The Financial Advisers (Definitions, Voluntary Authorisation, Prescribed Entities, and Exemptions) Amendment Regulations 2013, which came into force on 10 June 2013, reclassifies the following credit union products as category 2 products under the Financial Advisers Act 2008:
- Credit union fixed term deposit product (CU fixed term deposit)
- Credit union savings account product (CU savings account).
Parliament considers these products to be low-risk, simple and well understood. The reclassification is aimed at reducing the regulation that applies to these products, to improve access to financial advice with the view of improving the levels of savings and investment by credit union members.
A credit union share (a CU share) is already classified as a category 2 product by regulations. The main differences between a CU share and the products referred to above are as follows:
- As with a CU savings account, under a CU share the rate of return payable does not alter as a result of a repayment demand being made. However, under a CU fixed term deposit the rate of return payable can alter as a result of a demand being made before the fixed period ends
- As with a CU fixed term deposit, under a CU share no fee is payable as a result of the principal sum not having been held by the credit union for a particular period of time. However, under a CU savings account a fee of up to $50 may be payable.
A copy of the amendment regulations can be obtained here.