ASIC reinstates relief to limited AFS licensees offering group insurance products.
ASIC Class Order CO 08/1 Group purchasing bodies (“CO 08/1”) was due to expire on 1 October 2018 but has been remade through ASIC Corporations (Group Purchasing Bodies) Instrument 2018/751 (“ASIC Instrument”). It continues to provide class relief to eligible group purchasing bodies, which are bodies that arrange for the issue of a risk management products (such as group insurance). The practical effect of the ASIC Instrument is that certain groups purchasing risk management products are relieved of regulatory burdens under the Corporations Act 2001 (Cth) (“Act”) that would otherwise apply.
The substantive change in the ASIC Instrument is that the relief now expressly extends to limited Australian Financial Services (“AFS”) licensees.
Previously, accountants could provide a range of SMSF services without holding an AFS licence. This exemption, which was repealed on 30 June 2016, had the unintended consequence of changing how CO 08/1 applied to accountants, who were subsequently granted limited AFS licences.
The ASIC Instrument relieves eligible group purchasing bodies and limited AFS licensees from the requirements under the Act to:
- register a management investment scheme (under Chapter 5C)
- hold an AFS licence for certain activities relating to risk management products
- adhere to specific disclosure and conduct requirements (under Chapter 7)
ASIC also intends to conduct a detailed review in 2019 of the policy behind this class relief to ensure it operates effectively. Following this review, ASIC will look to repeal the ASIC Instrument and replace it with a framework that includes any appropriate changes. It is anticipated that ASIC will reach a final outcome by the end of 2020.
If you have any questions about your legal obligations please contact our Hillary Ray or someone in our Financial Services team.