CHAPTER 7
-
FINANCIAL SERVICES AND MARKETS
Note: This Chapter applies to a CCIV in a modified form: see Division
4
of Part
8B.7
.
History
Ch 7 amended by No 8 of 2022, s 3, Sch 2[165] (effective 1 July 2022).
Ch 7 inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
As Act No 122 of 2001 repealed Ch 7 and 8 the history notes for Ch 7 use
"
inserted
"
and references to the former provisions have been removed.
PART 7.1
-
PRELIMINARY
Division 1
-
Object of Chapter and outline of Chapter
SECTION 760A
760A
OBJECT OF CHAPTER
The main object of this Chapter is to promote:
(a)
confident and informed decision making by consumers of financial products and services while facilitating efficiency, flexibility and innovation in the provision of those products and services; and
(aa)
the provision of suitable financial products to consumers of financial products; and
(b)
fairness, honesty and professionalism by those who provide financial services; and
(c)
fair, orderly and transparent markets for financial products; and
(d)
the reduction of systemic risk and the provision of fair and effective services by clearing and settlement facilities.
History
S 760A amended by No 50 of 2019, s 3, Sch 1[1] (effective 5 April 2021).
S 760A inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
SECTION 760B
760B
OUTLINE OF CHAPTER
An outline of this Chapter is set out in the table below.
Part-by-Part outline of Chapter 7
|
|
Part...
|
Covers...
|
1
|
7.1 |
meaning of some terms relating to financial services and markets |
2
|
7.2 |
licensing of financial markets |
|
|
other matters relating to financial markets |
2A |
7.2A |
supervision of financial markets |
3
|
7.3 |
licensing of clearing and settlement facilities |
|
|
other matters relating to clearing and settlement facilities |
4
|
7.4 |
limitation on ownership of certain licensees |
|
|
individuals who are disqualified from being involved in certain licensees |
5
|
7.5 |
compensation regimes for financial markets |
5A |
7.5A |
regulation of derivative transactions and derivative trade repositories |
5B |
7.5B |
regulation of financial benchmarks |
6
|
7.6 |
licensing of providers of financial services |
|
|
other related matters (e.g. restrictions on use of terminology; agreements with unlicensed persons relating to provision of financial services) |
7
|
7.7 |
disclosure requirements for financial services licensees and their authorised representatives |
|
|
disclosure requirements for certain people who are not required to be licensed |
7A |
7.7A |
best interests obligations |
|
|
charging ongoing fees to clients |
|
|
ban on conflicted remuneration and other remuneration |
8
|
7.8 |
other conduct requirements for financial services licensees (e.g. dealing with client money and property; financial records, statements and audit) |
|
|
special provisions relating to insurance |
|
|
special provisions relating to margin lending facilities |
8A |
7.8A |
design and distribution requirements relating to financial products |
9
|
7.9 |
financial product disclosure requirements |
|
|
other requirements relating to issue, sale and purchase of financial products |
9A |
7.9A |
intervention powers in relation to financial products |
10 |
7.10 |
market misconduct and other prohibited conduct relating to financial products and services |
10A |
7.10A |
authorisation and regulation of an external dispute resolution scheme for financial complaints |
|
|
additional provisions relating to superannuation complaints |
11 |
7.11 |
title to, and transfer of, certain securities and other financial products |
12 |
7.12 |
qualified privilege in certain situations |
|
|
other miscellaneous matters |
History
S 760B amended by No 76 of 2023, s 3, Sch 2[287] (effective 20 October 2023).
S 760B amended by No 76 of 2023, s 3, Sch 6[10] (effective 21 September 2023).
S 760B amended by No 50 of 2019, s 3, Sch 1[2] (effective 5 April 2021).
S 760B amended by No 64 of 2020, s 3, Sch 3[24] (effective 23 June 2020).
S 760B amended by No 50 of 2019, s 3, Sch 2[1] (effective 6 April 2019).
S 760B amended by No 178 of 2012, s 3, Sch 1, Pt 1[4].
S 760B amended by No 67 of 2012, s 3, Sch 1[1].
S 760B amended by No 26 of 2010, Sch 1[5].
S 760B amended by No 108 of 2009, Sch 1
[
1].
S 760B amended by No 141 of 2003, s 3, Sch 1
[
1].
S 760B inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
Division 2
-
Meaning of some terms relating to financial services and markets
History
Div 2 heading substituted by No 76 of 2023, s 3, Sch 2[288] (effective 20 October 2023).
SECTION 761A
761A
MEANING OF SOME TERMS RELATING TO FINANCIAL SERVICES AND MARKETS
In this Act:
AFCA
(short for the Australian Financial Complaints Authority) means the operator of the AFCA scheme.
AFCA regulated superannuation scheme
means:
(a)
the scheme provided for by the
Australian Defence Force Cover Act 2015
; and
(b)
if, under the AFCA scheme, an exempt public sector superannuation scheme may elect to join the AFCA scheme, and such a superannuation scheme so elects
-
that superannuation scheme.
AFCA scheme
means the external dispute resolution scheme for which an authorisation under Part
7.10A
is in force.
AFCA staff member
means:
(a)
a director, officer or employee of AFCA; or
(b)
a person engaged as a consultant to, or to perform services for, AFCA for the purposes of the AFCA scheme.
annuity policy
means a life policy in relation to an annuity that is declared to be a superannuation policy under regulations made for the purposes of paragraph (b) of the definition of
superannuation policy
in the Schedule to the
Life Insurance Act 1995
.
authorised clearing and settlement facility
means:
(a)
a licensed CS facility; or
(b)
a clearing and settlement facility that satisfies the following requirements:
(i)
the operator of the facility is authorised to operate the facility in the foreign country in which the operator
'
s principal place of business is located;
(ii)
any requirements specified in regulations made for the purposes of this subparagraph.
binder
means an authorisation given to a person by a financial services licensee who is an insurer to do either or both of the following:
(a)
enter into contracts that are risk insurance products on behalf of the insurer as insurer;
(b)
provide a claims handling and settling service, on behalf of the insurer as insurer, in relation to risk insurance products;
but does not include an authorisation of a kind referred to in paragraph (a) that is limited to effecting contracts of insurance by way of interim cover unless there is also in existence an authority given by the insurer to the person to enter into, on behalf of the insurer and otherwise than by way of interim cover, contracts of insurance.
CGS depository interest
means a depository interest (within the meaning of the
Commonwealth Inscribed Stock Act 1911
) that can be transferred through a licensed CS facility.
death benefit decision-maker
means any of the following persons:
(a)
the trustee of:
(i)
a regulated superannuation fund; or
(ii)
an AFCA regulated superannuation scheme; or
(iii)
an approved deposit fund;
(b)
an insurer in relation to a superannuation complaint;
(c)
an RSA provider.
derivative retail client money
: money paid as mentioned in subsection
981A(1)
is
derivative retail client money
if:
(a)
either:
(i)
the financial service referred to in subparagraph
981A(1)(a)(i)
is or relates to a dealing in a derivative; or
(ii)
the financial product referred to in subparagraph
981A(1)(a)(ii)
is a derivative; and
(b)
the financial service or product would be provided to the client as a retail client if:
(i)
the service or product were provided to the client when the money is paid; and
(ii)
section
761GA
(about sophisticated investors) did not apply.
derivative trade data
means:
(a)
information about derivative transactions, or about positions relating to derivative transactions; or
(b)
information (including statistical data) that is created or derived from information referred to in paragraph (a).
financial services law
means:
(a)
a provision of this Chapter or of Chapter
5C
,
5D
,
6
,
6A
,
6B
,
6C
,
6D
,
8A
or
8B
; or
(b)
a provision of Chapter
9
as it applies in relation to a provision referred to in paragraph (a); or
(c)
a provision of the Passport Rules for this jurisdiction; or
(d)
a provision of Division
2
of Part
2
of the ASIC Act; or
(e)
any other Commonwealth, State or Territory legislation that covers conduct relating to the provision of financial services (whether or not it also covers other conduct), but only in so far as it covers conduct relating to the provision of financial services; or
(f)
in relation to a financial services licensee that is a licensed trustee company (in addition to paragraphs (a) to (e))
-
any rule of common law or equity that covers conduct relating to the provision of financial services that are traditional trustee company services (whether or not it also covers other conduct), but only in so far as it covers conduct relating to the provision of such services.
foreign exchange contract
means a contract:
(a)
to buy or sell currency (whether Australian or not); or
(b)
to exchange one currency (whether Australian or not) for another (whether Australian or not).
funeral benefit
:
(a)
means a benefit that consists of the provision of funeral, burial or cremation services, with or without the supply of goods connected with such services; but
(b)
does not include a scheme or arrangement for the provision of benefits consisting of the payment of money, on the death of a person, for the purpose of meeting the whole or a part of the expenses of and incidental to the funeral, burial or cremation of the person.
insurer
, in relation to a superannuation complaint, means the life company (within the meaning of the
Life Insurance Act 1995
) that is a party to the policy to which the complaint relates.
licensed derivative trade repository
means a derivative trade repository the operation of which is authorised by an Australian derivative trade repository licence.
life policy fund
means a regulated superannuation fund, or an AFCA regulated superannuation scheme, for the purpose of which the trustee maintains, in relation to at least some of the members of the fund:
(a)
individual life policies covering each of those members; or
(b)
a single life policy covering all of those members.
relevant personal circumstances
, in relation to advice provided or to be provided to a person in relation to a matter, are such of the person
'
s objectives, financial situation and needs as would reasonably be considered to be relevant to the advice.
sale
, in relation to an annuity policy, includes any activity undertaken, or representation made:
(a)
at the time of, or preliminary to, the entry into the policy, so that the policy as so entered into extends to a particular person; and
(b)
at the time of, or preliminary to, the variation of the policy, so that the policy as so varied affects a particular person.
title document
for a financial product means a certificate or other document evidencing ownership of the financial product.
History
S 761A substituted by No 76 of 2023, s 3, Sch 2[289] (effective 20 October 2023).
SECTION 761B
MEANING OF ARRANGEMENT
761B(1)
For the purposes of this Chapter,
arrangement
means a contract, agreement, understanding, scheme or other arrangement (as existing from time to time):
(a)
whether formal or informal, or partly formal and partly informal; and
(b)
whether written or oral, or partly written and partly oral; and
(c)
whether or not enforceable, or intended to be enforceable, by legal proceedings and whether or not based on legal or equitable rights.
