Financial Services Reform Act 2001 (122 of 2001)

Schedule 1   Financial Services and Markets

Part 1   Main amendments

Corporations Act 2001

1   Chapter 7 - Part 7.6 - Division 2

Division 2 - Requirement to be licensed or authorised

911A Need for an Australian financial services licence

(1) Subject to this section, a person who carries on a financial services business in this jurisdictionmust hold an Australian financial services licence covering the provision of the financial services.

Note 1: Also, a person must not provide a financial service contrary to a banning order or disqualification order under Division 8.

Note 2: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(2) However, a person is exempt from the requirement to hold an Australian financial services licence for a financial service they provide in any of the following circumstances:

(a) the person provides the service as representative of a second person who carries on a financial services business and who:

(i) holds an Australian financial services licence that covers the provision of the service; or

(ii) is exempt under this subsection from the requirement to hold an Australian financial services licence that covers the provision of the service;

Note: However, representatives must still comply with section 911B even if they are exempted from this section by this paragraph.

(b) the service is the issue, variation or disposal of a financial product by the person (the product provider ) pursuant to an arrangement (an intermediary authorisation ) between the product provider and a financial services licensee under which:

(i) the financial services licensee, or their authorised representatives, may make offers to people to arrange for the issue, variation or disposal of financial products by the product provider; and

(ii) the product provider is to issue, vary or dispose of financial products in accordance with such offers, if they are accepted;

provided that the offer pursuant to which the issue, variation or disposal is made was covered by the financial services licensee’s Australian financial services licence;

(ba) the service is the entry into of an intermediary authorisation referred to in paragraph (b);

(c) all of the following apply:

(i) the service is the variation or disposal of a financial product by the person;

(ii) the same person issued the original product;

(iii) the person provides the service at the direct request of the person to whom it is provided (rather than through an intermediary);

(d) the service is, or is provided incidentally to, the operation of a licensed market, or a licensed CS facility, operated by the person;

(ea) the service is the provision of general advice and all of the following apply:

(i) the advice is provided in a newspaper or periodical of which the person is the proprietor or publisher;

(ii) the newspaper or periodical is generally available to the public otherwise than only on subscription;

(iii) the sole or principal purpose of the newspaper or periodical is not the provision of financial product advice;

(eb) the service is the provision of general advice and all of the following apply:

(i) the advice is provided in the course of, or by means of, transmissions that the person makes by means of an information service (see subsection (6)), or that are made by means of an information service that the person owns, operates or makes available;

(ii) the transmissions are generally available to the public;

(iii) the sole or principal purpose of the transmissions is not the provision of financial product advice;

(ec) the service is the provision of general advice and all of the following apply:

(i) the advice is provided in sound recordings, video recordings, or data recordings;

(ii) the person makes the recordings available to the public by supplying copies of them to the public and/or by causing the recordings (if they are sound recordings) to be heard by the public, causing the recordings (if they are video recordings) to be seen and heard by the public, or the contents of the recordings (if they are data recordings) to be displayed or reproduced for the public;

(iii) the sole or principal purpose of the recordings is not the provision of financial product advice;

(f) the person provides the service while performing functions, or exercising powers, in any of the following capacities or circumstances:

(i) as an official receiver or trustee within the meaning of theBankruptcy Act 1966;

(ii) as a receiver, receiver and manager, or liquidator (whether appointed by a court or otherwise);

(iii) as a person appointed by a court to carry on a financial services business;

(iv) as the Public Trustee acting under a law, prescribed by regulations made for the purposes of this paragraph, of a State or Territory;

(v) as an administrator of a body corporate;

(vi) as an administrator of a deed of company arrangement executed by a body corporate;

(vii) as a trustee or person administering a compromise or arrangement between a body corporate and another person or persons;

(viii) as a personal representative of a deceased person other than a deceased financial services licensee;

(ix) subject to subsection (3), as a personal representative of a deceased financial services licensee;

(x) in the administration of a bankrupt estate or in the winding up of a body corporate or partnership;

(g) all of the following apply:

(i) the person is a body regulated by APRA;

(ii) the service is one in relation to which APRA has regulatory or supervisory responsibilities;

(iii) the service is provided only to wholesale clients;

(h) all of the following apply:

(i) the person is regulated by an overseas regulatory authority;

(ii) the regulatory authority is approved by ASIC in writing for the purposes of this paragraph;

(iii) the service is provided in the course of carrying on the business or undertaking which causes that regulation to be required;

(iv) the service is provided only to wholesale clients;

(i) the person provides the service only to related bodies corporate of the person;

(j) the person provides the service in the person’s capacity as trustee of a self-managed superannuation fund (within the meaning of theSuperannuation Industry (Supervision) Act 1993);

(k) the provision of the service is covered by an exemption prescribed in regulations made for the purposes of this paragraph;

(l) the provision of the service is covered by an exemption specified by ASIC in writing and published in theGazette.

