I suspect that not everyone has caught up with the regulations announced by the Federal Government on 25 Aug 2007 that simplify the lives of financial services providers by allowing some of the information, required to be included in retail disclosure documents, to be by reference rather than by direct incorporation.
SUMMARY OF BENEFITS
The incorporation by reference of information in Statements of Advice and Product Disclosure Statements reduces the size of disclosure documents. This has a twofold benefit in that: (a) Provider costs should reduce and (b) Clients receive more concise information.
As from 1 July 2008 the dollar disclosure requirements for general insurance products have been amended to facilitate costs and benefits being expressed as a range, percentage or description of costs and benefits in Product Disclosure Statements, in applicable circumstances.
The new regulations
The Corporations Amendment Regulations 2007 (No 10) (Cth)) commenced on 25 August 2007.
Incorporation by reference
The effect of the regulation is to allow ‘incorporation by reference’ in both Product Disclosure Statements (PDSs) and Statements of Advice (SOAs).
Therefore, it is no longer necessary to include information in full, in these disclosure documents and the provider can comply by simply providing a reference to another document or location for the relevant information.
However, any information incorporated by reference is deemed to be included in the relevant disclosure document. As such, product issuers must ensure that the PDS or SOA complies with legislative and the Australian Securities & Investments Commission’s (ASIC) regulatory requirements viz. that incorporated information is clear, concise and effective and is not misleading or deceptive etc.
The requirements for PDSs and SOAs vary slightly.
Product Disclosure Statements
A statement or information can be incorporated by reference in a PDS only if:
It is in writing and is publicly available (other than in the PDS or a short-form PDS) and the PDS:
Specifically refers to the statement/information;
Provides adequate particulars so that investors or prospective investors (“investors”) can identify the document (or the relevant portion) that contains the statement/information and can locate it; and
Notifies the investor that they may obtain a copy of the statement/information on request at no charge (where requested, the copy must be provided as soon as practicable).
Nonetheless, some essential information set out hereunder must be directly included in the PDS (i.e. cannot be incorporated by reference):
A summary of the purpose, significant features and risks of the product;
The name and contact details of the product issuer and seller (if it is a sale statement);
The enhanced fee disclosure requirements and the Consumer Advisory Warning in Part 2 of Schedule 10 of the Corporations Regulations (however some portions of the supplementary explanation of fees and costs in Division 4 are not deemed to be essential);
Information about the dispute resolution procedures for complaints and how it may be accessed by investors; and
Information about any cooling-off regime that applies to the acquisitions of the financial product.
Where statements/information are incorporated by reference in a PDS, the auxiliary statements or information are not required to be lodged with ASIC unless the PDS is required to be lodged. However, the supplementary documents must be retained for seven years from the date of the PDS. (If the PDS is required to be lodged with ASIC, the relevant document must also be lodged with ASIC.)
Statement of Advice
A statement or information can be incorporated by reference in a SOA in equivalent situations to a PDS.
However, the product issuer of the SOA, must supply investors with the document (or relevant portion), unless it has previously been given to the investor. Where the providing entity is an authorised representative of an Australian Financial Services (AFS) licensee, the entity is not obligated to provide the auxiliary document, providing another authorised representative of the AFS licensee or the licensee has already done so.
SOA must also be retained for seven years and the document (or portion thereof) referred to in the SOA must also be retained for seven years after the date of the SOA.
Dollar disclosure provisions for general insurance products
The complications experienced by the insurance industry as a result of the dollar disclosure requirements were recognised by the regulations that permit general insurers providing a PDS prepared on or after 1 July 2008 for a general insurance product, to only comply with the modified dollar disclosure requirements. Resultantly:
If information must be stated in dollars and the precise amount can only be established after the responsible person assesses the risk of the insured or after the insured has elected the level of insurance cover, then the responsible person is permitted to provide a document containing the information as soon as practicable (providing it is not provided later than five business days after the general insurance product is issued) and;
A statement in the PDS is included that sets out the information by providing it as a range of amounts in dollars, a percentage of a matter mentioned in the statement, or a description.
The transitional period for complying with these new requirements ends on 30 June 2008. (The current class order relief continues to be available during the transitional period). *
* IR 07-11 ASIC Extends Disclosure Relief for General Insurance Products: CO 05/638: CO056383.
Licensing relief for actuaries
Some actuaries have previously raised concerns that the existing categories of exemption from licensing did not necessarily apply to all aspects of their ordinary business. They will be pleased that the amendment clarifies that actuaries who ordinarily provide financial product advice to wholesale clients in the normal course of their business, are not required to hold an AFS licence.
Unresolved Issues
The previous Federal Government had requested feedback on a number of proposals that were included in draft regulations but which were not included in the new regulations nor were they resolved before the election. These are outlined below:
Financial Services Guides (FSG)
Where a client categorically rejects a product or financial services advice there would be no requirement to give the client an SOA or Financial Services Guides (FSG).
Pursuant to some restrictions, an FSG could be standardised to reflect industry criterion of AFS Licensees, banking-owned licensees and individuals that are sub-authorised by authorised representatives.
Superannuation
Providing a Superannuation trustee administers one fund with assets of $10 million and administers more than one fund, the net value of the funds could be aggregated for the purpose of treating the trustee as a wholesale client in relation to financial services advice regarding a superannuation product.
Employers operating businesses other than small businesses could be considered wholesale clients when provided with financial services relating to superannuation products.
Other Products
Oral financial services disclosure requirements associated with financial products described in a PDS, FSGs or SOAs could be reduced for financial products with a cooling-off period.
Secondary financial service providers could be relieved from obligations held to retail clients in prescribed circumstances where intermediaries would be obligated to accept responsibility for the financial services provided.
