A solution to licensing problems for group purchasing bodies is still being sought after the regulator provided a temporary respite.

The Australian Securities and Investments Commission (ASIC) has issued a class order giving temporary relief from the Australian financial services licensing regime to some group purchasing bodies.

Mark Radford from Radford Lawyers says the reprieve will provide time to “find an appropriate solution”.

“The original application of group purchasing bodies was a lot broader than ASIC thought,” he told insuranceNEWS.com.au.

The regulator says the order relates to group purchasing bodies “who arrange or hold risk management products for the benefit of third parties”.

These bodies include “sporting and other not-for-profit organisations which arrange insurance for third parties”. 

Problems have arisen because the bodies generally do not buy insurance on a one-off basis, and ASIC sees them as providing a financial services business, which would need a licence.

Some of the insurance arrangements handled by the bodies could be seen as operating a managed investment scheme, which would also need licensing.

But adding these bodies to the licensing regime and the requirements of running a managed investment scheme could be very costly.

Mr Radford says the class order has provided a six-month extension to June 30 to allow Treasury to consult on whether the current relief is appropriate.

“It has provided extra time for an alternative solution to be negotiated,” he said.

Mr Radford has been working with the National Insurance Brokers Association (NIBA) on the various practical problems that have arisen from the class order for brokers and their clients.

“Treasury is currently working with NIBA, ASIC and other stakeholders to come up with a solution that is more workable for the industry,” he said.

“This result is a significant success for NIBA members given the difficulties the class order would cause for all affected by it.”