761B(2)
For the purposes of this Part, if:
(a)
an arrangement (as defined in subsection
(1)
), when considered by itself, does not constitute a derivative, or some other kind of financial product; and
(b)
that arrangement, and one or more other arrangements, if they had instead been a single arrangement, would have constituted a derivative or other financial product; and
(c)
it is reasonable to assume that the parties to the arrangements regard them as constituting a single scheme;
the arrangements are to be treated as if they together constituted a single arrangement.
History
S 761B substituted by No 76 of 2023, s 3, Sch 2[289] (effective 20 October 2023).
S 761B inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
SECTION 761C
761C
MEANING OF CARRY ON A FINANCIAL SERVICES BUSINESS
(Repealed by No 76 of 2023, s 3, Sch 2[290] (effective 20 October 2023).)
SECTION 761CAA
MEANING OF
CLAIMANT INTERMEDIARY
761CAA(1)
A person is a
claimant intermediary
if the person:
(a)
carries on a business of representing persons insured under insurance products in pursuing claims under those products; and
(b)
represents those persons insured for a benefit given as consideration for that service, whether a monetary benefit or otherwise and whether given to the person providing the services or another person nominated by that person.
761CAA(2)
The regulations may prescribe circumstances in which a person is not a
claimant intermediary
despite subsection
(1)
.
History
S 761CAA inserted by No 135 of 2020, s 3, Sch 7
[
5] (effective 1 January 2021).
SECTION 761CA
761CA
MEANING OF CLASS AND KIND OF FINANCIAL PRODUCTS AND FINANCIAL SERVICES
The regulations may include provisions identifying, or providing for the identification of, what constitutes a
class
or
kind
of financial products or financial services for the purposes of a provision or provisions of this Act.
History
S 761CA amended by No 76 of 2023, s 3, Sch 2[291] (effective 20 October 2023).
S 761CA inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
SECTION 761D
MEANING OF
DERIVATIVE
761D(1)
Subject to subsections
(2)
,
(3)
and
(4)
, a
derivative
is an arrangement in relation to which the following conditions are satisfied:
(a)
under the arrangement, a party to the arrangement must, or may be required to, provide at some future time consideration of a particular kind or kinds to someone; and
(b)
that future time is not less than the number of days, prescribed by regulations made for the purposes of this paragraph, after the day on which the arrangement is entered into; and
(c)
the amount of the consideration, or the value of the arrangement, is ultimately determined, derived from or varies by reference to (wholly or in part) the value or amount of something else (of any nature whatsoever and whether or not deliverable), including, for example, one or more of the following:
(i)
an asset;
(ii)
a rate (including an interest rate or exchange rate);
(iii)
an index;
(iv)
a commodity.
History
S 761D(1) amended by No 76 of 2023, s 3, Sch 2[292] (effective 20 October 2023).
761D(2)
Without limiting subsection
(1)
, anything declared by the regulations to be a derivative is a
derivative
. A thing so declared is a derivative despite anything in subsections
(3)
and
(4)
.
History
S 761D(2) amended by No 76 of 2023, s 3, Sch 2[293] (effective 20 October 2023).
761D(3)
Subject to subsection
(2)
, none of the following is a
derivative
even if covered by subsection
(1)
:
(a)
an arrangement in relation to which subparagraphs (i), (ii) and (iii) are satisfied:
(i)
a party has, or may have, an obligation to buy, and another party has, or may have, an obligation to sell, tangible property (other than Australian or foreign currency) at a price and on a date in the future; and
(ii)
the arrangement does not permit the seller
'
s obligations to be wholly settled by cash, or by set-off between the parties, rather than by delivery of the property; and
(iii)
neitherusual market practice, nor the rules of a licensed market or a licensed CS facility, permits the seller
'
s obligations to be closed out by the matching up of the arrangement with another arrangement of the same kind under which the seller has offsetting obligations to buy;
but only to the extent that the arrangement deals with that purchase and sale;
(b)
a contract for the future provision of services;
(c)
anything that is covered by a paragraph of subsection
764A(1)
, other than paragraph (c) of that subsection;
(d)
anything declared by the regulations not to be a derivative.
History
S 761D(3) amended by No 76 of 2023, s 3, Sch 2[294] and
[
295] (effective 20 October 2023).
761D(4)
Subject to subsection
(2)
, an arrangement under which one party has an obligation to buy, and the other has an obligation to sell, property is not a
derivative
merely because the arrangement provides for the consideration to be varied by reference to a general inflation index such as the Consumer Price Index.
History
S 761D(4) amended by No 76 of 2023, s 3, Sch 2[296] (effective 20 October 2023).
S 761D inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
SECTION 761DA
MEANING OF
INSURANCE CLAIMS MANAGER
761DA(1)
A person is an
insurance claims manager
if:
(a)
the person carries on a business of providing claims handling and settling services on behalf of one or more insurers; and
(b)
where the person, as part of that business, also provides goods or other services
-
providing claims handling and settling services on behalf of one or more insurers is the primary part of the business.
761DA(2)
The regulations may prescribe:
(a)
circumstances in which, for the purposes of subsection
(1)
, providing claims handling and settling services on behalf of one or more insurers is taken to be the primary part of a business carried on by a person; and
(b)
circumstances in which, for the purposes of subsection
(1)
, providing claims handling and settling services on behalf of one or more insurers is taken not to be the primary part of a business carried on by a person.
History
S 761DA inserted by No 135 of 2020, s 3, Sch 7
[
6] (effective 1 January 2021).
SECTION 761E
MEANING OF ACQUIRE, ISSUE AND PROVIDE
761E(1)
General.
This section defines when a financial product is
issued
to a person. It also defines who the
issuer
of a financial product is. If a financial product is issued to a person:
(a)
the person
acquires
the product from the issuer; and
(b)
the issuer
provides
the product to the person.
Note: Some financial products can also be acquired from, or provided by, someone other than the issuer (e.g. on secondary trading in financial products).
History
S 761E(1) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
761E(2)
Issuing a financial product.
Subject to this section, a financial product is
issued
to a person when it is first issued, granted or otherwise made available to a person.
History
S 761E(2) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
761E(3)
Subject to this section, a financial product specified in the table is issued to a person when the event specified for that product occurs:
(Table)
(Table)
When particular financial products are issued
|
Item
|
Financial product
|
Event
|
1 |
superannuation product |
the person becomes a member of the fund concerned |
2 |
RSA |
the account concerned is opened in the person's name |
3 |
derivative |
the person enters into the legal relationship that constitutes the financial product |
4 |
margin lending facility |
the person enters into the legal relationship that constitutes the margin lending facility, as the client under the facility |
History
S 761E(3) amended by No 76 of 2023, s 3, Sch 2[298] (effective 20 October 2023).
S 761E(3) amended by No 70 of 2015, s 3, Sch 1
[
31].
S 761E(3) amended by No 108 of 2009, Sch 1
[
8].
S 761E(3) amended by No 45 of 2008, s 3, Sch 2
[
7].
S 761E(3) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
761E(3A)
For the avoidance of doubt, none of the following are taken to give rise to the issue of a financial product to a person (the
client
):
(a)
the client making a further contribution to a superannuation fund of which the client is already a member;
(aa)
an employer of the client making a further contribution, for the benefit of the client, to a superannuation fund of which the client is already a member;
(b)
the client making a further deposit into an RSA maintained in the client's name;
(ba)
(Repealed)
(c)
the client making a further payment under a life insurance investment product;
(d)
the client making a further deposit into a deposit product;
(e)
the client engaging in conduct specified in regulations made for the purposes of this paragraph in relation to a financial product already held by the client.
History
S 761E(3A) amended by No 70 of 2015, s 3, Sch 1
[
32].
S 761E(3A) amended by No 45 of 2008, s 3, Sch 2
[
8].
S 761E(3A) amended by No 141 of 2003, s 3, Sch 2
[
12].
S 761E(3A) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
761E(4)
Issuer of a financial product.
Subject to this section, the
issuer
, in relation to a financial product issued to a person (the
client
), is the person responsible for the obligations owed, under the terms of the facility that is the product:
(a)
to, or to a person nominated by, the client; or
(b)
if the product has been transferred from the client to another person and is now held by that person or another person to whom it has subsequently been transferred
-
to, or to a person nominated by, that person or that other person.
Note: For example, the issuer of a direct debit facility is the financial institution with which the account to be debited is held, rather than the persons to whom payments can be made using the facility.
History
S 761E(4) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
761E(4A)
For the purposes of subsection
(4)
, if the financial product issued to the client is an interest in a notified foreign passport fund, the operator of the fund is the person responsible for the obligations mentioned in that subsection that are owed under the terms of the facility that is the product.
History
S 761E(4A) inserted by No 61 of 2018, s 3, Sch 2[207] (effective 18 September 2018).
761E(5)
Subject to subsection
(7)
, each person who is a party to a financial product that:
(a)
is a derivative; and
(b)
is not entered into, or acquired, on a financial market;
is taken to be an issuer of the product.
Note 1: Under paragraph
(1)(a)
, each person who is a party to the derivative will also acquire the financial product at the time of its issue as specified in subsection
(3)
.
Note 2: Although each party to the derivative is an issuer, whether any particular party has disclosure or other obligations under this Chapter will depend on the circumstances (e.g. whether the issue occurs in the course of a business of issuing financial products and whether any of the other parties is a retail client).
History
S 761E(5) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
761E(6)
Subject to subsection
(7)
, the issuer of a financial product that:
(a)
is a derivative; and
(b)
is entered into, or acquired, on a financial market;
is taken to be:
(c)
if the product is entered into, or acquired, on the market through an arrangement made by a financial services licensee acting on behalf of another person
-
the financial services licensee; or
(d)
if the product is entered into, or acquired, on the market through an arrangement made by an authorised representative of a financial services licensee acting on behalf of another person (not being the licensee)
-
the financial services licensee; or
(e)
if neither paragraph (c) nor (d) applies
-
the market operator.
History
S 761E(6) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
761E(7)
The regulations may make provision determining all or any of the following:
(a)
the meaning of
issue
(and/or related parts of speech, including
issuer
) in relation to a class of financial products;
(b)
the meaning of
acquire
(and/or related parts of speech) in relation to a class of financial products;
(c)
the meaning of
provide
(and/or related parts of speech) in relation to a class of financial products.
Regulations made for the purposes of this subsection have effect despite anything else in this section.
History
S 761E(7) amended by No 76 of 2023, s 3, Sch 2[299] (effective 20 October 2023).
