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 7.8 - Division 3

Division 3 - Dealing with other property of clients

984A Property to which Division applies

(1) Subject to subsection (2), this Division applies to property other than money (for example, share certificates) given to a financial services licensee (the licensee ) in the following circumstances:

(a) the property is given in connection with:

(i) a financial service that has been provided, or that will or may be provided, to a person (the client ); or

(ii) a financial product held by a person (the client ); and

(b) the property is given:

(i) by the client; or

(ii) by a person acting on behalf of the client; or

(iii) for the benefit of the client; and

(c) the licensee is accountable for the property.

(2) The regulations may:

(a) exempt property given in specified circumstances from some or all of the provisions of this Division; or

(b) declare that this Division applies in relation to property given in specified circumstances as if specified provisions of this Division were omitted, modified or varied as set out in the regulations.

The circumstances that may be specified include (but are not limited to) that the property was given in connection with a specified class of financial product or financial service.

(3) An exemption in regulations made for the purposes of paragraph (2)(a) may be made subject to conditions specified in, or imposed in accordance with, the regulations. The regulations may provide for consequences of a contravention of a condition.

984B How property to which this Division applies is to be dealt with

(1) Subject to subsection (2), the licensee must ensure that property to which this Division applies is only dealt with in accordance with:

(a) the requirements (if any) specified in regulations made for the purposes of this paragraph; and

(b) subject to those requirements:

(i) the terms and conditions on which the property was given to the licensee; and

(ii) any subsequent instructions given by the client.

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

(2) If:

(a) the financial service referred to in subparagraph 984A(1)(a)(i) isor relates to a dealing in a derivative; or

(b) the financial product referred to in subparagraph 984A(1)(a)(ii) is a derivative;

the property concerned may also be used for the purpose of meeting obligations incurred by the licensee in connection with margining, guaranteeing, securing, transferring, adjusting or settling dealings in derivatives by the licensee (including dealings on behalf of people other than the client).