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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 7.7 - Division 2

Division 2 - Person provided with financial service as retail client to be given a Financial Services Guide

Subdivision A - Requirement for a Financial Services Guide to be given

941A Obligation on financial services licensee to give a Financial Services Guide if financial service provided to person as a retail client

(1) A financial services licensee (the providing entity ) must give a person a Financial Services Guide in accordance with this Division if the providing entity provides a financial service to the person (the client ) as a retail client.

(2) This section has effect subject to section 941C.

941B Obligation on authorised representative to give a Financial Services Guide if financial service provided to person as a retail client

(1) An authorised representative (the providing entity ) of a financial services licensee (the authorising licensee ), or of 2 or more financial services licensees (the authorising licensees ), must give a person a Financial Services Guide in accordance with this Division if the providing entity, as a representative of the authorising licensee, or one or more of the authorising licensees, provides a financial service to the person (the client ) as a retail client.

Note: If the providing entity is the authorised representative of 2 or more financial services licensees, each of those licensees is, for the purposes of this Division, an authorising licensee in relation to the financial service provided to the client, even though the providing entity may not have been acting as representative of each of those licensees in providing the service to the client.

(2) A Financial Services Guide must not be given to the person by the providing entity unless the authorising licensee, or each of the authorising licensees, has authorised its distribution by the providing entity.

(3) This section has effect subject to section 941C.

941C Situations in which a Financial Services Guide is not required

Client has already received the information

(1) The providing entity does not have to give the client a Financial Services Guide (the new FSG ) if the client has already received a Financial Services Guide that contains all of the information that the new FSG is required to contain.

Providing entity is product issuer dealing in own products

(2) The providing entity does not have to give the client a Financial Services Guide if:

(a) the providing entity is an issuer of financial products; and

(b) the financial service is a dealing (see section 766C) in financial products, other than derivatives able to be traded on a licensed market, issued by the providing entity, and does not also relate to financial products issued by someone else.

Note: The issuer will however have to comply with the Product Disclosure Statement requirements (see Division 2 of Part 7.9).

Providing entity is merely operating a registered scheme

(3) The providing entity does not have to give the client a Financial Services Guide if:

(a) the providing entity is the responsible entity of a registered scheme; and

(b) the financial service consists only of the operation of that scheme by the providing entity.

Financial product advice given in a public forum

(4) The providing entity does not have to give the client a Financial Services Guide if the financial service is general advice provided in a public forum.

(4A) The regulations may define what constitutes a public forum for the purposes of subsection (4).

(5) However, if subsection (4) applies and the client is not given a Financial Services Guide before the advice is provided, the client must instead, before the advice is provided, be given the information that would be required to be in the Financial Services Guide by paragraphs 942B(2)(a), (e) and (f), or paragraphs 942C(2)(a), (c), (f) and (g), as the case requires.

Certain basic deposit and other products

(6) The providing entity does not have to give the client a Financial Services Guide if the financial service is a dealing (see section 766C) in, or otherwise relates to, any of the following:

(a) a basic deposit product;

(b) a facility for making non-cash payments (see section 763D) that is related toa basic deposit product;

(7) However, if subsection (6) applies and the client is not given a Financial Services Guide before the service is provided, the client must instead, before the service is provided, be given the information that would be required to be in the Financial Services Guide by paragraphs 942B(2)(a) and (h), or paragraphs 942C(2)(a) and (i), as the case requires.

Regulations may specify other exemptions

(8) A Financial Services Guide does not have to be given to the client in circumstances specified in regulations made for the purposes of this subsection.

941D Timing of giving Financial Services Guide

General rule

(1) Subject to this section, the Financial Services Guide must be given to the client as soon as practicable after it becomes apparent to the providing entity that the financial service will be, or is likely to be, provided to the client, and must in any event be given to the client before the financial service is provided.

Time critical cases

(2) If:

(a) the client expressly instructs that they require the financial service to be provided immediately, or by a specified time; and

(b) it is not reasonably practicable to give the Financial Services Guide to the client before the service is provided as so instructed;

the providing entity must instead give the client a statement that complies with subsection (3) before the service is provided.