S 761E(7) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
SECTION 761EA
MEANING OF
MARGIN LENDING FACILITY
,
MARGIN CALL
AND ASSOCIATED EXPRESSIONS
761EA(1)
A
margin lending facility
is:
(a)
a standard margin lending facility; or
(b)
a non-standard margin lending facility; or
(c)
a facility of a kind that has been declared by ASIC to be a margin lending facility under subsection (8);
unless the facility is of a kind that has been declared by ASIC not to be a margin lending facility under subsection (9).
Standard margin lending facilities
761EA(2)
A
standard margin lending facility
is a facility under the terms of which:
(a)
credit is, or may be, provided by a person (the
provider
) to a natural person (the
client
); and
(b)
the credit provided is, or must be, applied wholly or partly:
(i)
to acquire one or more financial products, or a beneficial interest in one ormore financial products; or
(ii)
to repay, wholly or partly, another credit facility (within the meaning of subparagraph
765A(1)(h)(i)
), the credit provided under which was applied, wholly or partly, to acquire one or more financial products, or a beneficial interest in one or more financial products; and
(c)
the credit provided is, or must be, secured by property (the
secured property
); and
(d)
the secured property consists, or must consist, wholly or partly of one or more marketable securities, or a beneficial interest in one or more marketable securities; and
(e)
if the current LVR of the facility exceeds a ratio, percentage, proportion or level (however described) determined under the terms of the facility, then:
(i)
the client becomes required to take action; or
(ii)
the provider becomes entitled to take action; or
(iii)
another person becomes required or entitled to take action;
in accordance with the terms of the facility to reduce the current LVR of the facility.
761EA(3)
The
current LVR
of a standard margin lending facility at a particular time is the ratio, percentage, proportion or level (however described) that:
(a)
is determined under the terms of the facility; and
(b)
under the terms of the facility, represents a particular relationship between:
(i)
the amount of the debt owing by the client, or credit provided by the provider, or both, under the facility at that time; and
(ii)
the value of the secured property determined at that time under the terms of the facility.
761EA(4)
[
"
margin call
"
in relation to standard margin lending facility]
A standard margin lending facility is in
margin call
when paragraph (2)(e) applies in relation to the facility.
Non-standard margin lending facilities
761EA(5)
A
non-standard margin lending facility
is a facility under the terms of which:
(a)
a natural person (the
client
) transfers one or more marketable securities, or a beneficial interest in one or more marketable securities (the
transferred securities
) to another person (the
provider
); and
(b)
the provider transfers property to the client (the
transferred property
) as consideration or security for the transferred securities; and
(c)
the transferred property is, or must be, applied wholly or partly to acquire one or more financial products, or a beneficial interest in one or more financial products; and
(d)
the client has a right, in the circumstances determined under the terms of the facility, to be given marketable securities equivalent to the transferred securities; and
(e)
if the current LVR of the facility exceeds a ratio, percentage, proportion or level (however described) determined under the terms of the facility, then:
(i)
the client becomes required to take action; or
(ii)
the provider becomes entitled to take action; or
(iii)
another person becomes required or entitled to take action;
in accordance with the terms of the facility to reduce the current LVR of the facility.
761EA(6)
The
current LVR
of a non-standard margin lending facility at a particular time is the ratio, percentage, proportion or level (however described) that:
(a)
is determined under the terms of the facility; and
(b)
under the terms of the facility, represents a particular relationship between:
(i)
an amount determined at that time under the terms of the facility by reference to the value of the transferred property and any amount owing by the client to the provider; and
(ii)
the value of the transferred securities determined at that time under the terms of the facility.
761EA(7)
A non-standard margin lending facility is in
margin call
when paragraph (5)(e) applies in relation to the facility.
ASIC declarations in relation to margin lending facilities
761EA(8)
ASIC may declare that a particular kind of facility is a
margin lending facility
. The declaration must give the meanings of
margin call
and
limit
in relation to that kind of facility.
761EA(9)
ASIC may declare that a particular kind of facility is not a
margin lending facility
.
761EA(10)
A declaration made under subsection (8) or (9):
(a)
must be in writing; and
(b)
is a legislative instrument.
History
S 761EA(10) amended by No 141 of 2020, s 3, Sch 4[45] (effective 18 December 2020).
Meaning of
limit
of a margin lending facility
761EA(11)
The
limit
of a margin lending facility:
(a)
in relation to a standard margin lending facility
-
means the maximum amount of credit that may be provided by the provider to the client under the facility; and
(b)
in relation to a non-standard margin lending facility
-
means the maximum amount of property that may be transferred by the provider to the client under the facility; and
(c)
in relation to a facility of a kind that ASIC has declared to be a margin lending facility under subsection (8)
-
has the meaning given in the declaration.
History
S 761EA inserted by No 108 of 2009, Sch 1
[
9].
SECTION 761F
MEANING OF
PERSON
-
GENERALLY INCLUDES A PARTNERSHIP
761F(1)
[
Application to partnership]
This Chapter applies to a partnership as if the partnership were a person, but it applies with the following changes:
(a)
obligations that would be imposed on the partnership are imposed instead on each partner, but may be discharged by any of the partners;
(b)
any contravention of a provision of this Chapter, or a provision of this Act that relates to a requirement in a provision of this Chapter, that would otherwise be a contravention by the partnership is taken (whether for the purposes of criminal or civil liability) to have been a contravention by each partner who:
(i)
aided, abetted, counselled or procured the relevant act or omission; or
(ii)
was in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the partner).
761F(2)
[
Effect of change in partners]
For the purposes of this Chapter, a change in the composition of a partnership does not affect the continuity of the partnership.
761F(3)
[
Limitation]
Subsections (1) and (2) have effect subject to:
(a)
an express or implied contrary intention in a provision or provisions of this Chapter; and
(b)
the regulations, which may exclude or modify the effect of those subsections in relation to specified provisions.
History
S 761F inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1] (effective 11 March 2002).
SECTION 761FA
MEANING OF
PERSON
-
GENERALLY INCLUDES MULTIPLE TRUSTEES
761FA(1)
[
Application to trust]
This section applies in relation to a trust while the trust continues to have:
(a)
2 or more trustees; or
(b)
a single trustee who was a trustee of the trust at a time when it had 2 or more trustees.
761FA(2)
[
``notional entity'']
Subject to subsections (3) and (4), during a period while this section applies to a trust, this Chapter applies to the trust as if the trustee or trustees of the trust from time to time during the period constituted a single legal entity (the
notional entity
) that remained the same for the duration of that period.
Note: So, for example, while this section applies to a trust, a licence granted under this Chapter to the trustees of the trust will continue in force, despite a change in the persons who are the trustees.
761FA(3)
[
Where trust has two or more trustees]
During any period or part of a period while this section applies to a trust and the trust has 2 or more trustees, this Chapter applies to the trustees as mentioned in subsection (2), but it applies with the following changes:
(a)
obligations that would be imposed on the notional entity are imposed instead on each trustee, but may be discharged by any of the trustees;
(b)
any contravention of a provision of this Chapter, or a provision of this Act that relates to a requirement in a provision of this Chapter, that would otherwise be a contravention by the notional entity is taken (whether for the purposes of criminal or civil liability) to have been a contravention by each trustee who:
(i)
aided, abetted, counselled or procured the relevant act or omission; or
(ii)
was in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the trustee).
761FA(4)
[
Where trust has only one trustee]
During any period or part of a period while this section applies to a trust and the trust has only one trustee, this Chapter applies to the trustee as mentioned in subsection (2), but it applies with the following changes:
(a)
obligations that would be imposed on the notional entity are imposed instead on that single trustee;
(b)
any contravention of a provision of this Chapter, or a provision of this Act that relates to a requirement in a provision of this Chapter, that would otherwise be a contravention by the notional entity is taken (whether for the purposes of criminal or civil liability) to have been a contravention by that single trustee.
761FA(5)
[
Limitation]
Subsections (2), (3) and (4) have effect subject to:
(a)
an express or implied contrary intention in a provision or provisions of this Chapter; and
(b)
the regulations, which may exclude or modify the effect of those subsections in relation to specified provisions.
History
S 761FA inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1] (effective 11 March 2002).
SECTION 761G
MEANING OF RETAIL CLIENT AND WHOLESALE CLIENT
Providing a financial product or financial service to a person as a retail client
761G(1)
A financial product or a financial service is provided to a person as a
retail client
unless subsection
(5)
,
(6)
,
(6A)
or
(7)
, or section
761GA
, provides otherwise.
Note: The references in this section to providing a financial product to a person are not to be taken to imply that the provision of a financial product is not also the provision of a financial service (see the meaning of
dealing
in section
766C
).
History
S 761G(1) amended by No 76 of 2023, s 3, Sch 2[300] (effective 20 October 2023).
S 761G(1) amended by No 108 of 2009, Sch 2
[
15].
S 761G(1) amended by No 101 of 2007, s 3, Sch 1, Pt 1
[
97].
S 761G(1) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
[
CCH Note:
Act No 101 of 2007, Sch 1, Pt 6
[
238] contained the following application provision (which was effective 28 June 2007):
Application of items 95 and 97 to 100
The amendments made by items 95 and 97 to 100 of this Schedule apply to financial products and financial services provided on and after the day on which those items commence.
]
Acquiring a financial product or financial service as a retail client
761G(2)
A person to whom a financial product or financial service is provided as a retail client is taken to acquire the product or service as a retail client.
History
S 761G(2) amended by No 76 of 2023, s 3, Sch 2[300] (effective 20 October 2023).
S 761G(2) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
Disposing of a financial product as a retail client
761G(3)
If a financial product is provided to a person as a retail client, any subsequent disposal of all or part of that product by the person is a disposal by the person as a retail client.
History
S 761G(3) amended by No 76 of 2023, s 3, Sch 2[301] (effective 20 October 2023).
S 761G(3) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
Wholesale clients
761G(4)
A financial product or a financial service is provided to, or acquired by, a person as a
wholesale client
if it is not provided to, or acquired by, the person as a retail client.
History
S 761G(4) amended by No 76 of 2023, s 3, Sch 2[302] (effective 20 October 2023).
S 761G(4) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
General insurance products
761G(5)
If a financial product is, or a financial service provided to a person relates to, a general insurance product, the product or service is provided to the person as a retail client if:
(a)
either:
(i)
the person is an individual; or
(ii)
the insurance product is or would be for use in connection with a small business (see subsection
(12)
); and
(b)
the general insurance product is:
(i)
a motor vehicle insurance product (as defined in the regulations); or
(ii)
a home building insurance product (as defined in the regulations); or
(iii)
a home contents insurance product (as defined in the regulations); or
(iv)
a sickness and accident insurance product (as defined in the regulations); or
(v)
a consumer credit insurance product (as defined in the regulations); or
(vi)
a travel insurance product (as defined in the regulations); or
(vii)
a personal and domestic property insurance product (as defined in the regulations); or
(viii)
a kind of general insurance product prescribed by regulations made for the purposes of this subparagraph.
