(Current as at 30 June 2017)
BACKGROUND
Group purchasing bodies (GPBs) are persons who arrange for the issue of or for a person to be covered by risk management products for others (general and life insurance products, but not general insurance arranged with an unauthorised foreign insurer), but do not issue risk management products (other than interests in a risk management scheme) nor provide any financial product advice (other than as a result of providing certain general information).
ASIC Class Order [CO 08/1] Group purchasing bodies gives conditional relief from the Australian Financial Service licensing regime and Chapter 5C of the Corporations Act 2001 for some GPB’s who arrange or hold risk management products (insurance) for the benefit of third parties. GPBs can include sporting and other not-for-profit organisations which arrange insurance for third parties (e.g. players or volunteers).
The Class Order contains a condition that requires a GPB who relies on the relief to report to ASIC breaches of conditions of the relief. On 26 June 2017 ASIC released ASIC Corporations (Amendment) Instrument 2017/577 (the instrument), which removes the breach reporting obligations in Class Order 08/1.
PURPOSE AND OPERATION OF THE LEGISLATIVE INSTRUMENT
The instrument removes the breach reporting conditions set out in paragraph 10 (f), and the exclusion under paragraph 8 from relying on the relief provided in CO 08/1 if the body fails to comply with subparagraph 10(f),of Class Order 08/1.
Paragraph 4 of the instrument amends the Class Order by repealing the paragraphs containing the breach reporting conditions and omitting other wording relating to those paragraphs. The practical effect of this is while Class Order 08/1 remains in force, GPBs will not need to report breaches of Class Order 08/1 to ASIC.
According to the explanatory statement, ASIC made the decision to remove the breach reporting conditions solely to avoid having a new obligation commence so near to the sunset date of the Class Order.
WHAT IS THE TIMING?
The transitional period for compliance with the breach reporting condition in Class Order 08/1 will end on 30 June 2017.
The transitional period was intended to give the Government and ASIC the opportunity to consider how various issues raised by GPBs could be addressed by amendments to the Corporations Regulations 2001 and to consult with stakeholders in the development of the regulations. ASIC has now been advised that Government will not be progressing consideration of regulations.
Class Order 08/1 is due to sunset on 1 October 2018 and assessment of [CO 08/1] in that context is currently underway. ASIC’s assessment in that context will not be completed by 30 June 2017.
FOR FURTHER INFORMATION
For further information, please refer to the Federal Register of Legislation.
IMPORTANT NOTICE
This document is designed to provide helpful general guidance on some key issues relevant to this topic. It should not be relied on as legal advice. It does not cover everything that may be relevant to you and does not take into account your particular circumstances. It is only current as at the date of release. You must ensure that you seek appropriate professional advice in relation to this topic as well as to the currency, accuracy and relevance of this material for you.
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