Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 (7 of 2017)

Schedule 1   Amendments

Part 2   Application of amendments

Corporations Act 2001

27   After Part 10.23 of Chapter 10

Insert:

Part 10.23A - Transitional provisions relating to the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017

Division 1 - Definitions

1546A Definitions

In this Part:

amending Act means the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017.

commencement means the start of the day Part 1 of Schedule 1 to the amending Act commences.

education and training standards has the meaning given by section 921B.

existing provider means:

(a) a person who:

(i) is a relevant provider at any time between 1 January 2016 and 1 January 2019 (except a person who has ceased to be a relevant provider under subsection 1546B(4) or (5)); and

(ii) is not banned, disqualified or suspended under Division 8 of Part 7.6 on 1 January 2019; or

(b) a person who:

(i) at any time between 1 January 2016 and 1 January 2019, provides personal advice in a foreign country to retail clients in relation to relevant financial products; and

(ii) is not prohibited under the law of the foreign country from providing such advice on 1 January 2019.

foreign country includes a region, where:

(a) the region is a colony, territory or protectorate of a foreign country; or

(b) the region is part of a foreign country; or

(c) the region is under the protection of a foreign country; or

(d) a foreign country exercises jurisdiction or control over the region; or

(e) a foreign country is responsible for the region's international relations.

relevant financial products has the meaning given by section 910A.

relevant provider has the meaning given by section 910A.

Division 2 - Application and transitional provisions

1546B Existing providers to meet certain education and training standards

Completion of qualifications

(1) An existing provider must have done either of the following by 1 January 2024:

(a) met the education and training standard in subsection 921B(2);

(b) completed one or more courses determined by the standards body to give the provider qualifications equivalent to that standard.

Note: The standard in subsection 921B(2) is that a person has completed a bachelor or higher degree, or equivalent qualification, approved by the standards body, or a foreign qualification approved by the standards body.

(2) To avoid doubt, an existing provider may meet the education and training standard in subsection 921B(2), or complete one or more courses in accordance with paragraph (1)(b) of this section, before this section commences.

Exam

(3) An existing provider must have met the education and training standard in subsection 921B(3) before 1 January 2021.

Note 1: The standard in subsection 921B(3) is that a person has passed an exam approved by the standards body.

Note 2: ASIC must be notified when existing providers have passed the exam (see section 1546Y).

Note 3: An existing provider is not required to meet the standard in subsection 921B(4), which is that a person has undertaken at least a year of work and training that meets the requirements set by the standards body.

Failing to meet the education and training standards

(4) If, at the start of 1 January 2024, a person who is an existing provider, and a relevant provider at that time, fails to comply with subsection (1), the person is taken for the purposes of this Act, after that time, to have ceased to be a relevant provider.

(5) If, at the start of 1 January 2021, a person who is an existing provider, and a relevant provider at that time, fails to comply with subsection (3), the person is taken for the purposes of this Act, after that time, to have ceased to be a relevant provider.

(6) Subsections (4) and (5) do not prevent the person again becoming a relevant provider.

Standards body may determine courses

(7) The standards body may, by legislative instrument, determine courses for the purposes of paragraph (1)(b).

1546C Application of limitation on authorisation to provide personal advice and offence

Limitation on authorisation to provide personal advice

(1) Section 921C,as inserted by the amending Act, applies in relation to:

(a) any Australian financial services licence granted on or after 1 January 2019 to a person who is not a relevant provider before that day; and

(b) any authorisation given on or after that day to a person who is not a relevant provider before that day.

Note: Section 921C provides that a person cannot be granted a licence, or be authorised, to provide certain financial advice unless the person meets certain conditions.

(2) Section 921C, as inserted by the amending Act, applies, on and after 1 January 2024, in relation to a person who ceases to be a relevant provider under subsection 1546B(4).

(3) Section 921C, as inserted by the amending Act, applies, on and after 1 January 2021, in relation to a person who ceases to be a relevant provider under subsection 1546B(5).

(4) Section 921C, as inserted by the amending Act, does not apply in relation to a person who is an existing provider while the person continues to be a relevant provider.

Restriction on use of terms "financial adviser" and "financial planner"

(5) The following provisions, as inserted by the amending Act, apply on and after 1 January 2019:

(a) section 923C;

(b) items 269AAA and 269AAB of the table in Schedule 3.

Note: Those provisions relate to offences for using the terms "financial adviser" and "financial planner".

1546D Application of requirements relating to provisional relevant providers

Section 921F,as inserted by the amending Act, applies in relation to any authorisation given on or after 1 January 2019 to a person who is not a relevant provider before that day.

