The Australian Securities and Investment Commission (ASIC) have released a Consultation paper (230) addressing three class orders that are due to expire and proposing to repeal one class order that they say is no longer required. The three Class Orders that are being modified are:
- Class Order [CO 04/909] Agency banking, due to expire on 1 October 2017. This class order removes the obligation to appoint authorised representatives in relation to the distribution of basic deposit products;
- Class order [CO 05/681] Transitional relief for deposit product providers – PDSs and periodic statements, due to expire on 1 October 2015. This class order does not require the inclusion of an interest rate in a Product Disclosure Statement and a termination value in a periodic statement for deposit products; and
- Class Order [CO 05/1070] General insurance distributors, due to expire on 1 April 2016. This class order, similarly to CO 04/909, removes the obligation to appoint authorised representatives in relation to general insurance products.
The proposed changes to [CO 04/909] and [CO 05/1070] are relatively minor. The changes include combining [CO 04/909] and [CO 05/1070] into a single instrument and updating the formatting, language and drafting of the instruments to ensure the instruments are simple to understand. ASIC have reached the view that the current orders are operating effectively and efficiently and are continuing to achieve the desired outcomes. It is of the view that consumers will not be negatively impacted by this proposal.
ASIC’s proposal to maintain the relief provided for distributors of general insurance products means that existing distribution arrangements would not need to be altered. If this approach is adopted, this will be a positive for the industry because there will be no substantive change to the regulatory environment which means there should be no additional costs incurred.
Also, ASIC has proposed to repeal Class Order [CO 06/623] Relief for certain general insurers from s 981B account requirements as they have formed the view that it is no longer required and not a useful part of the regulatory framework. ASIC’s rationale is the current provisions in the Act are sufficient to protect insurers collecting premium payments as agents for another insurer because of the current exemption contained in section 981A(2)(c) of the Act extends to money collected by insurers that act as agents for another insurer. The received money must continue to be treated in accordance with section 1017E of the Act.