In any other cases, the provision to a person of a financial product that is, or a financial service that relates to, a general insurance product does not constitute the provision of a financial product or financial service to the person as a retail client.
History
S 761G(5) amended by No 76 of 2023, s 3, Sch 2[303] (effective 20 October 2023).
S 761G(5) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
Products and services relating to superannuation and RSAs
761G(6)
For the purposes of this Act:
(a)
if a financial product provided to a person is a superannuation product or an RSA, the product is provided to the person as a retail client; and
(aa)
however, if a trustee of a pooled superannuation trust provides a financial product that is an interest in the trust to a person covered by subparagraph (c)(i), the product is not provided to the person as a retail client; and
(b)
if a financial service (other than the provision of a financial product) provided to a person who is not covered by subparagraph (c)(i) or (ii) relates to a superannuation product or an RSA, or is a superannuation trustee service, the service is provided to the person as a retail client; and
(c)
if a financial service (other than the provision of a financial product) provided to a person who is:
(i)
the trustee of a superannuation fund, an approved deposit fund, a pooled superannuation trust or a public sector superannuation scheme that has net assets of at least $10 million; or
(ii)
an RSA provider;
relates to a superannuation product or an RSA, or is a superannuation trustee service, that does not constitute the provision of a financial service to the person as a retail client.
History
S 761G(6) amended by No 76 of 2023, s 3, Sch 2[304]
-
[
310] (effective 20 October 2023).
S 761G(6) amended by No 135 of 2020, s 3, Sch 9
[
38] (effective 1 January 2021).
S 761G(6) amended by No 101 of 2007, s 3, Sch 1, Pt 1
[
98] and
[
99].
S 761G(6) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
[
CCH Note:
Act No 101 of 2007, Sch 1, Pt 6
[
238] contained the following application provision (which was effective 28 June 2007):
Application of items 95 and 97 to 100
The amendments made by items 95 and 97 to 100 of this Schedule apply to financial products and financial services provided on and after the day on which those items commence.
]
Traditional trustee company services
761G(6A)
If a financial service provided to a person is a traditional trustee company service, the service is provided to the person as a retail client unless regulations made for the purpose of this subsection provide otherwise.
History
S 761G(6A) amended by No 76 of 2023, s 3, Sch 2[311] (effective 20 October 2023).
S 761G(6A) inserted by No 108 of 2009, Sch 216.
Other kinds of financial product
761G(7)
If a financial product is not, or a financial service (other than a traditional trustee company service or a superannuation trustee service) provided to a person does not relate to, a general insurance product, a superannuation product or an RSA, the product or service is provided to the person as a retail client unless one or more of the following paragraphs apply:
(a)
the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of this paragraph as being applicable in the circumstances (but see also subsection
(10)
); or
(b)
the financial product, or the financial service, is provided for use in connection with a business that is not a small business (see subsection
(12)
);
(c)
the financial product, or the financial service, is not provided for use in connection with a business, and the person who acquires the product or service gives the provider of the product or service, before the provision of the product or service, a copy of a certificate given within the preceding 6 months by a qualified accountant that states that the person:
(i)
has net assets of at least the amount specified in regulations made for the purposes of this subparagraph; or
(ii)
has a gross income for each of the last 2 financial years of at least the amount specified in regulations made for the purposes of this subparagraph a year;
(d)
the person is a professional investor.
History
S 761G(7) amended by No 76 of 2023, s 3, Sch 2[312]
-
[
314] (effective 20 October 2023).
S 761G(7) amended by No 135 of 2020, s 3, Sch 9
[
39] (effective 1 January 2021).
S 761G(7) amended by No 108 of 2009, Sch 2
[
17].
S 761G(7) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
Offence proceedings
-
defendant bears evidential burden in relation to matters referred to in paragraphs (7)(a) to (d)
761G(8)
In a prosecution for an offence based on a provision of this Chapter or Part
6D.3A
, a defendant bears an evidential burden in relation to the matters in paragraphs
(7)(a)
to
(d)
as if those matters were exceptions for the purposes of subsection
13.3(3)
of the
Criminal Code
.
History
S 761G(8) amended by No 17 of 2017, s 3, Sch 1
[
23].
S 761G(8) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
Other proceedings relating to subsection (7) products
-
presumption in non-criminal proceedings of retail client unless contrary established
761G(9)
If:
(a)
it is alleged in a proceeding under this Chapter (not being a prosecution for an offence), or in any other proceeding (not being a prosecution for an offence) in respect of a matter arising under this Chapter, that a particular financial product or financial service was provided to a person as a retail client; and
(b)
the product or the service is one to which subsection
(7)
applies;
it is presumed that the product or service was provided to the person as a retail client unless the contrary is established.
Note 1: There is no such presumption in relation to the provision of a product or service that is or relates to a general insurance product, a superannuation product or an RSA. Whether or not such a product, or a service relating to such a product, was provided to a person as a retail client is to be resolved as provided in subsection
(5)
or
(6)
, as the case requires.
Note 2: In criminal proceedings, a defendant bears an evidential burden in relation to the matters in paragraphs
(7)(a)
to
(d)
(see subsection
(8)
).
History
S 761G(9) amended by No 76 of 2023, s 3, Sch 2[315] (effective 20 October 2023).
S 761G(9) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
Regulations and paragraph (7)(a)
761G(10)
In addition to specifying an amount or amounts for the purposes of paragraph
(7)(a)
, the regulations may do either or both of the following:
(a)
deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products;
(b)
modify the way in which that paragraph applies in particular circumstances.
History
S 761G(10) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
Regulations and paragraph (7)(c)
761G(10A)
In addition to specifying amounts for the purposes of subparagraphs
(7)(c)(i)
and
(ii)
, the regulations may do either or both of the following:
(a)
deal with how net assets referred to in subparagraph
(7)(c)(i)
are to be determined and valued, either generally or in specified circumstances;
(b)
deal with how gross income referred to in subparagraph
(7)(c)(ii)
is to be calculated, either generally or in specified circumstances.
History
S 761G(10A) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
What happens if a package of general insurance products and other kinds of financial products is provided?
761G(11)
If:
(a)
either:
(i)
in a single transaction, 2 or more financial products are provided to a person; or
(ii)
a single financial service provided to a person relates to 2 or more financial products; and
(b)
one or more, but not all, of the financial products are general insurance products;
subsection
(5)
applies to the transaction or service so far as it relates to the general insurance products, and subsection
(6)
or
(7)
, as the case requires, applies to the transaction or service so far as it relates to other financial products.
History
S 761G(11) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
Definition
761G(12)
In this section:
small business
means a business employing less than:
(a)
if the business is or includes the manufacture of goods
-
100 people; or
(b)
otherwise
-
20 people.
History
S 761G(12) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
SECTION 761GA
761GA
MEANING OF RETAIL CLIENT
-
SOPHISTICATED INVESTORS
A financial product, or a financial service (other than a traditional trustee company service, a crowd-funding service or a superannuation trustee service) in relation to a financial product, is not provided by one person to another person as a
retail client
if:
(a)
the first person (the
licensee
) is a financial services licensee; and
(b)
the financial product is not a general insurance product, a superannuation product or an RSA; and
(c)
the financial product or service is not provided for use in connection with a business; and
(d)
the licensee is satisfied on reasonable grounds that the other person (the
client
) has previous experience in using financial services and investing in financial products that allows the client to assess:
(i)
the merits of the product or service; and
(ii)
the value of the product or service; and
(iii)
the risks associated with holding the product; and
(iv)
the client
'
s own information needs; and
(v)
the adequacy of the information given by the licensee and the product issuer; and
(e)
the licensee gives the client before, or at the time when, the product or advice is provided a written statement of the licensee
'
s reasons for being satisfied as to those matters; and
(f)
the client signs a written acknowledgment before, or at the time when, the product or service is provided that:
(i)
the licensee has not given the client a Product Disclosure Statement; and
(ii)
the licensee has not given the client any other document that would be required to be given to the client under this Chapter if the product or service were provided to the client as a retail client; and
(iii)
the licensee does not have any other obligation to the client under this Chapter that the licensee would have if the product or service were provided to the client as a retail client.
History
S 761GA amended by No 76 of 2023, s 3, Sch 2[316] and
[
317] (effective 20 October 2023).
S 761GA amended by No 135 of 2020, s 3, Sch 9
[
40] (effective 1 January 2021).
S 761GA amended by No 17 of 2017, s 3, Sch 1
[
24] (effective 28 September 2017).
S 761GA amended by No 108 of 2009, Sch 2
[
18].
S 761GA inserted by No 101 of 2007, s 3, Sch 1, Pt 1
[
100].
[
CCH Note:
Act No 101 of 2007, Sch 1, Pt 6
[
238] contained the following application provision (which was effective 28 June 2007):
Application of items 95 and 97 to 100
The amendments made by items 95 and 97 to 100 of this Schedule apply to financial products and financial services provided on and after the day on which those items commence.
]
SECTION 761H
REFERENCES TO THIS CHAPTER INCLUDE REFERENCES TO REGULATIONS OR OTHER INSTRUMENTS MADE FOR THE PURPOSES OF THIS CHAPTER
761H(1)
[
Application]
A reference in a provision of this Chapter to this Chapter, or to a particular provision or group of provisions of this Chapter, includes (unless a contrary intention appears) a reference to regulations, or other instruments, made for the purposes of this Chapter, or for the purposes of that provision or any of those provisions, as the case requires.
761H(2)
[
Effect]
Subsection (1) has effect as if provisions in
Part 10.2
(transitional provisions) that relate to matters dealt with in this Chapter were part of this Chapter.
History
S 761H inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1] (effective 11 March 2002).
Division 3
-
Meaning of financial product and related terms
History
Div 3 heading substituted by No 69 of 2023, s 3, Sch 2[40] (effective 15 September 2023).
Subdivision A
-
Preliminary
SECTION 762A
OVERVIEW OF APPROACH TO DEFINING WHAT A FINANCIAL PRODUCT IS
762A(1)
General definition.
Subdivision
B
sets out a general definition of
financial product
. Subject to subsections (2) and (3), a facility is a financial product if it falls within that definition.
762A(2)
Specific inclusions.