Note: Section 921F sets out the requirements in relation to a person who is a provisional relevant provider.

1546E Application of continuing professional development standard for relevant providers

(1) Sections 921D and 922HA,as inserted by the amending Act, apply on and after 1 January 2019.

Note: Section 921D provides that certain relevant providers must meet the continuing professional development standard. Section 922HA requires ASIC to be notified of the day on which a financial services licensee's CPD year is to begin.

(2) Sections 922HB and 922HC, as inserted by the amending Act, apply in relation to any CPD year of a financial services licensee that begins on or after 1 January 2019.

Note: Section 922HB requires ASIC to be notified if relevant providers do not comply with the continuing professional development standard. Section 922HC requires a financial services licensee to retain evidence of the continuing professional development of relevant providers.

(3) Section 922N, as inserted by the amending Act, applies in relation to a request made of a person on or after 1 January 2019 for the purposes of subparagraph 922N(1)(c)(iii).

Note: Among other things, section 922N allows a financial services licensee to ask a person to provide information relating to whether the licensee must lodge a notice under section 922HB.

(4) Subsection (5) applies if:

(a) the first CPD year of a financial services licensee commences after 1 January 2019; and

(b) before the start of the licensee's first CPD year:

(i) the licensee is a relevant provider; or

(ii) a relevant provider is authorised to provide personal advice to retail clients, on behalf of the licensee, in relation to relevant financial products.

(5) Sections 922HB, 922HC and 922Q, as inserted by the amending Act, apply as if a reference in those sections to a financial services licensee's CPD year included a reference to the period:

(a) beginning on the later of 1 January 2019 and:

(i) if subparagraph (4)(b)(i) applies - the day the licensee is granted an Australian financial services licence that covers the provision of personal advice to retail clients in relation to relevant financial products; and

(ii) if subparagraph (4)(b)(ii) applies - the first day the relevant provider is authorised to provide personal advice to retail clients, on behalf of the licensee, in relation to relevant financial products; and

(b) ending on the day before the licensee's first CPD year.

Note 1: Among other things, section 922Q requires failures of relevant providers to comply with the continuing education standard to be entered on the Register.

Note 2: The standards body may, under subparagraph 921U(2)(a)(iv), set requirements for continuing professional development in relation to a period mentioned in subsection (5) of this section, and, in one or more determinations made under subsection 921U(3), modify the operation of a provision in Part 7.6 in relation to such a period.

1546F Application of Code of Ethics to relevant providers

Sections 921E and 922HD, as inserted by the amending Act, apply on and after 1 January 2020.

Note: Section 921E requires a relevant provider to comply with the Code of Ethics. Section 922HD requires ASIC to be notified of failures to comply with the Code of Ethics.

1546G Application of obligations in relation to compliance schemes

(1) Section 921H, as inserted by the amending Act, applies on and after 15 November 2019:

(a) in relation to a person who becomes a financial services licensee on or after that day; and

(b) for a person who becomes a financial services licensee before that day:

(i) in relation to a person who becomes a relevant provider on or after that day; and

(ii) in relation to a person who becomes a relevant provider before that day as if subsection 921H(2) required the scheme to cover the relevant provider by 1 January 2020.

Note: Section 921H requires a financial services licensee to ensure that a compliance scheme covers each of its relevant providers.

(2) Section 921J, as inserted by the amending Act, applies on and after 15 November 2019.

Note: Section 921J sets out when a compliance scheme covers a relevant provider.

(3) Sections 921K, 921Q, 921R and 921T, as inserted by the amending Act, apply on and after the day this section commences.

Note: Section 921K provides that a monitoring body for a compliance scheme may apply to ASIC for approval of the scheme. Section 921Q provides that ASIC may request information about a compliance scheme from the monitoring body for the scheme. Section 921R provides that a monitoring body may propose to modify a scheme in certain circumstances. Section 921T requires a monitoring body to notify ASIC of certain reductions in the body's resources or expertise.

(4) Sections 921L, 921M, 921N, 921P and 921S, as inserted by the amending Act, apply on and after 1 January 2020.

Note: Sections 921L to 921N include provisions about investigations by monitoring bodies. Section 921P provides for compliance schemes to be made publicly available. Section 921S provides for the review of compliance schemes.

(5) Paragraphs 922E(1)(i) and 922F(1)(n), as inserted by the amending Act, apply on and after 15 November 2019 in relation to notices lodged under section 922D on or after that day.

Note: Paragraphs 922E(1)(i) and 922F(1)(n) require notices lodged under section 922D in relation to a relevant provider to include the name of the compliance scheme that is to cover the relevant provider.

