3) : (a) a condition that a person satisfy a standard of training, or meet a professional standard, other than a standard otherwise prescribed for the person by or under this Act; (b) a condition that a person who is not required to hold an Australian financial services licence become a member of an external dispute resolution scheme; (c) a condition related to a person ' s remuneration, other than a condition related to:
(i) so much of the person ' s remuneration as is conditional on the achievement of objectives directly related to the financial product; or
(ii) a fee, charge or other consideration paid or payable to the person by a retail client.
1023D(5)
Conduct covered by a product intervention order must be limited to conduct in relation to a retail client.
In considering whether a financial product has resulted in, or will or is likely to result in, significant detriment to retail clients for the purposes of this Part, the following must be taken into account:
(a) the nature and extent of the detriment;
(b) without limiting paragraph (a), the actual or potential financial loss to retail clients resulting from the product;
(c) the impact that the detriment has had, or will or is likely to have, on retail clients;
(d) any other matter prescribed by regulations made for the purposes of this paragraph.
1023E(2)
Subsection (1) does not limit the matters to be taken into account in considering whether a financial product has resulted in, or will or is likely to result in, significant detriment to retail clients for the purposes of this Part.
1023E(3)
A financial product may result in significant detriment to retail clients even if a person has complied with the disclosure requirements in Chapter 6D or this Chapter, and with the person ' s obligations under Part 7.8A , in relation to the product.
ASIC must not make a product intervention order unless ASIC has:
(a) consulted persons who are reasonably likely to be affected by the proposed order; and
(b) if the proposed order will apply to a body that is regulated by APRA - consulted APRA; and
(c) complied with any other requirements as to consultation prescribed by regulations made for the purposes of this paragraph.
1023F(2)
Without limiting paragraph (1)(a), ASIC is taken to comply with that paragraph if ASIC, on its website:
(a) makes the proposed order, or a description of the content of the proposed order, available; and
(b) invites the public to comment on the proposed order.
1023F(3)
A failure to comply with subsection (1) does not invalidate a product intervention order.
1023F(4)
Section 17 of the Legislation Act 2003 (rule-makers should consult before making legislative instruments) does not apply to the making of a product intervention order.
Commencement of product intervention orders
1023G(1)
A product intervention order comes into force:
(a) for an order that is a legislative instrument - on the day after the instrument is registered under the Legislation Act 2003 ; or
(b) otherwise - on the day after the notice under subsection 1023L(3) in relation to the order is published;
or a later day specified in the order.
Duration of product intervention orders
1023G(2)
A product intervention order remains in force for:
(a) 18 months, or any shorter period specified by the regulations; or
(b) any shorter period specified in the order.
However, if the Court makes an order staying or otherwise affecting the operation or enforcement of a product intervention order, then, in determining when the period referred to in paragraph (a) or (b) ends, disregard the period during which the Court ' s order has that effect.
1023G(3)
Subsection (2) does not apply to a product intervention order if a declaration under section 1023H (which relates to extensions of product intervention orders) is in force in relation to the order.
1023G(4)
Subsection (2) does not prevent the revocation of a product intervention order.
Repeal of product intervention orders
1023G(5)
A product intervention order that is a legislative instrument that ceases to be in force is repealed by force of this subsection.
ASIC may, in accordance with an approval under subsection (4), by legislative instrument, declare that a product intervention order that is in force:
(a) remains in force until it is revoked; or
(b) remains in force for a specified period, unless it is revoked earlier.
Note: A declaration under this subsection has the effect of overriding any provisions in a product intervention order about the duration of the order: see subsection 1023G(3) .
1023H(2)
ASIC may make more than one declaration under subsection (1) in relation to a product intervention order that is in force.
Approval of Minister
1023H(3)
ASIC may, at any time before the order ceases to be in force, give the Minister a report on whether the declaration should be made.
1023H(4)
After considering the report, the Minister may give an approval in writing for the purposes of subsection (1).
Subject to this section, ASIC may, in writing, amend a product intervention order that is in force.
Requirements before amending product intervention orders
1023J(2)
If a declaration under section 1023H is in force in relation to a product intervention order, ASIC must not amend the order without the Minister ' s approval, given after considering a report from ASIC on whether the amendment should be made.
1023J(3)
ASIC may, at any time before the order ceases to be in force, give the Minister a report on whether the amendment should be made.
Amendments of product intervention orders
1023J(4)
An amendment of a product intervention order must not be such that the order remains in force for a period longer than the maximum period determined for the order in accordance with subsection 1023G(2) or 1023H(1) .