Subdivision
C
identifies, or provides for the identification of, kinds of facilities that, subject to subsection (3), are financial products (whether or not they are within the general definition).
762A(3)
Overriding exclusions.
Subdivision
D
identifies, or provides for the identification of, kinds of facilities that are not financial products. These facilities are not financial products:
(a)
even if they are within the general definition; and
(b)
even if they are within a class of facilities identified as mentioned in subsection (2).
History
S 762A inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1] (effective 11 March 2002).
SECTION 762B
762B
WHAT IF A FINANCIAL PRODUCT IS PART OF A BROADER FACILITY?
If a financial product is a component of a facility that also has other components, this Act, in applying to the financial product, only applies in relation to the facility to the extent it consists of the component that is the financial product.
Note: So, e.g., Part
7.9
does not require disclosures to be made in relation to those other components.
History
S 762B amended by No 76 of 2023, s 3, Sch 2[318] (effective 20 October 2023).
S 762B inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1] (effective 11 March 2002).
SECTION 762C
762C
MEANING OF FACILITY
In this Act:
facility
includes:
(a)
intangible property; or
(b)
an arrangement or a term of an arrangement (including a term that is implied by law or that is required by law to be included); or
(c)
a combination of intangible property and an arrangement or term of an arrangement.
Note: 2 or more arrangements may be taken to constitute a single arrangement: see subsection
761B(2)
.
History
S 762C amended by No 76 of 2023, s 3, Sch 2[319] and
[
320] (effective 20 October 2023).
S 762C inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1] (effective 11 March 2002).
Subdivision B
-
The general definition
SECTION 763A
MEANING OF FINANCIAL PRODUCT
763A(1)
A
financial product
is a facility through which, or through the acquisition of which, a person does one or more of the following:
(a)
makes a financial investment;
(b)
manages financial risk;
(c)
makes non-cash payments.
History
S 763A(1) amended by No 76 of 2023, s 3, Sch 2[321] and
[
322] (effective 20 October 2023).
763A(2)
A particular facility that is of a kind through which people commonly make financial investments, manage financial risks or make non-cash payments is a
financial product
even if that facility is acquired by a particular person for some other purpose.
History
S 763A(2) amended by No 76 of 2023, s 3, Sch 2[323] (effective 20 October 2023).
763A(3)
A facility does not cease to be a financial product merely because:
(a)
the facility has been acquired by a person other than the person to whom it was originally issued; and
(b)
that person, in acquiring the product, was not making a financial investment or managing a financial risk.
History
S 763A inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
SECTION 763B
763B
MEANING OF MAKES A FINANCIAL INVESTMENT
A person (the
investor
)
makes a financial investment
if:
(a)
the investor gives money or money's worth (the
contribution
) to another person and any of the following apply:
(i)
the other person uses the contribution to generate a financial return, or other benefit, for the investor;
(ii)
the investor intends that the other person will use the contribution to generate a financial return, or other benefit, for the investor (even if no return or benefit is in fact generated);
(iii)
the other person intends that the contribution will be used to generate a financial return, or other benefit, for the investor (even if no return or benefit is in fact generated); and
(b)
the investor has no day-to-day control over the use of the contribution to generate the return or benefit.
Note 1: Examples of actions that constitute making a financial investment under this subsection are:
(a) a person paying money to a company for the issue to the person of shares in the company (the company uses the money to generate dividends for the person and the person, as a shareholder, does not have control over the day-to-day affairs of the company); or
(b) a person contributing money to acquire interests in a registered scheme from the responsible entity of the scheme (the scheme uses the money to generate financial or other benefits for the person and the person, as a member of the scheme, does not have day-to-day control over the operation of the scheme).
Note 2: Examples of actions that do not constitute making a financial investment under this subsection are:
(a) a person purchasing real property or bullion (while the property or bullion may generate a return for the person, it is not a return generated by the use of the purchase money by another person); or
(b) a person giving money to a financial services licensee who is to use it to purchase shares for the person (while the purchase of the shares will be a financial investment made by the person, the mere act of giving the money to the licensee will not of itself constitute making a financial investment).
History
S 763B amended by No 76 of 2023, s 3, Sch 2[324] (effective 20 October 2023).
S 763B inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
SECTION 763C
763C
MEANING OF MANAGES FINANCIAL RISK
A person
manages financial risk
if they:
(a)
manage the financial consequences to them of particular circumstances happening; or
(b)
avoid or limit the financial consequences of fluctuations in, or in the value of, receipts or costs (including prices and interest rates).
Note 1: Examples of actions that constitute managing a financial risk are:
(a) taking out insurance; or
(b) hedging a liability by acquiring a futures contract or entering into a currency swap.
Note 2: An example of an action that does not constitute managing a financial risk is employing a security firm (while that is a way of managing the risk that thefts will happen, it is not a way of managing the financial consequences if thefts do occur).
History
S 763C amended by No 76 of 2023, s 3, Sch 2[325] (effective 20 October 2023).
S 763C inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
SECTION 763D
MEANING OF MAKES NON-CASH PAYMENTS
763D(1)
A person
makes non-cash payments
if they make payments, or cause payments to be made, otherwise than by the physical delivery of Australian or foreign currency in the form of notes and/or coins.
Note: Examples of actions that constitute making non-cash payments are:
(a) making payments by means of a facility for direct debit of a deposit account; or
(b) making payments by means of a facility for the use of cheques; or
(c) making payments by means of a purchased payment facility within the meaning of the
Payment Systems (Regulation) Act 1998
, such as a smart card; or
(d) making payments by means of traveller
'
s cheques (whether denominated in Australian or foreign currency).
History
S 763D(1) amended by No 76 of 2023, s 3, Sch 2[326] (effective 20 October 2023).
763D(2)
The following are not
making non-cash payments
, even if they might otherwise be covered by subsection
(1)
:
(a)
making payments by means of a facility in relation to which one of the following applies:
(i)
there is only one person to whom payments can be made by means of the facility;
(ii)
the facility is, or is of a kind, specified in the regulations as being a facility that is not to be covered by this section because of restrictions relating to the number of people to whom payments can be made by means of the facility, or relating to the number of persons who can use the facility to make payments;
(b)
making payments by means of:
(i)
a letter of credit from a financial institution; or
(ii)
a cheque drawn by a financial institution on itself; or
(iii)
a guarantee given by a financial institution.
History
S 763D(2) amended by No 76 of 2023, s 3, Sch 2[327] (effective 20 October 2023).
S 763D inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
SECTION 763E
WHAT IF A FINANCIAL PRODUCT IS ONLY INCIDENTAL?
763E(1)
[
``incidental product'']
If:
(a)
something (the
incidental product
) that, but for this section, would be a financial product because of this Subdivision is:
(i)
an incidental component of a facility that also has other components; or
(ii)
a facility that is incidental to one or more other facilities; and
(b)
it is reasonable to assume that the main purpose of:
(i)
if subparagraph (a)(i) applies
-
the facility referred to in that subparagraph, when considered as a whole; or
(ii)
if subparagraph (a)(ii) applies
-
the incidental product, and the other facilities referred to in that subparagraph, when considered as a whole;
is not a financial product purpose;
the incidental product is not a financial product because of this Subdivision (however, it may still be a financial product because of
Subdivision C
).
763E(2)
[
``financial product purpose'']
In this section:
financial product purpose
means a purpose of:
(a)
making a financial investment; or
(b)
managing financial risk; or
(c)
making non-cash payments.
History
S 763E inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1] (effective 11 March 2002).
Subdivision C
-
Specific inclusions
SECTION 764A
SPECIFIC THINGS THAT ARE FINANCIAL PRODUCTS (SUBJECT TO SUBDIVISION D)
764A(1)
Subject to Subdivision
D
, the following are
financial products
:
(a)
a security;
(b)
any of the following in relation to a registered scheme:
(i)
an interest in the scheme;
(ii)
a legal or equitable right or interest in an interest covered by subparagraph (i);
(iii)
an option to acquire, by way of issue, an interest or right covered by subparagraph (i) or (ii);
(ba)
any of the following in relation to a managed investment scheme that is not a registered scheme, other than a scheme (whether or not operated in this jurisdiction) in relation to which none of paragraphs
601ED(1)(a)
,
(b)
and
(c)
are satisfied:
(i)
an interest in the scheme;
(ii)
a legal or equitable right or interest in an interest covered by subparagraph (i);
(iii)
an option to acquire, by way of issue, an interest or right covered by subparagraph (i) or (ii);
(bb)
any of the following in relation to a notified foreign passport fund:
(i)
an interest in the fund;
(ii)
a legal or equitable right or interest in an interest covered by subparagraph (i);
(iii)
an option to acquire, by way of issue, an interest or right covered by subparagraph (i) or (ii);
(c)
a derivative;
(d)
a contract of insurance that is not a life policy, or a sinking fund policy, but not including such a contract of insurance:
(i)
to the extent that it provides for a benefit to be provided by an association of employees that is registered as an organisation, or recognised, under the
Fair Work (Registered Organisations) Act 2009
for a member of the association or a dependant of a member; or
(ii)
to the extent that it provides for benefits, pensions or payments described in paragraph
11(3)(c)
of the
Life Insurance Act 1995
; or
(iii)
to the extent that it provides for the provision of a funeral benefit; or
(iv)
issued by an employer to an employee of the employer;
(e)
a life policy, or a sinking fund policy, that is a contract of insurance, but not including such a policy:
(i)
to the extent that it provides for a benefit to be provided by an association of employees that is registered as an organisation, or recognised, under the
Fair Work (Registered Organisations) Act 2009
for a member of the association or a dependant of a member; or
(ii)
to the extent that it provides for benefits, pensions or payments described in paragraph
11(3)(c)
of the
Life Insurance Act 1995
; or
(iii)
to the extent that it provides for the provision of a funeral benefit; or
(iv)
issued by an employer to an employee of the employer;
(f)
a life policy, or a sinking fund policy, that is not a contract of insurance, but not including such a policy:
(i)
to the extent that it provides for a benefit to be provided by an association of employees that is registered as an organisation, or recognised, under the
Fair Work (Registered Organisations) Act 2009
for a member of the association or a dependant of a member; or
(ii)
to the extent that it provides for benefits, pensions or payments described in paragraph
11(3)(c)
of the
Life Insurance Act 1995
; or
(iii)
to the extent that it provides for the provision of a funeral benefit; or
(iv)
issued by an employer to an employee of the employer;
(g)
a superannuation product; or
(h)
an RSA; or
(ha)
(Repealed)
(i)
any deposit-taking facility made available by an ADI (within the meaning of the
Banking Act 1959
) in the course of its banking business (within the meaning of that Act), other than an RSA (RSAs are covered by paragraph (h));
(j)
a debenture, stock or bond issued or proposed to be issued by a government;
(k)
a foreign exchange contract that is not:
(i)
a derivative (derivatives are covered by paragraph (c)); or
(ii)
a contract to exchange one currency (whether Australian or not) for another that is to be settled immediately;
(kaa)
(Repealed)
(ka)
an Australian carbon credit unit;
(kb)
an eligible international emissions unit;
(l)
a margin lending facility;
(m)
anything declared by the regulations to be a financial product.
