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 8

Division 8 - Miscellaneous

992A Prohibition on hawking of certain financial products

(1) A person must not offer financial products for issue or sale in the course of, or because of, an unsolicited meeting with another person.

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

(2) Subsection (1) does not apply to offering of securities, hawking of which is prohibited by section 736, or to offering of managed investment products, hawking of which is prohibited by section 992AA.

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

(3) A person must not make an offer to issue or sell a financial product (other than an offer to which subsection (1) applies) in the course of, or because of, unsolicited personal contact with another person unless the other person has been:

(a) contacted only during the hours prescribed by the regulations and only if the person is not listed on the “No Contact/No Call” register in relation to the person making the contact; and

(b) given an opportunity to:

(i) register on a “No Contact/No Call” register maintained by the person making the contact at no cost to that person; and

(ii) select the time and frequency of any future contacts; and

(c) given a Product Disclosure Statement before becoming bound to acquire a financial product; and

(d) clearly informed of the importance of using the information in the Product Disclosure Statement when making a decision to acquire a financial product; and

(e) given the option of having the information in the Product Disclosure Statement read out to that person.

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

(4) In addition to other penalties for breaches of this section, a failure to comply with this section gives the other person a right of return and refund exercisable within 1 month after the expiry date of the relevant cooling-off period for the financial product, or one month and fourteen days in the event that no cooling-off period applies to the financial product, subject to the following provisions:

(a) on the exercise of the right to return the product:

(i) if the product is constituted by a legal relationship between the client and the issuer of the product - that relationship is, by force of this subsection, terminated with effect from that time without penalty to the client; and

(ii) any contract for the acquisition of the product by the client is, by force of this subsection, terminated with effect from that time without penalty to the client;

(b) the regulations may provide for consequences and obligations (in addition to those provided for in paragraph (a)) to apply if the right to return a financial product is exercised;

(c) the regulations may do any or all of the following:

(i) provide that a specified subclass of financial products that would otherwise be covered by this subsection is excluded from this subsection;

(ii) provide additional requirements to be satisfied before this subsection applies in relation to a class or subclass of financial products;

(iii) provide that this subsection does not apply in relation to the provision of a financial product in specified circumstances.

992AA Prohibition of hawking of managed investment products

(1) A person must not offer interests in managed investment schemes for issue or sale in the course of, or because of:

(a) an unsolicited meeting with another person; or

(b) an unsolicited telephone call to another person;

unless the offer is exempted under subsection (2).

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

(2) Subsection (1) does not apply to an offer of interests in managed investment schemes if:

(a) the offer is not to a retail client;

(b) the offer is an offer of interests in a listed managed investment scheme made by telephone by a financial services licensee; or

(c) the offer is made to a client by a financial services licensee through whom the client has acquired or disposed of an interest in a managed investment scheme in the previous 12 months.

992B Exemptions and modifications by ASIC

(1) ASIC may, subject to subsection (2):

(a) exempt a person or class of persons from all or specified provisions of this Part; or

(b) exempt a financial product or class of financial products from all or specified provisions of this Part; or

(c) declare that this Part applies in relation to a person or a financial product, or a class of persons or financial products, as if specified provisions of this Part were omitted, modified or varied as specified in the declaration.

(2) However, ASIC cannot declare that provisions of this Part are modified so that they apply in relation to persons or financial products to which they would not otherwise apply.

(3) An exemption may apply unconditionally or subject to specified conditions. A person to whom a condition specified in an exemption applies must comply with the condition. The Court may order the person to comply with the condition in a specified way. Only ASIC may apply to the Court for the order.

(4) An exemption or declaration must be in writing and ASIC must publish notice of it in theGazette.

(5) If conduct (including an omission) of a person would not have constituted an offence if a particular declaration under paragraph (1)(c) had not been made, that conduct does not constitute an offence unless, before the conduct occurred (in addition to complying with the gazettal requirement of subsection (4)):

(a) the text of the declaration was made available by ASIC on the Internet; or

(b) ASIC gave written notice setting out the text of the declaration to the person.

In a prosecution for an offence to which this subsection applies, the prosecution must prove that paragraph (a) or (b) was complied with before the conduct occurred.

(6) For the purpose of this section, the provisions of this Part include:

(a) definitions in this Act, or in the regulations, as they apply to references in this Part; and

(b) any provisions of Part 10.2 (transitional provisions) that relate to provisions of this Part.