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 10

Division 10 - Restrictions on use of terminology

923A Restriction on use of certain words or expressions

(1) A person contravenes this subsection if:

(a) either:

(i) the person carries on a financial services business or provides a financial service (whether or not on behalf of another person); or

(ii) another person (the provider ) provides a financial service on behalf of the first person; and

(b) the first person assumes or uses, in this jurisdiction, a restricted word or expression in relation to that business or service.

Note 1: For the meanings of restricted word or expression and assume or use , see subsection (5).

Note 2: A contravention of this subsection is an offence (see subsection 1311(1)).

(2) However, it is not a contravention of subsection (1) for a person to assume or use a restricted word or expression if:

(a) the person does not receive any of the following:

(i) commissions (apart from commissions that are rebated in full to the person’s clients);

(ii) forms of remuneration calculated on the basis of the volume of business placed by the person with an issuer of a financial product;

(iii) other gifts or benefits from an issuer of a financial product which may reasonably be expected to influence the person; and

(b) none of the following persons receives any of the things covered by paragraph (a):

(i) the person’s employer (if any);

(ii) if the person provides the financial service on behalf of another person (as mentioned in subparagraph (1)(a)(i)) - that other person;

(iii) any other person identified (whether by reference to a class of person or otherwise) in regulations made for the purposes of this subparagraph; and

(c) if subparagraph (1)(a)(ii) applies in relation to a financial service - the provider mentioned in that subparagraph does not receive any of the things mentioned in paragraph (a) of this subsection in respect of the provision of that service; and

(d) in carrying on a financial services business, or providing financial services, the person operates free from direct or indirect restrictions relating to the financial products in respect of which they provide financial services; and

(e) in carrying on that business, or providing those services, the person operates without any conflicts of interest that might:

(i) arise from their associations or relationships with issuers of financial products; and

(ii) reasonably be expected to influence the person in carrying on the business or providing the services.

Note: A defendant bears an evidential burden in relation to the matters in subsection (2). See subsection 13.3(3) of theCriminal Code.

(3) The reference in paragraph (2)(d) to direct or indirect restrictions does not include a reference to restrictions imposed on a person by:

(a) the conditions on an Australian financial services licence; or

(b) this Chapter or regulations made for the purposes of this Chapter.

(4) If a person assumes or uses a word or expression in circumstances that give rise to the person committing an offence based on subsection (1) of this section, the person is guilty of such an offence in respect of:

(a) the first day on which the offence is committed; and

(b) each subsequent day (if any) on which the circumstances that gave rise to the person committing the offence continue (including the day of conviction for any such offence or any later day).

(5) In this section:

(a) a reference to a restricted word or expression is a reference to:

(i) the word independent , impartial or unbiased ; or

(ii) any other word or expression specified in the regulations as a restricted word or expression for the purposes of this section; or

(iii) any other word or expression (whether or not in English) that is of like import to a word or expression covered by any of the previous subparagraphs; and

(b) a reference to a word or expression being assumed or used includes a reference to the word or expression being assumed or used:

(i) as part of another word or expression; or

(ii) in combination with other words, letters or other symbols.

923B Restriction on use of certain words or expressions unless authorised in licence conditions

(1) A person contravenes this subsection if:

(a) the person carries on a financial services business or provides a financial service (whether or not on behalf of another person); and

(b) the person assumes or uses, in this jurisdiction, a restricted word or expression in relation to that business or service; and

(c) the person is not authorised, by the conditions on an Australian financial services licence held by the person, or by a person in relation to whom they are a representative, to assume or use that word or expression (see subsection (3)).

Note 1: For the meanings of restricted word or expression and assume or use , see subsection (4).

Note 2: A contravention of this subsection is an offence (see subsection 1311(1)).

(2) If a person assumes or uses a word or expression in circumstances that give rise to the person committing an offence based on subsection (1), the person is guilty of such an offence in respect of:

(a) the first day on which the offence is committed; and

(b) each subsequent day (if any) on which the circumstances that gave rise to the person committing the offence continue (including the day of conviction for any such offence or any later day).

(3) ASIC can only impose a condition on an Australian financial services licence authorising a person to assume or use a restricted word or expression in these circumstances:

(a) in the case of a word or expression covered by subparagraph (4)(a)(i) - if the person:

(i) can, under the licence, provide a financial service relating to securities (whether or not the person can provide other financial services under the licence as well); and

(ii) is a participant in a licensed market whose licence covers dealings in securities;

(b) in the case of a word or expression covered by subparagraph (4)(a)(ii) - if the person:

(i) can, under the licence, provide a financial service relating to derivatives (whether or not the person can provide other financial services under the licence as well); and

(ii) is a participant in a licensed market whose licence covers dealings in derivatives;

(c) in the case of a word or expression covered by subparagraph (4)(a)(iii) - if the person:

(i) can, under the licence, provide a financial service relating to contracts of insurance (whether or not the person can provide other financial services under the licence as well); and

(ii) in providing that service, acts on behalf of intending insureds;

(d) in the case of a word or expression covered by subparagraph (4)(a)(iv) - if the person:

(i) can, under the licence, provide a financial service relating to contracts of general insurance (whether or not the person can provide other financial services under the licence as well); and

(ii) in providing that service, acts on behalf of intending insureds;

(e) in the case of a word or expression covered by subparagraph (4)(a)(v) - if the person:

(i) can, under the licence, provide a financial service relating to contracts of life insurance (whether or not the person can provide other financial services under the licence as well); and

(ii) in providing that service, acts on behalf of intending insureds;

(f) in the case of a word or expression covered by subparagraph (4)(a)(vi) - in the circumstances (if any) that are prescribed by regulations made for the purposes of this paragraph, or after ASIC has considered the matters (if any) that are so prescribed.

(4) In this section:

(a) a reference to a restricted word or expression is a reference to:

(i) the expression stockbroker or sharebroker , or any other word or expression (whether or not in English) that is of like import to that expression; or

(ii) the expression futures broker , or any other word or expression (whether or not in English) that is of like import to that expression; or

(iii) the expression insurance broker or insurance broking , or any other word or expression (whether or not in English) that is of like import to that expression; or

(iv) the expression general insurance broker , or any other word or expression (whether or not in English) that is of like import to that expression; or

(v) the expression life insurance broker , or any other word or expression (whether or not in English) that is of like import to that expression; or

(vi) any other expression or word specified in the regulations as a restricted word or expression for the purposes of this section, or any other word or expression (whether or not in English) that is of like import to such a word or expression; and

(b) a reference to a word or expression being assumed or used includes a reference to the word or expression being assumed or used:

(i) as part of another word or expression; or

(ii) in combination with other words, letters or other symbols; and

(c) contract of insurance and insured have the same meanings as in Division 4 of Part 7.8.