(3) The statement must contain:

(a) the information that would be required to be in the Financial Services Guide by paragraphs 942B(2)(e), (f) and (i), or paragraphs 942C(2)(f), (g) and (j), as the case requires; and

(b) such other information as would be required to be in the Financial Services Guide as is particularly relevant to the financial service to be provided.

(4) The client must then be given the Financial Services Guide within 5 days after being given the statement, or sooner if practicable.

941E Information must be up to date

The information in the Financial Services Guide must be up to date as at the time when it is given to the client.

Note: A Supplementary Financial Services Guide containing updated information may be given with a Financial Services Guide that has become out of date. The updated information is taken to be included in the Financial Services Guide (see section 943D.)

941F Obligation to give updated Financial Services Guide

If:

(a) the Financial Services Guide is given to the client before the financial service is provided; and

(b) the following conditions are satisfied:

(i) there is a change in circumstances before the service is provided, and the Financial Services Guide does not contain the information it would be required to contain if it were given to a person immediately after that change;

(ii) the fact that the Financial Services Guide does not contain the up to date information is materially adverse from the point of view of a reasonable person deciding, as a retail client, whether to proceed to be provided with the financial service;

the providing entity must, before the service is provided, give the client:

(d) a Supplementary Financial Services Guide (see Subdivision C) that updates the information in the Financial Services Guide.

Subdivision B - Content and authorisation of Financial Services Guide

942A Title of Financial Services Guide

(1) The title “Financial Services Guide” must be used on the cover of, or at or near the front of, a Financial Services Guide.

(2) In any other part of a Financial Services Guide, “Financial Services Guide” may be abbreviated to “FSG”.

942B Financial Services Guide given by financial services licensee - main requirements

(1) This section applies if the providing entity is a financial services licensee.

(2) Subject to subsection (3) and to the regulations (see subsection (4)), the Financial Services Guide must include the following statements and information:

(a) a statement setting out the name and contact details of the providing entity; and

(b) a statement setting out any special instructions about how the client may provide instructions to the providing entity; and

(c) information about the kinds of financial services (the authorised services ) that the providing entity is authorised by its licence to provide, and the kinds of financial products to which those services relate; and

(d) information about who the providing entity acts for when providing the authorised services; and

(e) information about the remuneration (including commission) or other benefits that any of the following is to receive in respect of, or that is attributable to, the provision of any of the authorised services:

(i) the providing entity;

(ii) a related body corporate of the providing entity;

(iii) a director or employee of the providing entity or a related body corporate;

(iv) an associate of any of the above;

(v) any other person in relation to whom the regulations require the information to be provided;

(f) information about any associations or relationships between the providing entity, or any related body corporate, and the issuers of any financial products, being associations or relationships that might reasonably be expected to be capable of influencing the providing entity in providing any of the authorised services; and

(g) if the providing entity provides execution-related telephone advice (see section 946B) - a statement in relation to which the following requirements are satisfied:

(i) the statement must indicate that the client may request a record of execution-related telephone advice that is provided to them, if they have not already been provided with a record of that advice;

(ii) the statement must set out particulars of how the client may request such a record;

(iii) any limitations in those particulars on the time within which the client may request such a record must be consistent with any applicable requirements in regulations made for the purposes of this subparagraph or, if there are no such applicable requirements, must be such as to allow the client a reasonable opportunity to request a record of the advice; and

(h) information about the dispute resolution system that covers complaints by persons to whom the providing entity provides financial services, and about how that system may be accessed; and

(i) if the providing entity acts under a binder in providing any of the authorised services - a statement that:

(i) identifies the services provided under the binder; and

(ii) states that they are provided under a binder; and

(iii) explains the significance of the services being provided under a binder; and

(j) if the providing entity is a participant in a licensed market or a licensed CS facility - a statement that the providing entity is a participant in that market or facility; and

(k) any other statements or information required by the regulations.

Note: A Supplementary Financial Services Guide containing additional information may be given with a Financial Services Guide that does not contain all the required information. The additional information is taken to be included in the Financial Services Guide (see section 943D.)

