Corporations Act 2001

CHAPTER 7 - FINANCIAL SERVICES AND MARKETS  

Note: This Chapter applies to a CCIV in a modified form: see Division 4 of Part 8B.7 .

PART 7.8A - DESIGN AND DISTRIBUTION REQUIREMENTS RELATING TO FINANCIAL PRODUCTS FOR RETAIL CLIENTS  

Division 3 - Distribution of financial products  

SECTION 994E   REASONABLE STEPS TO ENSURE CONSISTENCY WITH TARGET MARKET DETERMINATIONS  

Persons who make target market determinations

994E(1)  
A person who makes a target market determination for a financial product must take reasonable steps that will, or are reasonably likely to, result in retail product distribution conduct in relation to the product (other than excluded conduct) being consistent with the determination.

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

Note 2: In a prosecution for an offence, the defendant bears an evidential burden in relation to conduct being excluded conduct (see subsection 13.3(3) of the Criminal Code ).

Note 3: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

994E(2)  
A person is not taken to have failed to take reasonable steps for the purpose of subsection (1) merely because:

(a)  retail product distribution conduct of a regulated person (other than the person) in relation to the product is inconsistent with the target market determination; or

(b)  a retail client who is not in the target market for the product acquires the product. Regulated persons

994E(3)  
If:

(a)  a target market determination for a financial product has been made; and

(b)  the product is on offer for acquisition by issue, or for regulated sale, to retail clients; and

(c)  a regulated person engages in retail product distribution conduct in relation to the product; and

(d)  the regulated person failed to take reasonable steps that would have resulted in, or would have been reasonably likely to have resulted in, the retail product distribution conduct being consistent with the determination;

the regulated person contravenes this subsection unless the retail product distribution conduct is excluded conduct.

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

Note 2: In a prosecution for an offence, the defendant bears an evidential burden in relation to conduct being excluded conduct (see subsection 13.3(3) of the Criminal Code ).

Note 3: This subsection is also a civil penalty provision (see section 1317E ). For relief from liability to a civil penalty relating to this subsection, see section 1317S .

994E(4)  
A regulated person is not taken to have failed to take reasonable steps for the purpose of paragraph (3)(d) merely because a retail client who is not in the target market for the product acquires the product. What are reasonable steps

994E(5)  
Without limiting subsections (1) and (3) , reasonable steps in relation to a person are steps that, in the circumstances, the person is reasonably able to take that will, or are reasonably likely to, result in retail product distribution conduct in relation to the financial product being consistent with the target market determination for the product, taking into account all relevant matters, including:

(a)  the likelihood of any such conduct being inconsistent with the determination; and

(b)  the nature and degree of harm that might result from an issue or regulated sale of the financial product:


(i) to retail clients who are not in the target market; or

(ii) that is inconsistent with the determination; and

(c)  what the person knows, or ought reasonably to know, about:


(i) the matters referred to in paragraphs (a) and (b); and

(ii) ways of eliminating or minimising the likelihood and the harm; and

(d)  the availability and suitability of ways to eliminate or minimise the likelihood and the harm.

994E(6)  
A regulated person is not taken to have failed to take reasonable steps for the purpose of paragraph (3)(d) if the person engages in retail product distribution conduct that:

(a)  relates to a particular retail client; and

(b)  relates to a particular financial product; and

(c)  is necessary to implement personal advice given to the client in relation to the product.


 

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