Explanatory Statement

Issued by the Minister for Revenue and Assistant Treasurer

EXPLANATORY STATEMENT

Australian Securities and Investments Commission Act 2001

Corporations Act 2001

Trade Practices Act 1974

Section 251 of the Australian Securities and Investments Commission Act 2001 (the ASIC Act), section 1364 of the Corporations Act 2001 (the Corps Act) and section 172 of the Trade Practices Act 1974 (the TP Act) provide, in part, that the Governor-General may make regulations prescribing matters required or permitted by the Acts to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Acts.

The Treasury Legislation Amendment (Professional Standards) Act 2004 (the Amendment Act) amended the ASIC Act, the Corps Act, and the TP Act to align these Commonwealth laws with State laws on professional standards. The relevant State laws limit the civil liability of professionals and others while still maintaining appropriate protection for consumers of professional services through such measures as compulsory insurance cover and complaints procedures.

The new Regulations prescribe the New South Wales Bar Association Scheme and thereby limit the occupational liability of members of that scheme relating to an action for contravention of section 12DA of the ASIC Act, section 1041H of the Corps Act, or section 52 of the TP Act in the same way as occupational liability arising under the Professional Standards Act 1994 (NSW) is limited.

The Amendment Act supports State professional standards law by limiting liability in certain circumstances under provisions of certain Acts. Section 12DA of the ASIC Act deals with misleading or deceptive conduct in relation to financial services, part 7.10 of the Corps Act deals with market misconduct and other misconduct relating to financial products and financial services, and section 52 of the TP Act deals with misleading and deceptive conduct. These broad provisions have been recognised as being possible alternative causes of action to common law negligence.

The Amendment Act establishes a structure under which the Commonwealth, by prescribing State professional standards schemes, can support State professional standards legislation by allowing liability under the ASIC Act, the Corps Act, and the TP Act to be capped.

The Regulations commence on 11 May 2006.