Treasury Releases Draft Legislation Proposing To Incorporate ASIC Instruments Into Legislation

On 24 August 2022, the Australian Treasury released the draft Treasury Laws Amendment (Measures for consultation) Bill 2022: Rationalisation of ending ASIC instruments (Cth) ("the Draft Bill") and the draft Treasury Laws Amendment (Rationalising ASIC Instruments) Regulations 2022 (Cth) ("the Draft Regulations") for public consultation.

These drafts propose making amendments that would move matters previously covered in ASIC Instruments (instruments made by the Australian Securities and Investments Commission) into Acts and Regulations. The Treasury feels that this change will create greater certainty for stakeholders.

Consultation on these drafts are still open and details for submissions are available on the Australian Treasury website.

The Aim of the Draft Legislation

This proposal, "Rationalisation of the ASIC Instruments", forms part of the Treasury's legislative program to simplify and improve accessibility and clarity of legislation. 

These amendments follow the Australian Law Reform Commission's findings in its first interim report regarding its Review of the Legislative Framework for Corporations and Financial Services Regulation ("the Review"). The Review found that the volume of ASIC Class Orders and other instruments, as well as the effect of its notional amendments on primary laws and regulations, created unnecessary complexity and so overall undermined the accessibility of this legislation.

The Draft Bill

Schedules 1 to 5 of the Draft Bill contain proposed amendments that would incorporate a number of instruments into the Corporations Act 2001 (Cth) ("the Corporations Act") and the National Consumer Credit Protection Act 2009 (Cth) ("the NCCP Act").

Schedule 1 of the Draft Bill seeks to incorporate the ASIC Class Order [CO 12/340] Proposed licensed trustee companies (Cth) into Chapters 5D.1 and 5D.5 of the Corporations Act.  According to the Draft Bill's Explanatory Memorandum, these amendments would:

Schedule 2 of the Draft Bill would incorporate the ASIC Corporations (Financial Services Guide Given in a Time Critical Situation) Instrument 2022/498 (Cth) into the Corporations Act. The proposed amendments would amend the requirements of section 941E regarding information in a Financial Services Guide supplied to a client.

Schedule 3 proposes to incorporate the ASIC Corporations (PDS Requirements for General Insurance Quotes) Instrument 2022/66  (Cth) into the Corporations Act. This would introduce a new section, which sets out circumstances in which a general insurance product PDS does not need to be provided to a retail client.

Schedule 4 contains proposed amendments that would incorporate the ASIC Corporations (Describing Debentures—Secured Notes) Instrument 2022/61 (Cth) into the Corporations Act, which would incorporate details of when a debenture may be described as a secured note.

Schedule 5 seeks to incorporate ASIC Class Order [CO 14/41] (Cth) into the NCCP Act. These proposed amendments contain exemptions for credit and consumer lease providers in regards to notices that need to be provided in certain circumstances.

The Draft Regulations

The Draft Regulations would incorporate the following instruments into the Corporations Regulations 2001 (Cth) and the National Consumer Credit Protection Regulations 2010 (Cth):

• the ASIC Corporations (Commonwealth Financial Counselling—Financial Capability Services) Instrument 2022/221 (Cth);
• the ASIC Corporations (Financial Counselling Agencies) Instrument 2017/792 (Cth);
• section 5 of ASIC Corporations (Superannuation and Schemes: Underlying Investments) Instrument 2016/378 (Cth); and 
• the ASIC Corporations (Financial Counselling Agencies) Instrument 2017/793 (Cth).

Overall, the proposed amendments would provide for certain exemptions from section 911A licensing requirements in the Corporations Act for financial counselling and capability services, and for trustees of registrable superannuation entities.

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[Draft] Treasury Laws Amendment (Measures for consultation) Bill 2022: Rationalisation of ending ASIC instruments (Cth) and draft explanatory materials available from TimeBase's LawOne service

[Draft] Treasury Laws Amendment (Rationalising ASIC Instruments) Regulations 2022 (Cth) and draft explanatory materials available from TimeBase's LawOne service