(3) Subject to subsection (4), the level of information about a matter that is required is such as a person would reasonably require for the purpose of making a decision whether to acquire financial services from the providing entity as a retail client.

(4) The regulations may provide all or any of the following:

(a) that a provision of subsection (2) does not apply in a particular situation;

(b) that particular information is not required by a provision of subsection (2), either in a particular situation or generally;

(c) a more detailed statement of the information that is required by a provision of subsection (2), either in a particular situation or generally;

(d) that certain supplementary information must be given or made available to the client in some other way.

(5) The Financial Services Guide must be dated. The date must be the date on which the Financial Services Guide was prepared or its preparation was completed.

(6) The Financial Services Guide may also contain other information.

(6A) The information included in the Financial Services Guide must be worded and presented in a clear, concise and effective manner.

(7) The regulations may require the providing entity, in circumstances specified in the regulations, to provide the client, on request, with more detailed information about remuneration (including commission) or other benefits of a kind referred to in paragraph (2)(e).

(8) If:

(a) the Financial Services Guide includes a statement to the effect that a client may request a record of execution-related telephone advice; and

(b) the client is provided with execution-related telephone advice to which that statement applies; and

the providing entity must comply with a request made in accordance with that statement for a record of that advice.

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

942C Financial Services Guide given by authorised representative - main requirements

(1) This section applies if the providing entity is an authorised representative.

(2) Subject to subsection (3) and to the regulations (see subsection (4)), the Financial Services Guide must include the following statements and information:

(a) a statement setting out the name and contact details of the providing entity; and

(b) a statement setting out any special instructions about how the client may provide instructions to the providing entity; and

(i) setting out the name and contact details of the authorising licensee, or of each of the authorising licensees; and

(ii) stating that the providing entity is the authorised representative of that licensee or those licensees; and

(d) information, in relation to the authorising licensee or each of the authorising licensees, about the kinds of financial services (the authorised services ) that the providing entity provides as representative of the authorising licensee, and the kinds of financial products to which those services relate; and

(e) information about who the authorising licensee, or each of the authorising licensees, acts for when financial services are provided on their behalf by the providing entity; and

(f) information about the remuneration (including commission) or other benefits that any of the following is to receive in respect of, or that is attributable to, the provision of any of the authorised services:

(i) the providing entity;

(ii) an employer of the providing entity;

(iii) the authorising licensee, or any of the authorising licensees;

(iv) an employee or director of the authorising licensee, or of any of the authorising licensees;

(v) an associate of any of the above;

(vi) any other person in relation to whom the regulations require the information to be provided; and

(g) information about any associations or relationships between:

(i) the providing entity, or any employer of the providing entity, and the issuers of any financial products; or

(ii) the authorising licensee, or any of the authorising licensees, or any related body corporate of the authorising licensee or any of the authorising licensees, and the issuers of any financial products;

being associations or relationships that might reasonably be expected to be capable of influencing the providing entity in providing any of the authorised services; and

(h) if the providing entity, when acting as representative of the authorising licensee or any of the authorising licensees, provides execution-related telephone advice (see section 946B) - a statement in relation to which the following requirements are satisfied:

(ii) the statement must set out particulars of how the client may request such a record;

(i) information about the dispute resolution system that covers complaints by persons to whom the providing entity provides financial services when acting as representative of the authorising licensee or any of the authorising licensees, and about how that system may be accessed; and

(j) if the providing entity acts under a binder in providing any of the authorised services - a statement that:

(i) identifies the services provided under the binder; and

(ii) states that they are provided under a binder; and

(iii) explains the significance of the services being provided under a binder; and

(k) if the providing entity, or the authorising licensee or any of the authorising licensees, is a participant in a licensed market or a licensed CS facility - a statement that the providing entity or authorising licensee is a participant in that market or facility; and

(l) a statement to the effect that the distribution of the Financial Services Guide by the providing entity has been authorised by the authorising licensee, or by each of the authorising licensees; and

(m) any other statements or information required by the regulations.

(3) Subject to subsection (4), the level of detail of information about a matter that is required is such as a person would reasonably require for the purpose of making a decision whether to acquire financial services from the providing entity as a retail client.