1546H Application of obligation for standards body to publish annual report

(1) Section 921ZC, as inserted by the amending Act, applies on and after 1 July 2017.

(2) If the declaration of a body corporate to be the standards body under section 921X takes effect at a time during a financial year, the first annual report published by the standards body must cover the period beginning at that time and ending at the end of the next financial year as if that period were a financial year.

1546J Application of obligation to notify ASIC about a person who becomes a relevant provider

Sections 922D, 922E and 922F, as inserted by the amending Act, apply (subject to subsection 1546G(5) and sections 1546K to 1546N) in relation to a person who becomes a relevant provider if:

(a) the person becomes a relevant provider after commencement; or

(b) both of the following apply:

(i) the person becomes a relevant provider before commencement;

(ii) immediately before commencement, a notice has not been lodged in accordance with section 922D, as notionally inserted into this Act by Schedule 8D to the Corporations Regulations 2001.

Note: Section 922D requires ASIC to be notified if a person becomes a relevant provider.

1546K Application of requirements relating to information about relevant provider's principal place of business

Paragraphs 922E(1)(b) and 922F(1)(b), as inserted by the amending Act, apply on and after 15 November 2019 in relation to notices lodged under section 922D on or after that day.

Note: Paragraphs 922E(1)(b) and 922F(1)(b) require notices lodged under section 922D in relation to a relevant provider to include the address of the relevant provider's principal place of business.

1546L Application of requirements relating to information about membership of professional associations where relevant provider is licensee

Section 922E, as inserted by the amending Act, applies until the start of 15 November 2019 as if paragraph 922E(1)(h) were replaced with the following:

(h) information about both of the following:

(i) the educational qualifications of, and any training courses completed by, the relevant provider;

(ii) the relevant provider's membership (if any) of professional bodies;

to the extent that the qualifications, training courses or memberships are relevant to the provision of financial services (and if the relevant provider has more than 5 memberships, the 5 memberships that the person lodging the notice believes, on reasonable grounds, are most relevant to the provision of financial services);

1546M Application of requirements relating to information about membership of professional associations where relevant provider is not licensee

Section 922F, as inserted by the amending Act, applies until the start of 15 November 2019 as if paragraph 922F(1)(m) were replaced with the following:

(m) information about both of the following:

(i) the educational qualifications of, and any training courses completed by, the relevant provider;

(ii) the relevant provider's membership (if any) of professional bodies;

to the extent that the qualifications, training courses or memberships are relevant to the provision of financial services (and if the relevant provider has more than 5 memberships, the 5 memberships that the person lodging the notice believes, on reasonable grounds, are most relevant to the provision of financial services);

1546N Application of requirements relating to information about provisional relevant provider's work and training

Paragraphs 922F(1)(f) and (g), as inserted by the amending Act, apply in relation to notices lodged under section 922D on or after 1 January 2019.

Note: Paragraphs 922F(1)(f) and (g) require notices lodged under section 922D to include information in relation to provisional relevant providers and their work and training.

1546P Application of ongoing obligation to notify ASIC when there is a change in a matter for a relevant provider

Paragraph 922H(1)(a), as inserted by the amending Act, applies in relation to a change in a matter if:

(a) the change occurs after commencement; or

(b) both of the following apply:

(i) the change occurs before commencement;

(ii) immediately before commencement, a notice has not been lodged in accordance with section 922H, as notionally inserted into this Act by Schedule 8D to the Corporations Regulations 2001.

1546Q Application of obligation to notify ASIC about a person who starts to have control of a body corporate licensee

Section 922J, as inserted by the amending Act, applies in relation to a person who starts to have control of a body corporate licensee if:

(a) the person starts to have control of the licensee after commencement; or

(b) both of the following apply:

(i) the person starts to have control of the licensee before commencement;

(ii) immediately before commencement, a notice has not been lodged in accordance with section 922J, as notionally inserted into this Act by Schedule 8D to the Corporations Regulations 2001.

1546R Application of obligation to notify ASIC about a person who ceases to have control of a body corporate licensee

Section 922K, as inserted by the amending Act, applies in relation to a person who ceases to have control of a body corporate licensee if:

(a) the person ceases to have control of the licensee after commencement; or

(b) both of the following apply:

(i) the person ceases to have control of the licensee before commencement;

(ii) immediately before commencement, a notice has not been lodged in accordance with section 922K, as notionally inserted into this Act by Schedule 8D to the Corporations Regulations 2001.

