The transitional arrangements for the Financial Services Reform (FSR) Bill will be contained in the Financial Services Reform (Consequential and Transitional Provisions) Bill that will be introduced during the Winter Sittings. That Bill will deal with transitional issues related to when the FSR regime begins to apply to different categories of people. Transitional issues related to how people actually move from a current regime to the FSR regime will be dealt with by regulations.
The information below sets out the proposed approach for a number of key areas of the FSR Bill.
Markets and Clearing and Settlement Facilities Parts 7.2-7.5
- The Australian Stock Exchange and those exchanges and clearing houses which are approved will be issued with a licence under the new regime with effect from commencement. Those licences will reflect the activities which the exchanges and clearing houses are entitled, under the Corporations Law, to provide.
- Market and clearing and settlement facility licensees will then be entitled to seek an amendment (under the generally applicable provisions) to the conditions on their licences to allow services to be provided in relation to a greater range of financial products.
- The operators of financial markets which are currently the subject of exempt market declarations will have two years to apply for and obtain a licence under the new regime. During that period, the existing regime will continue to apply.
- Similarly, the operators of clearing and settlement facilities which are not currently required to be approved will have two years to apply for and obtain a licence under the new regime.
Financial Service Provider Licensing, Conduct and Disclosure Parts 7.6-7.8
- Existing licensees such as holders of securities dealers licences, investment advisers licences, futures brokers licences, futures advisers licences and registered insurance brokers will have two years from commencement to obtain an Australian financial services licence. During this period, existing licensing regimes will continue to apply.
- The two year transitional period will also apply to bodies that are regulated by APRA. In addition, regulations will be able to extend this transitional period to other categories of people, such as some people who are currently exempt from the requirement to hold a licence.
- From commencement new entrants will have to apply for an Australian financial services licence.
- Existing licensees will be automatically entitled to an Australian financial services licence that covers their existing activities at any time during the two years, if they make a declaration to the effect that they will comply with their obligations under that licence.
- Licensees will then be entitled to seek an amendment (under the generally applicable provisions) to the conditions on their licences to allow for a greater range of activites.
- The provisions relating to conduct and disclosure for licensees (Parts 7.7 and 7.8) will apply to people when they become holders of an Australian financial services licence. Until that point, existing conduct and disclosure regimes will continue to apply.
Financial Product Disclosure Part 7.9
- Existing product disclosure regimes will continue to apply for a period of two years after commencement.
- During that time product issuers will be able to opt in to the new regime in relation to a financial product.
- However, a number of new provisions will apply on commencement to all financial products. These are: information for existing holders of superannuation products and RSA products (proposed section 1017C), dealing with money (proposed section 1017E), confirming transactions (proposed section 1017F), cooling off periods (proposed sections 1019A and 1019B) and short selling (proposed sections 1020B and 1020C).
- In relation to superannuation products that will be subject to the choice of fund regime, special transitional provisions will be prescribed in regulations once the timing of choice legislation is known.
Implementation
- Treasury and ASIC will be establishing an Implementation Consultative Committee to facilitate ongoing consultation in the development of the regulations under the regime.
- ASIC have announced their proposed timetable for releasing policy proposal papers and other guidelines for implementing the Bill (see ASIC Press release 8 February 2001).