1023J(5)
An amendment of a product intervention order comes into force:
(a) for an amendment of an order that is a legislative instrument - on the day after the amendment is registered under the Legislation Act 2003 ; or
(b) otherwise - on the day after the day on which the notice under subsection 1023L(6) in relation to the amendment is published;
or a later day specified in the amendment.
Amendments of orders that are legislative instruments
1023J(6)
An amendment of a product intervention order that is a legislative instrument must be by legislative instrument.
Subject to this section, ASIC may, in writing, revoke a product intervention order.
Requirements for revocation of product intervention orders
1023K(2)
If a declaration under section 1023H is in force in relation to a product intervention order, ASIC must not revoke the order without the Minister ' s approval, given after considering a report from ASIC on whether the order should be revoked.
1023K(3)
ASIC may, at any time before the order ceases to be in force, give the Minister a report on whether the order should be revoked.
Revocation of orders that are legislative instruments
1023K(4)
A revocation of a product intervention order that is a legislative instrument must be by legislative instrument.
Product intervention orders
1023L(1)
ASIC must serve a copy of a product intervention order that is not a legislative instrument on any person to whom ASIC considers the order applies. Failure to comply with this subsection does not invalidate the order.
1023L(2)
ASIC must publish each product intervention order, as in force for the time being, on its website.
Note: The Legislation Act 2003 requires legislative instruments to be registered on the Federal Register of Legislation and provides for compilations of legislative instruments.
1023L(3)
ASIC must also publish on its website, with the product intervention order, a notice that:
(a) describes the significant detriment to retail clients that has resulted from, or will or is likely to result from, the financial product or class of financial products to which the order relates, and sets out why the order is an appropriate way of reducing the detriment; and
(b) describes the consultation that ASIC undertook in relation to the order; and
(c) if the order comes into force after it is published - specifies the day it comes into force.
1023L(4)
ASIC must publish on its website, with the product intervention order, each declaration under section 1023H (which relates to extensions of product intervention orders) that relates to the order.
Amendments of product intervention orders
1023L(5)
ASIC must serve a copy of the instrument amending a product intervention order that is not a legislative instrument on any person to whom ASIC considers the order applies. Failure to comply with this subsection does not invalidate the order.
1023L(6)
ASIC must publish on its website, with the product intervention order, each amendment of the product intervention order.
1023L(7)
ASIC must also publish on its website, with the amendment, a notice that:
(a) sets out why the amendment is appropriate; and
(b) describes the consultation that ASIC undertook in relation to the amendment; and
(c) if the day the amendment is to take effect is later than the day after the day of publication of the amendment - specifies the day the amendment is to take effect.
Revocation of product intervention orders
1023L(8)
If a product intervention order is revoked, ASIC must publish notice of the revocation on its website.
If a product intervention order ceases to be in force or is revoked, ASIC must not remake the order, or make an order in substantially the same terms, unless:
(a) ASIC is satisfied the circumstances have materially changed since the order was made; or
(b) the Minister approves, in writing, the remaking or making of the order.
A product intervention order in relation to a financial product may:
(a) require that a specified person who has:
(i) dealt in, or dealt in a specified way in, a financial product in relation to a retail client; or
(ii) provided financial product advice, or a specified kind of financial product advice, to a retail client in relation to a financial product;
take reasonable steps to notify the retail client:
(iii) of the terms of the order; and
(iv) of any other matter specified in regulations made for the purposes of this subparagraph; and
(b) specify requirements in relation to giving those notifications (including requirements as to the periods within which to give those notifications).
1023N(2)
In this section, dealing in a financial product has the meaning given by subsection 994A(1) .
A person must not engage in conduct contrary to a product intervention order that is in force in relation to the person.
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 .
1023P(2)
A person who is required by a product intervention order to take reasonable steps to notify a retail client must comply with the requirement.
Note 1: For this requirement, see subsection 1023N(1) .
Note 2: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
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 .
1023P(3)
Subsections (1) and (2) do not apply if:
(a) the product intervention order is not a legislative instrument; and
(b) the person was not aware, and could not reasonably have been aware, of the order.
Note: A defendant bears an evidential burden in relation to the matters in this subsection (see subsection 13.3(3) of the Criminal Code ).
1023P(4)
If a product intervention order has been served on a person, the person must take all reasonable steps as soon as practicable to ensure that other persons 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 .
If:
(a) a person (the first person ) contravenes a product intervention order; and
(b) a retail client suffers loss or damage because of the contravention;
the retail 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.
1023Q(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.