Note: Even though something is expressly excluded from one of these paragraphs, it may still be a financial product (subject to Subdivision
D
) either because:
(a) it is covered by another of these paragraphs; or
(b) it is covered by the general definition in Subdivision
B
.
History
S 764A(1) amended by No 76 of 2023, s 3, Sch 2[328]
-
[
332] (effective 20 October 2023).
S 764A(1) amended by No 50 of 2019, s 3, Sch 2[2] (effective 6 April 2019).
S 764A(1) amended by No 61 of 2018, s 3, Sch 2[208] (effective 18 September 2018).
S 764A(1) amended by No 70 of 2015, s 3, Sch 1
[
33].
S 764A(1) amended by No 83 of 2014, s 3, Sch 1, Pt 2
[
106].
S 764A(1) amended by No 132 of 2011, s 3, Sch 1, Pt 2
[
260].
S 764A(1) amended by No 102 of 2011, s 3, Sch 1, Pt 1[11].
S 764A(1) amended by No 108 of 2009, Sch 1
[
10].
S 764A(1) amended by No 54 of 2009, s 3, Sch 18
[
2].
S 764A(1) amended by No 45 of 2008, s 3, Sch 2
[
9].
S 764A(1) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
Contracts of insurance
764A(1A)
If a single contract of insurance provides 2 or more kinds of cover, paragraph
(1)(d)
applies separately in relation to that contract, in relation to each of those kinds of cover, as if the contract only provided that kind of cover.
Note: Because of this subsection (including as it is affected by subsection
(1B)
), a single contract of insurance may constitute 2 or more separate general insurance products.
History
S 764A(1A) inserted by No 141 of 2003, s 3, Sch 2
[
12A].
764A(1B)
If a contract of insurance provides a kind of cover in relation to 2 or more kinds of asset, subsection
(1A)
applies to the contract, in relation to each of those kinds of asset, as if the cover provided by the contract in relation to that kind of asset constituted a separate kind of cover.
History
S 764A(1B) inserted by No 141 of 2003, s 3, Sch 2
[
12A].
764A(2)
For the purpose of paragraphs
(1)(d)
,
(e)
and
(f)
and subsections
(1A)
and
(1B)
,
contract of insurance
includes:
(a)
a contract that would ordinarily be regarded as a contract of insurance even if some of its provisions are not by way of insurance; and
(b)
a contract that includes provisions of insurance in so far as those provisions are concerned, even if the contract would not ordinarily be regarded as a contract of insurance.
History
S 764A(2) amended by No 141 of 2003, s 3, Sch2
[
12B].
S 764A(2) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
Declaring additional things to be financial products for specified provisions of this Chapter
764A(3)
Subject to Subdivision
D
, a thing declared by regulations to be a financial product for a specified provision of this Act is a
financial product
for that provision.
History
S 764A(3) amended by No 76 of 2023, s 3, Sch 2[333] (effective 20 October 2023).
S 764A(3) inserted by No 50 of 2019, s 3, Sch 2[4] (effective 6 April 2019).
Subdivision D
-
Specific exclusions
SECTION 765A
SPECIFIC THINGS THAT ARE NOT FINANCIAL PRODUCTS
765A(1)
Despite anything in Subdivision
B
or Subdivision
C
, the following are not
financial products
:
(a)
an excluded security;
(b)
an undertaking by a body corporate to pay money to a related body corporate;
(c)
health insurance provided as part of a health insurance business (as defined in Division 121 of the
Private Health Insurance Act 2007
);
(ca)
insurance provided as part of a health-related business (as defined by section 131-15 of that Act) that is conducted through a health benefits fund (as defined by section 131-10 of that Act);
(d)
insurance provided by the Commonwealth;
(e)
State insurance or Northern Territory insurance, including insurance entered into by:
(i)
a State or the Northern Territory; and
(ii)
some other insurer;
as joint insurers;
(f)
insurance entered into by the Export Finance and Insurance Corporation, other than a short-term insurance contract within the meaning of the
Export Finance and Insurance Corporation Act 1991
;
(g)
reinsurance;
(h)
any of the following:
(i)
a credit facility within the meaning of the regulations (other than a margin lending facility);
(ii)
a facility for making non-cash payments, if payments made using the facility will all be debited to a credit facility covered by subparagraph (i);
(i)
a facility:
(i)
that is an approved RTGS system within the meaning of the
Payment Systems and Netting Act 1998
; or
(ii)
for the transmission and reconciliation of non-cash payments, and the establishment of final positions, for settlement through an approved RTGS system within the meaning of the
Payment Systems and Netting Act 1998
;
(j)
a facility that is a designated payment system for the purposes of the
Payment Systems (Regulation) Act 1998
;
(k)
a facility for the exchange and settlement of non-cash payments between providers of non-cash payment facilities;
(l)
a facility that is:
(i)
a financial market; or
(ii)
a clearing and settlement facility; or
(iii)
a payment system operated as part of a clearing and settlement facility; or
(iv)
a derivative trade repository;
(m)
a contract to exchange one currency (whether Australian or not) for another that is to be settled immediately;
(n)
so much of an arrangement as is not a derivative because of paragraph
761D(3)(a)
;
[
CCH Note:
There is no paragraph 765A(1)(o).]
(p)
an arrangement that is not a derivative because of subsection
761D(4)
;
(q)
an interest in a superannuation fund of a kind prescribed by regulations made for the purposes of this paragraph;
(r)
any of the following:
(i)
an interest in something that is not a managed investment scheme because of paragraph (c), (e), (f), (k), (l) or (m) of the definition of
managed investment scheme
in section
9
;
(ii)
a legal or equitable right or interest in an interest covered by subparagraph (i);
(iii)
an option to acquire, by way of issue, an interest or right covered by subparagraph (i) or (ii);
(s)
any of the following in relation to a managed investment scheme (whether or not operated in this jurisdiction) in relation to which none of paragraphs
601ED(1)(a)
,
(b)
and
(c)
are satisfied and that is not a registered scheme or a notified foreign passport fund:
(i)
an interest in the scheme;
(ii)
a legal or equitable right or interest in an interest covered by subparagraph (i);
(iii)
an option to acquire, by way of issue, an interest or right covered by subparagraph (i) or (ii);
(t)
a deposit-taking facility that is, or is used for, State banking;
(u)
a benefit provided by an association of employees that is registered as an organisation, or recognised, under the
Fair Work (Registered Organisations) Act 2009
for a member of the association or a dependant of a member;
(v)
either of the following:
(i)
a contract of insurance; or
(ii)
a life policy or a sinking fund policy, that is not a contract of insurance;
issued by an employer to an employee of the employer;
(w)
a funeral benefit;
(x)
physical equipment or physical infrastructure by which something else that is a financial product is provided;
(y)
a facility, interest or other thing declared by regulations made for the purposes of this subsection not to be a financial product;
(z)
a facility, interest or other thing declared by ASIC under subsection (2) not to be a financial product.
History
S 765A(1) amended by No 76 of 2023, s 3, Sch 2[334]
-
[
337] (effective 20 October 2023).
S 765A(1) amended by No 61 of 2018, s 3, Sch 2[209] (effective 18 September 2018).
S 765A(1) amended by No 178 of 2012, s 3, Sch 1, Pt 1[18].
S 765A(1) amended by No 108 of 2009, Sch 1
[
11].
S 765A(1) amended by No 54 of 2009, s 3, Sch 18
[
3].
S 765A(1) amended by No 54 of 2008, s 3, Sch 1
[
3].
S 765A(1) amended by No 32 of 2007, Sch 2
[
8B].
S 765A(1) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
ASIC declarations
765A(2)
ASIC may declare that a specified facility, interest or other thing is not a financial product. The declaration must be in writing and ASIC must publish notice of it in the
Gazette
.
History
S 765A(2) amended by No 76 of 2023, s 3, Sch 2[338] (effective 20 October 2023).
S 765A(2) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
Regulations
765A(3)
Despite anything in Subdivision
B
or
C
, the regulations may declare that a specified facility, interest or other thing is not a financial product for the purposes of specified provisions of this Chapter.
History
S 765A(3) inserted by No 50 of 2019, s 3, Sch 2[6] (effective 6 April 2019).
765A(4)
A declaration under subsection
(2)
that is inconsistent with regulations made for the purposes of subsection
(3)
has no effect to the extent of the inconsistency, but a declaration is taken to be consistent with the regulations to the extent that the declaration is capable of operating concurrently with the regulations.
History
S 765A(4) inserted by No 50 of 2019, s 3, Sch 2[6] (effective 6 April 2019).
SECTION 765B
765B
FUNERAL EXPENSES FACILITIES ARE NOT FUNERAL BENEFITS
(Repealed by No 69 of 2023, s 3, Sch 2[101] (effective 15 September 2023).)
Division 4
-
Meaning of financial service and related terms
History
Div 4 heading substituted by No 69 of 2023, s 3, Sch 2[45] (effective 15 September 2023).
SECTION 766A
MEANING OF FINANCIAL SERVICE
General
766A(1)
Subject to paragraph
(2)(b)
, a person provides a
financial service
if they:
(a)
provide financial product advice; or
(b)
deal in a financial product; or
(c)
make a market for a financial product; or
(d)
operate a registered scheme; or
(da)
operate the business and conduct the affairs of a CCIV; or
(e)
provide a custodial or depository service; or
(ea)
provide a crowd-funding service; or
(eb)
provide a claims handling and settling service; or
(ec)
provide a superannuation trustee service; or
(f)
engage in conduct of a kind prescribed by regulations made for the purposes of this paragraph.
History
S 766A(1) amended by No 76 of 2023, s 3, Sch 2[339]
-
[
341] (effective 20 October 2023).
S 766A(1) amended by No 8 of 2022, s 3, Sch 2[167] (effective 1 July 2022).
S 766A(1) amended by No 135 of 2020, s 3, Sch 9
[
41] (effective 1 January 2021).