Note: A defendant bears an evidential burden in relation to the matters in this subsection. See subsection 13.3(3) of theCriminal Code.

(3) Subparagraph (2)(f)(ix) only applies until whichever of these happens first:

(a) the end of 6 months after the death of the licensee;

(b) the removal or discharge of the personal representative;

(c) the final distribution of the licensee’s estate.

(4) A person is not exempt under any paragraph of subsection (2) for a financial service they provide if the service is the operation of a registered scheme.

(5) The exemption under paragraph (2)(ea), (eb) or (ec), or an exemption under paragraph (2)(k) or (l), may apply unconditionally or subject to conditions:

(a) in the case of the exemption under paragraph (2)(ea), (eb) or (ec), or an exemption under paragraph (2)(k) - specified in regulations made for the purposes of this paragraph; or

(b) in the case of an exemption under paragraph (2)(l) - specified by ASIC in writing published in theGazette.

(6) In this section:

information service means:

(a) a broadcasting service; or

(b) an interactive or broadcast videotext or teletext service or a similar service; or

(c) an online database service or a similar service; or

(d) any other service identified in regulations made for the purposes of this paragraph.

911B Providing financial services on behalf of a person who carries on a financial services business

(1) A person (the provider ) must only provide a financial service in this jurisdiction on behalf of another person (the principal ) who carries on a financial services business if one or more of the following paragraphs apply:

(a) these conditions are satisfied:

(i) the principal holds an Australian financial services licence covering the provision of the service; and

(ii) the provider is an employee or director of the principal or of a related body corporate of the principal; and

(iii) the provider is not an employee or director, or authorised representative, of any other person who carries on a financial services business and who is not a related body corporate of the principal; and

(iv) the provider is not an employee or director, or authorised representative, of a related body corporate of a person of the kind mentioned in subparagraph (iii);

(b) these conditions are satisfied:

(i) the principal holds an Australian financial services licence covering the provision of the service; and

(ii) the provider is an authorised representative of the principal; and

(iii) the authorisation covers the provision of the service by the provider; and

(iv) in the case of a provider who is an employee or director of any other person (the second principal ) who carries on a financial services business, or of a related body corporate of such a second principal - if the provider provides any financial services in this jurisdiction on behalf of the second principal, the provider does so as an authorised representative of the second principal;

(c) these conditions are satisfied:

(i) the principal holds an Australian financial services licence covering the provision of the service; and

(ii) the provider is an employee of an authorised representative of the principal; and

(iii) the authorisation covers the provision of the service by the authorised representative; and

(iv) the service is the provision of a basic deposit product or of a facility for making non-cash payments (see section 763D) that is related to a basic deposit product, or is the provision of a financial product of a kind prescribed by regulations made for the purposes of this subparagraph;

(d) the provider holds their own Australian financial services licence covering the provision of the service;

Note: However, in general a financial services licensee cannot be the authorised representative of another financial services licensee: see sections 916D and 916E.

(e) if the principal (rather than the provider) provided the service, the principal would not need an Australian financial services licence because the provision of the service would be exempt under subsection 911A(2).

Note 1: Also, a person must not provide a financial service on behalf of another person contrary to a banning order or disqualification order under Division 8.

Note 2: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(2) Paragraphs (1)(a), (b) and (c) do not apply if the provider is a financial services licensee, unless the principal is an insurer and the provider is acting under a binder given by the principal.

(3) If, as mentioned in paragraph (1)(d), the provider holds their own Australian financial services licence covering the provision of the service, then, for the purposes of the other provisions of this Chapter, the service is taken to be provided by the provider (and not by the principal) unless regulations made for the purposes of this subsection provide otherwise.

911C Prohibition on holding out

A person must not hold out:

(a) that the person has an Australian financial services licence; or

(b) that a financial service provided by the person or by someone else is exempt from the requirement to hold an Australian financial services licence; or

(c) that, in providing a financial service, the person acts on behalf of another person; or

(d) that conduct, or proposed conduct, of the person is within authority (within the meaning of Division 6) in relation to a particular financial services licensee; or

(e) that a body is a declared professional body; or

(f) that a person is a member of a declared professional body;

if that is not the case.

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

911D When a financial services business is taken to be carried on in this jurisdiction

(1) For the purposes of this Chapter, a financial services business is taken to be carried on in this jurisdiction by a person if, in the course of the person carrying on the business, the person engages in conduct that is:

(a) intended to induce people in this jurisdiction to use the financial services the person provides; or

(b) is likely to have that effect;

whether or not the conduct is intended, or likely, to have that effect in other places as well.

(2) This section does not limit the circumstances in which a financial services business is carried on in this jurisdiction for the purposes of this Chapter.