1546S Application of obligation for relevant providers to provide information to financial services licensees

Section 922N, as inserted by the amending Act, applies in relation to a request made of a person if:

(a) both of the following apply:

(i) the request is made of the person for the purposes of subparagraph 922N(1)(c)(i) or (ii);

(ii) the request is made after commencement (whether the person becomes a relevant provider before or after commencement); or

(b) both of the following apply:

(i) the request (as mentioned in paragraph 922N(1)(c), as notionally inserted into this Act by Schedule 8D to the Corporations Regulations 2001) is made before commencement;

(ii) immediately before commencement, the person has not provided the information requested.

1546T Application of requirements relating to Register of Relevant Providers

(1) Paragraphs 922Q(2)(b), (r), and (v), as inserted by the amending Act, apply on and after 1 January 2020.

(2) Subparagraph 922Q(2)(j)(ii) and paragraph 922Q(2)(m), as inserted by the amending Act, apply on and after 1 January 2019.

(3) Section 922Q, as inserted by the amending Act, applies until the start of 1 January 2020 as if subparagraph 922Q(2)(u)(ii) were replaced with the following:

(ii) the relevant provider's membership (if any) of professional associations, to the extent that the memberships are relevant to the provision of financial services;

(4) Otherwise, sections 922Q and 922S, as inserted by the amending Act, apply on and after commencement.

1546U Relevant provider numbers given before commencement

For the purposes of this Act, a number given by ASIC to a person in accordance with regulation 7.6.06A of the Corporations Regulations 2001 is taken to have been given in accordance with section 922R of this Act, as inserted by the amending Act.

1546V Continuation of Register of Relevant Providers

The repeal of regulation 7.6.06B of the Corporations Regulations 2001 by the Corporations Amendment (Professional Standards of Financial Advisers) Regulations 2017 does not affect the continuity of the register of relevant providers established under that regulation.

Division 3 - Transitional notices

1546W Obligation to notify ASIC of certain information

(1) A notice must be lodged under this section, in the prescribed form, if, before 15 November 2019, a notice was lodged in relation to a relevant provider under:

(a) section 922D, as inserted by the amending Act; or

(b) section 922D, as notionally inserted into this Act by Schedule 8D to the Corporations Regulations 2001.

(2) The notice must include:

(a) the address of the relevant provider's principal place of business; and

(b) the name of the compliance scheme that is to cover the relevant provider.

(3) The notice must be lodged before 1 January 2020 by:

(a) if the relevant provider is a financial services licensee - the licensee; or

(b) otherwise - the financial services licensee on whose behalf the relevant provider is authorised to provide personal advice to retail clients in relation to relevant financial products.

(4) Subsection 921J(2) applies, subject to this section, as if the reference in that subsection to section 922D included a reference to this section.

1546X Obligation to notify ASIC of CDP year

(1) A notice must be lodged under this section, in the prescribed form, if, before 1 January 2019, ASIC granted an applicant an Australian financial services licence that covers the provision of personal advice to retail clients in relation to relevant financial products.

(2) The notice must include the day of the year on which the relevant financial services licensee's CPD year begins.

(3) The notice must be lodged by the licensee before 1 January 2019.

(4) Subsection 922HA(3) applies as if a reference in that subsection to subsection 922HA(1) or (3) included a reference to this section.

1546Y Obligation to notify ASIC when exams passed

(1) A notice must be lodged under this section, in the prescribed form, if an existing provider passes an exam for the purposes of complying with subsection 1546B(3).

(2) The notice must state that the existing provider has passed the exam.

(3) The notice must be lodged by a financial services licensee within 30 business days of the financial services licensee becoming aware that the existing provider has passed the exam.

1546Z Obligation to notify ASIC of certain information after banning order

(1) A notice must be lodged under this section, in the prescribed form, if:

(a) a person was banned, disqualified or suspended under Division 8 of Part 7.6 on 1 January 2019; and

(b) the person becomes a provisional relevant provider after that day.

(2) The notice must include the day the person begins undertaking work and training in accordance with subsection 921B(4).

(3) The notice must be lodged within 30 business days of the day mentioned in subsection (2) by the financial services licensee on whose behalf the person is authorised to provide personal advice to retail clients in relation to relevant financial products.

1546ZA Offence for failing to lodge transitional notices

Section 922M applies as if a reference in that section to a notice provision included a reference to a notice given under this Division.

Note: Section 922M provides that a person commits an offence if a person does not lodge certain notices.

Division 4 - Review

1546ZB Review

The Minister must cause a review of Divisions 8A, 8B and 8C of Part 7.6, as inserted by the amending Act, to be commenced before 31 December 2026.