S 766A(1) amended by No 135 of 2020, s 3, Sch 7
[
7] (effective 1 January 2021).
S 766A(1) amended by No 17 of 2017, s 3, Sch 1
[
25].
S 766A(1) amended by No 108 of 2009, Sch 2
[
19] (note 1).
S 766A(1) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
Provision of traditional trustee company services by trustee company
766A(1A)
Subject to paragraph
(2)(b)
, the provision by a trustee company of a traditional trustee company service constitutes the provision, by the company, of a
financial service
.
Note: Trustee companies may also provide other kinds of financial service mentioned in subsection
(1)
.
History
S 766A(1A) inserted by No 108 of 2009, Sch 2
[
19].
766A(1B)
The regulations may, in relation to a traditional trustee company service of a particular class, prescribe the person or persons to whom a service of that class is taken to be provided. This subsection does not limit (and is not limited by) subsection
(2)
.
Note: A traditional trustee company service is provided to a person as a retail client unless regulations provide otherwise (see subsection
761G(6A)
).
History
S 766A(1B) inserted by No 108 of 2009, Sch 2
[
19].
Regulations may deal with various matters
766A(2)
The regulations may set out:
(a)
the circumstances in which persons facilitating the provision of a financial service (for example, by publishing information) are taken also to provide that service; or
(b)
the circumstances in which persons are taken to provide, or are taken not to provide, a financial service.
History
S 766A(2) amended by No 108 of 2009, Sch 2
[
19] (note 2).
S 766A(2) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
Exception for work ordinarily done by clerks or cashiers
766A(3)
To avoid doubt, a person
'
s conduct is not the provision of a
financial service
if it is done in the course of work of a kind ordinarily done by clerks or cashiers.
History
S 766A(3) amended by No 108 of 2009, Sch 2
[
19] (note 3).
S 766A(3) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
Meaning of
operating a registered scheme
766A(4)
For the purposes of this section, a person is not
operating a registered scheme
merely because:
(a)
they are acting as an agent or employee of another person; or
(b)
they are taking steps to wind up the scheme.
History
S 766A(4) amended by No 108 of 2009, Sch 2
[
19] (note 4).
S 766A(4) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
Overlap between financial services
766A(5)
The fact that conduct constitutes the provision of a financial service is not to be taken to imply that the conduct does not also constitute the provision of another financial service.
Note: For example, conduct may constitute providing a superannuation trustee service and also providing another financial service (such as dealing in a financial product that is a superannuation product).
History
S 766A(5) inserted by No 135 of 2020, s 3, Sch 9
[
42] (effective 1 January 2021).
SECTION 766B
MEANING OF FINANCIAL PRODUCT ADVICE, PERSONAL ADVICE AND GENERAL ADVICE
766B(1)
Financial product advice
means a recommendation or a statement of opinion, or a report of either of those things, that:
(a)
is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or
(b)
could reasonably be regarded as being intended to have such an influence.
History
S 766B(1) amended by No 76 of 2023, s 3, Sch 2[342] (effective 20 October 2023).
S 766B(1) amended by No 141 of 2003, s 3, Sch 2
[
13].
S 766B(1) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
766B(1A)
However, subject to subsection
(1B)
, the provision or giving of an exempt document or statement does not constitute the provision of financial product advice.
History
S 766B(1A) inserted by No 141 of 2003, s 3, Sch 2
[
13A].
766B(1B)
Subsection
(1A)
does not apply for the purpose of determining whether a recommendation or statement of opinion made by an outside expert, or a report of such a recommendation or statement of opinion, that is included in an exempt document or statement is financial product advice provided by the outside expert.
History
S 766B(1B) inserted by No 141 of 2003, s 3, Sch 2
[
13A].
766B(2)
There are 2 types of financial product advice: personal advice and general advice.
History
S 766B(2) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
766B(3)
Personal advice
is financial product advice that is given or directed to a person (including by electronic means) in circumstances where:
(a)
the provider of the advice has considered one or more of the person's objectives, financial situation and needs (otherwise than for the purposes of compliance with the
Anti-Money Laundering and Counter-Terrorism Financing Act 2006
or with regulations, or AML/CTF Rules, under that Act); or
(b)
a reasonable person might expect the provider to have considered one or more of those matters.
History
S 766B(3) amended by No 76 of 2023, s 3, Sch 2[343] (effective 20 October 2023).
S 766B(3) amended by No 170 of 2006, s 3, Sch 1, Pt 1
[
18].
S 766B(3) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
766B(3A)
However, the acts of asking for information solely to determine whether a person is in a target market for a financial product, and of informing the person of the result of that determination, do not, of themselves, constitute personal advice.
History
S 766B(3A) amended by No 76 of 2023, s 3, Sch 2[344] (effective 20 October 2023).
S 766B(3A) inserted by No 50 of 2019, s 3, Sch 1
[
4] (effective 5 April 2021).
766B(4)
General advice
is financial product advice that is not personal advice.
History
S 766B(4) amended by No 76 of 2023, s 3, Sch 2[345] (effective 20 October 2023).
S 766B(4) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
766B(5)
The following advice is not financial product advice:
(a)
advice given by a lawyer in his or her professional capacity, about matters of law, legal interpretation or the application of the law to any facts;
(b)
except as may be prescribed by the regulations
-
any other advice given by a lawyer in the ordinary course of activities as a lawyer, that is reasonably regarded as a necessary part of those activities;
(c)
except as may be prescribed by the regulations
-
advice given by a registered tax agent or BAS agent, that is given in the ordinary course of activities as such an agent and that is reasonably regarded as a necessary part of those activities.
History
S 766B(5) amended by No 115 of 2021, s 3, Sch 1
[
15] (effective 1 January 2022).
S 766B(5) amended by No 114 of 2009, Sch 1
[
2].
S 766B(5) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
766B(6)
If:
(a)
in response to a request made by a person (the
inquirer
) to another person (the
provider
), the provider tells the inquirer the cost, or an estimate of the likely cost, of a financial product (for example, an insurance product); and
(b)
that cost or estimate is worked out, or said by the provider to be worked out, by reference to a valuation of an item (for example, a house or car to which an insurance policy would relate), being a valuation that the provider suggests or recommends to the inquirer;
the acts of telling the inquirer the cost, or estimated cost, and suggesting or recommending the valuation, do not, of themselves, constitute the making of a recommendation (or the provision of any other kind of financial product advice) relating to the financial product.
History
S 766B(6) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
766B(7)
If:
(a)
in response to a request made by a person (the
inquirer
) to another person (the
provider
), the provider tells the inquirer information about:
(i)
the cost of a financial product; or
(ii)
the rate of return on a financial product; or
(iii)
any other matter identified in regulations made for the purposes of this subparagraph; and
(b)
the request could also have been complied with (but was not also so complied with) by telling the inquirer equivalent information about one or more other financial products;
the act of telling the inquirer the information does not, of itself, constitute the making of a recommendation (or the provision of any other kind of financial product advice) in relation to the financial product referred to in paragraph
(a)
.
History
S 766B(7) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
766B(7A)
A recommendation or a statement of opinion, or a report of either of those things, is not financial product advice if giving the recommendation, statement of opinion or report could reasonably be regarded as a necessary part of providing a claims handling and settling service.
History
S 766B(7A) inserted by No 135 of 2020, s 3, Sch 7
[
8] (effective 1 January 2021).
766B(7B)
The regulations may prescribe:
(a)
circumstances in which giving a recommendation, statement of opinion or report could reasonably be regarded as a necessary part of providing a claims handling and settling service for the purposes of subsection
(7A)
; and
(b)
circumstances in which giving a recommendation, statement of opinion or report could not reasonably be regarded as a necessary part of providing a claims handling and settling service for the purposes of subsection
(7A)
.
History
S 766B(7B) inserted by No 135 of 2020, s 3, Sch 7
[
8] (effective 1 January 2021).
766B(8)
Subsections
(5)
,
(6)
,
(7)
and
(7A)
are not intended to affect, in any way, the determination of whether situations not covered by those subsections do, or do not, constitute the provision of financial product advice.
History
S 766B(8) amended by No 135 of 2020, s 3, Sch 7
[
9] (effective 1 January 2021).
S 766B(8) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
766B(9)
In this section:
exempt document or statement
means:
(a)
a document prepared, or a statement given, in accordance with requirements of this Chapter, other than:
(i)
a Statement of Advice; or
(ii)
a document or statement of a kind prescribed by regulations made for the purposes of this subparagraph; or
(b)
any other document or statement of a kind prescribed by regulations made for the purposes of this paragraph.
outside expert
, in relation to an exempt document or statement, means an expert who is not:
(a)
the person by whom, or on whose behalf, the exempt document or statement was prepared; or
(b)
an employee or director of that person.
History
Definition of
outside expert
inserted by No 141 of 2003, s 3, Sch 2
[
13B].
History
S 766B(9) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
SECTION 766C
MEANING OF DEALING
766C(1)
The the following conduct (whether engaged in as principal or agent) constitutes
dealing
in a financial product:
(a)
applying for or acquiring a financial product;
(b)
issuing a financial product;
(c)
in relation to securities and interests in managed investment schemes
-
underwriting the securities or interests;
(d)
varying a financial product;
(e)
disposing of a financial product.
History
S 766C(1) amended by No 76 of 2023, s 3, Sch 2[346] (effective 20 October 2023).
S 766C(1) amended by No 61 of 2018, s 3, Sch 2[210] (effective 18 September 2018).
S 766C(1) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
766C(2)
Arranging for a person to engage in conduct referred to in subsection
(1)
is also
dealing
in a financial product, unless the actions concerned amount to providing financial product advice.
History
S 766C(2) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
766C(2A)
Despite subsections
(1)
and
(2)
, providing a crowd-funding service does not constitute
dealing
in a financial product.
History
S 766C(2A) inserted by No 17 of 2017, s 3, Sch 1
[
26].
766C(3)
A person is taken not to
deal
in a financial product if the person deals in the product on their own behalf (whether directly or through an agent or other representative), unless:
(a)
the person is an issuer of financial products; and
(b)
the dealing is in relation to one or more of those products.
History
S 766C(3) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
766C(3A)
For the purposes of subsection
(3)
, a person (the
agent
) who deals in a product as an agent or representative of another person (the
principal
) is not taken to deal in the product on the agent
'
s own behalf, even if that dealing, when considered as a dealing by the principal, is a dealing by the principal on the principal
'
s own behalf.