1023Q(3)
This section does not affect any liability that a person has under any other law.
The Court dealing with an action under subsection 1023Q(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 relating to the financial product that was entered into by the retail client who suffered the loss or damage; 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.
1023R(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.
General prohibition
1023S(1)
A person must not, either alone or with others, engage in any of the following conduct: (a) enter into a scheme; (b) begin to carry out a scheme; (c) carry out a scheme;
if, having regard to any matters as required under subsection (8) , it would be reasonable to conclude that the purpose, or one of the purposes, of the person engaging in that conduct was to avoid the application of a credit product intervention order.
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 .
Constitutional corporations
1023S(2)
A constitutional corporation must not, either alone or with others, engage in any of the following conduct: (a) enter into a scheme; (b) begin to carry out a scheme; (c) carry out a scheme;
if, having regard to any matters as required under subsection (8) , it would be reasonable to conclude that the purpose, or one of the purposes, of the constitutional corporation engaging in that conduct was to avoid the application of a credit product intervention order.
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 .
Constitutional trade and commerce
1023S(3)
A person must not in the course of constitutional trade and commerce, either alone or with others, engage in any of the following conduct: (a) enter into a scheme; (b) begin to carry out a scheme; (c) carry out a scheme;
if, having regard to any matters as required under subsection (8) , it would be reasonable to conclude that the purpose, or one of the purposes, of the person engaging in that conduct was to avoid the application of a credit product intervention order.
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 .
Use of communications service
1023S(4)
A person must not use postal, telegraphic, telephonic or other like services (within the meaning of paragraph 51(v) of the Constitution), either alone or with others, in order to engage in any of the following conduct: (a) enter into a scheme; (b) begin to carry out a scheme; (c) carry out a scheme;
if, having regard to any matters as required under subsection (8) , it would be reasonable to conclude that the purpose, or one of the purposes, of the person engaging in that conduct was to avoid the application of a credit product intervention order.
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 .
Prohibitions independent of each other
1023S(5)
To avoid doubt, subsections (1) , (2) , (3) and (4) are independent from and do not limit each other.
1023S(6)
If conduct constitutes a contravention of 2 or more subsections of this section, proceedings may be started against a person in relation to the contravention of any one or more of those subsections.
1023S(7)
However, the person is not liable to more than one pecuniary penalty in relation to the same conduct.
Matters to which regard must be had
1023S(8)
In determining, for the purposes of subsection (1) , (2) , (3) or (4) , whether it would be reasonable to conclude that a purpose of a person entering into or carrying out (to any extent) a scheme was to avoid the application of a credit product intervention order, regard must be had to any matters prescribed by the regulations.
1023S(9)
Subsection (8) does not limit the matters to which regard may be had in making a determination described in that subsection.
Offence
1023S(10)
A person commits an offence if: (a) the person is subject to a requirement under subsection (1) , (2) , (3) or (4) ; and (b) the person engages in conduct; and (c) the conduct contravenes the requirement.
Definitions
1023S(11)
In this section:
constitutional corporation
means a corporation to which paragraph
51(xx)
of the Constitution applies.
constitutional trade and commerce
means trade and commerce:
(a) between Australia and places outside Australia; or
(b) between the States; or
(c) between a State and a Territory; or
(d) between 2 Territories; or
(e) within a Territory.
credit product intervention order
means a product intervention order made in relation to a financial product of the kind covered by paragraph
12BAA(7)(k)
of the
Australian Securities and Investments Commission Act 2001
(which is about credit facilities).
(a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied; or
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise; or
(c) any combination of 2 or more things that are schemes because of paragraph (a) or (b).
For the purposes of subsection 1023S(1) , (2) , (3) or (4) , it is reasonable to conclude, unless the contrary is proved, that a person entered into or carried out a scheme for the purpose of avoiding a credit product intervention order (within the meaning of subsection 1023S(11) ) if: (a) the scheme is of a kind prescribed by the regulations; or (b) the scheme is of a kind determined by ASIC under subsection (3) .
1023T(2)
In proving the contrary for the purposes of subsection (1) , regard must be had to any matters as required under subsection 1023S(8) .
1023T(3)
ASIC may, by legislative instrument, determine a scheme, or a class of schemes, for the purposes of paragraph (1)(b) .
1023T(4)
This section does not have effect for the purposes of determining whether a person has committed an offence against subsection 1023S(10) .
ASIC may, by legislative instrument, exempt a scheme, or class of schemes, from all or specified provisions of section 1023S .
1023U(2)
The exemption may apply subject to any specific conditions imposed by ASIC.