A list of proposed changes to the Corporations Act was released late last week by the Federal Government. The changes are to be contained in a new Financial Services Reform Amendment Bill.

Parliamentary Secretary to the Treasurer Ian Campbell says the changes are designed to “promote certainty and facilitate transition to the new arrangements before the deadline of March 11 next year”. The Bill will be introduced into Parliament soon.

Blake Dawson Waldron Financial Services Partner Mark Radford says the changes are extremely important and relevant to the insurance industry. “They will need to be taken into account in planning,” he said. “The proposed amendment to the corporate authorised representative requirements is particularly important.”

The changes:

Meaning of “retail” and “wholesale” client: In relation to bundled contracts of insurance, a person is considered to be a retail client only in respect of specific covers under the contract, as opposed to the entire contract.

Overseas regulatory bodies: Difficulties have come to light with the application of this provision. It is intended to provide an exemption from licensing for certain persons if they meet prescribed conditions, including regulation by an overseas regulatory authority approved by the Australian Securities and Investments Commission (ASIC), and dealing only with wholesale clients.

Reporting of breaches to ASIC: The requirements relating to notification of breaches of obligations to ASIC will be relaxed, including extending the basic reporting period, the introduction of a materiality requirement and specifying that it is only breaches of financial services laws under which ASIC and the Australian Prudential Regulation Authority have functions and powers that require reporting.

Licence numbers on documents: A regulation-making power will be inserted into the section to clarify the list of documents where an Australian financial services licence number is required.

Appointment of authorised representatives: The period for notification of the appointment of an authorised representative will be extended from 10 to 15 business days. Notification to ASIC of the appointment of individual authorised representatives by a corporate authorised representative will not be required under certain circumstances.

These circumstances will be that the individuals are in a specified class to which the licensee has consented; are employees of the corporate authorised representative; provide only general advice; and the advice is provided in relation to specified categories of financial products.

Combining Financial Services Guides and Product Disclosure Statements: Amendments will permit combination in certain circumstances.

Verbal Product Disclosure Statement (PDS): An amendment will allow for the oral provision of PDS information.

Disclosure of material changes and significant events: The operation of the ongoing disclosure requirements will be clarified.

Inspection of registers: The public may inspect documents lodged with ASIC under sections 1015B and 1015D.

ASIC’s modification and exemption powers: Modification and exemption powers will be provided to ASIC to enhance its ability to grant relief. The powers in Chapter 7 will also be made consistent with those given to ASIC elsewhere in the Corporations Act.

Regulation-making powers: To ensure that future Financial Services Reform Act-related issues can be resolved via regulation, more comprehensive general regulation-making powers will be included.