History
S 766C(3A) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
766C(4)
Also, a transaction entered into by a person who is, or who encompasses or constitutes in whole or in part, any of the following entities:
(a)
a government or local government authority;
(b)
a public authority or instrumentality or agency of the Crown;
(c)
a body corporate (other than a CCIV) or an unincorporated body;
(ca)
a CCIV;
is taken not to be
dealing
in a financial product by that person if the transaction relates only to:
(d)
securities of that entity; or
(e)
if the entity is a government
-
debentures, stocks or bonds issued or proposed to be issued by that government.
History
S 766C(4) amended by No 8 of 2022, s 3, Sch 2[168] and
[
169] (effective 1 July 2022).
S 766C(4) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
766C(5)
Paragraph
(4)(c)
does not apply if the entity:
(a)
carries on a business of investment in securities, interests in land or other investments; and
(b)
in the course of carrying on that business, invests funds subscribed, whether directly or indirectly, after an offer or invitation to the public (within the meaning of section
82
) made on terms that the funds subscribed would be invested.
History
S 766C(5) inserted by No 122 of 2001, s 3, Sch 1, Pt 1
[
1].
766C(6)
A transaction entered into by a sub-underwriter of an issue of securities that relates only to the sub-underwriting is taken not to be
dealing
in a financial product.
Hide history note
The regulations may prescribe conduct that is taken to be, or not to be,
in a financial product. Regulations made for the purposes of this subsection have effect despite anything else in this section.
either through a facility, at a place or otherwise, the person regularly states the prices at which they propose to acquire or dispose of financial products on their own behalf; and
other persons have a reasonable expectation that they will be able to regularly effect transactions at the stated prices; and
the actions of the person do not, or would not if they happened through a facility or at a place, constitute operating a financial market because of the effect of paragraph
.
does not apply to a person stating prices at which they propose to acquire or dispose of financial products if:
) if, under an arrangement between the provider and the client, or between the provider and another person with whom the client has an arrangement, (whether or not there are also other parties to any such arrangement), a financial product, or a beneficial interest in a financial product, is held by the provider in trust for, or on behalf of, the client or another person nominated by the client.
The following provisions apply in relation to a custodial or depository service:
, the time at which a custodial or depository service is provided is the time when the financial product or beneficial interest concerned is first held by the provider as mentioned in subsection
, and of any other provisions of this Act prescribed by regulations made for the purposes of this paragraph, the continued holding of the financial product or beneficial interest concerned by the provider as mentioned in subsection
also constitutes the provision of a custodial or depository service.
the operation of a registered scheme, or the holding of the assets of a registered scheme;
the holding of the assets of a notified foreign passport fund;
the operation of a statutory fund by a life company (within the meaning of the
any other conduct of a kind prescribed by regulations made for the purposes of this paragraph.
a CSF offer document for a CSF offer of securities of a company is published on a platform operated by the person; and
applications may be made to the person for the issue, by the company, of securities pursuant to the offer.
), performing all other aspects of the role of a CSF intermediary under Part
A person who uses the application facility for the CSF offer to make an application pursuant to the offer is a person to whom the crowd-funding service is provided. The time at which the crowd-funding service is provided to the person is the time when the person first uses the application facility to make an application pursuant to the offer.
The company making the CSF offer is a person to whom the crowd-funding service is provided. The time at which the crowd-funding service is provided to the company is the time when the company enters into the hosting arrangement for the offer.
the person makes a recommendation, or states an opinion, in the following circumstances:
the person assists another person to make a claim under an insurance product; or
the person represents a person insured under an insurance product in pursuing a claim under the product; or
the person assesses whether an insurer has a liability under an insurance product, or provides assistance in relation to such an assessment; or
the person makes a decision to accept or reject all or part of a claim under an insurance product; or
the person quantifies the extent of the insurer
'
s liability to another person under an insurance product, or provides assistance in relation to the quantification of the extent of such a liability; or
the person offers to settle all or part of a claim under an insurance product; or
the person satisfies a liability of the insurer under an insurance product in full or partial settlement of a claim under the insurance product.
For the purposes of this Act, a claims handling and settling service provided in relation to an insurance product is to be treated as having been provided to the insured under the insurance product (who may be a person insured as a third party beneficiary under the contract of insurance that constitutes the insurance product, within the meaning of the
if the person operates a registrable superannuation entity as trustee of the entity.
Note 2: To determine whether a person to whom the service is provided is a retail client, see subsection
761G(6)
.
the operation of an exempt public sector superannuation scheme;
conduct of a kind prescribed by regulations made for the purposes of this paragraph.
offers to acquire or dispose of financial products are regularly made or accepted; or
offers or invitations are regularly made to acquire or dispose of financial products that are intended to result or may reasonably be expected to result, directly or indirectly, in:
a person making or accepting offers or invitations to acquire or dispose of financial products on the person
'
s own behalf, or on behalf of one party to the transaction only, unless the regulations specify circumstances in which such conduct does constitute operating a financial market and the person
'
s conduct occurs in circumstances so specified;
conducting treasury operations between related bodies corporate;
a person, being the holder of a licence under an Australian law relating to the licensing of auctioneers, conducting an auction of forfeited shares;
any other conduct of a kind prescribed by regulations made for the purposes of this paragraph.
Something that is done through or by means of the facility that constitutes a financial market is done
Note: For example, when securities are quoted or traded on a financial market.
A person who is allowed to participate directly in a financial market under the market
'
s operating rules is a
recognised by the operating rules of the market as a suitably qualified affiliate of the market; and
involved in the carrying on of a financial services business (including as an employee, director or in some other capacity);
any other provisions prescribed by regulations for the purposes of this paragraph.
is a facility that provides a regular mechanism for the parties to transactions relating to financial products to meet obligations to each other that:
are of a kind prescribed by regulations made for the purposes of this paragraph.
a person acting on their own behalf, or on behalf of one party to a transaction only;
a person who provides financial services to another person dealing with the other person's accounts in the ordinary course of the first person's business activities;
the actions of a participant in a clearing and settlement facility who has taken on the delivery or payment obligations, in relation to a particular financial product, of another person who is a party to a transaction relating to a financial product;
conducting treasury operations between related bodies corporate;
operating a facility for the exchange and settlement of non-cash payments between providers of non-cash payment facilities;
any other conduct of a kind prescribed by regulations made for the purposes of this paragraph.
A person who is allowed to participate directly in a clearing and settlement facility under the facility
'
s operating rules is a
recognised by the operating rules of the facility as a suitably qualified affiliate of the facility; and
involved in the carrying on of a financial services business (including as an employee, director or in some other capacity);
any other provisions prescribed by regulations for the purposes of this paragraph.
does not apply to any offences based on the provisions of this Chapter.
Note: For the purposes of offences based on provisions of this Chapter, corporate criminal responsibility is dealt with by section 769B, rather than by Part 2.5 of the
Criminal Code
.
Subject to subsections (7) and (8), conduct engaged in on behalf of a body corporate:
by a director, employee or agent of the body, within the scope of the person
'
s actual or apparent authority; or
by any other person at the direction or with the consent or agreement (whether express or implied) of a director, employee or agent of the body, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, employee or agent;
is taken, for the purposes of a provision of this Chapter, or a proceeding under this Chapter, to have been engaged in also by the body corporate.
Conduct engaged in by a person (for example, the giving of money or property) in relation to:
a director, employee or agent of a body corporate, acting within the scope of their actual or apparent authority; or
any other person acting at the direction or with the consent or agreement (whether express or implied) of a director, employee or agent of a body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, employee or agent;
is taken, for the purposes of a provision of this Chapter, or a proceeding under this Chapter, to have been engaged in also in relation to the body corporate.
If, in a proceeding under this Chapter in respect of conduct engaged in by a body corporate, it is necessary to establish the state of mind of the body, it is sufficient to show that a director, employee or agent of the body, being a director, employee or agent by whom the conduct was engaged in within the scope of the person
'
s actual or apparent authority, had that state of mind. For this purpose, a person acting as mentioned in paragraph (1)(b) is taken to be an agent of the body corporate concerned.
Subject to subsections (7) and (8), conduct engaged in on behalf of a person other than a body corporate:
by an employee or agent of the person, acting within the scope of the actual or apparent authority of the employee or agent; or
by any other person acting at the direction or with the consent or agreement (whether express or implied) of an employee or agent of the first-mentioned person, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the employee or agent;
is taken, for the purposes of a provision of this Chapter, or of a proceeding under this Chapter, to have been engaged in also by the first-mentioned person.
Conduct engaged in by a person (for example, the giving of money or property) in relation to:
) other than a body corporate, acting within the scope of their actual or apparent authority; or
any other person acting at the direction or with the consent or agreement (whether express or implied) of an employee or agent of a person (the
) other than a body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the employee or agent;
is taken, for the purposes of a provision of this Chapter, or of a proceeding under this Chapter, to have been engaged in also in relation to the principal.
If, in a proceeding under this Chapter in respect of conduct engaged in by a person other than a body corporate, it is necessary to establish the state of mind of the person, it is sufficient to show that an employee or agent of the person, being an employee or agent by whom the conduct was engaged in within the scope of the employee
'
s or agent
'
s actual or apparent authority, had that state of mind. For this purpose, a person acting as mentioned in paragraph (4)(b) is taken to be an agent of the person first referred to in subsection (4).
Nothing in this section, or in any other law (including the common law), has the effect that, for the purposes of a provision of
, a financial service provided by a person in their capacity as an authorised representative of a financial services licensee is taken, or taken also, to have been provided by that financial services licensee.
Nothing in this section, or in any other law (including the common law), has the effect that, for the purposes of a provision of
, conduct engaged in by a person in their capacity as a regulated person (within the meaning of
) is taken, or taken also, to have been engaged in by another such regulated person.
Nothing in this section, other than subsections (7) and (8), excludes or limits the operation of
in relation to the provisions of this Chapter or to proceedings under this Chapter.
The regulations may provide that this section, or a particular provision of this section, has effect for specified purposes subject to modifications specified in the regulations. The regulations have effect accordingly.
is a reference to an act, an omission to perform an act, or a state of affairs; and
of a person includes a reference to the knowledge, intention, opinion, belief or purpose of the person and the person
'
s reasons for the person
'
s intention, opinion, belief or purpose.
For the purposes of this Chapter, or of a proceeding under this Chapter, if:
a person makes a representation with respect to any future matter (including the doing of, or refusing to do, any act); and
the person does not have reasonable grounds for making the representation;
the representation is taken to be misleading.
Subsection (1) does not limit the circumstances in which a representation may be misleading.