A provider of sickness and accident insurance or a provider of life risk insurance could address an investor as wholesale where cover is part of a package with workers’ compensation insurance being offered.
Foreign financial services providers who act as trustee of an Australian financial product where all investors of the product are wholesale, may no longer have to obtain an AFS Licence if the Australian product issuer holds an AFS licence.
With the arrival of a new Federal Labor Government it is not known whether it intends to introduce the outstanding proposals or abandon them.
Which school do we send Johnny to? Should we allow Johnny to go on his school camp? or is Johnny old enough to go out unsupervised with his friends? These are all decisions that parents at some point or another need to make.Parents are not always in agreement when it comes to making these parenting decisions.This divide between parents can be even greater when the parents do not live together or have in fact separated and are in conflict with each other.
With separated couples, the room for dispute is increased. Issues which arise in these circumstances are often more emotionally fuelled.Issues such as where children should live and how much time they should spend with each parent can have deep emotional impacts on parents and can affect their relationship with their children significantly.Furthermore protracted litigation over these issues is not necessarily going to improve the relationship between the parents or their children.
It is very easy to let you’re feelings towards the other parent affect the way you deal with that other parent.What must be remembered is that in proceedings regarding children’s issues the most important thing to remember is that as a parent you should be acting in the best interests of your child.According to the Family Law Act 1975 the best interests of children are met by:
ensuring that children have the benefit of both of their parents having a meaningful involvement in their lives, to the maximum extent consistent with the best interests of the child; and
protecting children from physical or psychological harm from being subjected to, or exposed to, abuse, neglect or family violence; and
ensuring that children receive adequate and proper parenting to help them achieve their full potential; and
ensuring that parents fulfil their duties, and meet their responsibilities, concerning the care, welfare and development of their children.
The principles specified in the Act underlying these objects are that (except when it is or would be contrary to a child’s best interests):
children have the right to know and be cared for by both their parents, regardless of whether their parents are married, separated, have never married or have never lived together; and
children have a right to spend time on a regular basis with, and communicate on a regular basis with, both their parents and other people significant to their care, welfare and development (such as grandparents and other relatives); and
parents jointly share duties and responsibilities concerning the care, welfare and development of their children; and
children have a right to enjoy their culture (including the right to enjoy that culture with other people who share that culture).
As you may see the Act speaks of the rights of the child as opposed to the rights of the parents.
If you find that you cannot sit down and talk with the other parent of your child on your own, then mediation with a neutral third party may be a good option for you.In fact in most cases a certificate stating that you have attempted mediation is required before you can begin Court proceedings regarding children’s issues. There are numerous mediation services available.If at mediation you are still unable to come to an arrangement with the other party that would ensure the child has available to him or her all their rights, then Court action may be the only avenue available to you.It must be remembered that in situations where there is an ongoing relationship between the parties, all parties concerned will be better off if they can avoid Court action.Unfortunately this is not always possible for one reason or another.
At Georgiadis Lawyers we believe that our clients deserve the best representation and that this may not always mean barreling into Court and racking up fees and charges for our client.In disputes regarding children the aim should be to obtain a settlement that both parents are happy with, that will hopefully avoid future conflicts.
I have had a number of enquiries from entities which provide financial services or issue financial products about whether or not they are obligated to comply with the corporate finance, financial services and managed investment provisions.
1.1 Assumptions Regarding the Need for a PDS or Prospectus
Some of these entities seem to be acutely aware of the disclosure obligations implemented pursuant to the Commonwealth Corporations Act 2001 (the “Corporations Act”) and the Corporations Regulations 2001 (the “Regulations”) as amended and interpreted by all applicable Australian Securities and Investment Commission (“ASIC”), forms, class orders, practice notes, regulatory guides and media releases.
However they sometimes erroneously assume that because they are providing a financial service that they must instruct a lawyer to draft a Product Disclosure Statement or Prospectus or conduct a compliance review of the same.
In other instances, the entity spends hours attempting to draft the Disclosure Document themselves or allows one of their staff members to draft it and then spends many more hours researching what is a reasonable legal fee for legal compliance services.
Their lawyer is left to advise them when finally instructed at a late stage, that the PDS or Prospectus they have spent six months preparing is not required at this stage because there is some exemption from the Disclosure Obligations that applies to the intended activity.
1.2 Assumptions Regarding the Need for an AFSL
Similarly, too some entities which have never performed any financial services activity before, and which have no experience, assume that if they are undertaking any activity that is arguable financial in nature that they must instruct a lawyer to make an AFSL application for an Australian Financial Services Licence (“AFSL”) on their behalf.
I advise that ASIC will be unlikely to grant an AFSL to a person who has never performed financial services activities who has no prior experience. Whilst it may be a surprise to those gaining experience by undertaking activity that is exempt from the AFSL requirements or acting in conjunction with an experienced AFS Licensee may be the most appropriate method for gaining the necessary experience.
1.3 Seek Legal Advice Regarding These Assumptions
My advice is that if you believe you are required to issue a PDS or Prospectus or to make an application for an AFSL, seek a legal opinion from an adviser regarding whether or not this assumption is correct. Seeking advice in the early stages may save you or your staff from wasting valuable time and energy if ultimately, your assumptions are wrong.
1.4 ASIC May Grant Relief From the Financial Services Obligations
In some instances, ASIC may grant relief from the corporate finance, financial services and managed investment provisions of the Corporations Act and Regulations.
ASIC recently issued a report that provides an overview of situations between January to May of 2007 where ASIC has exercised, or refused to exercise its power to grant an exemption from the financial reporting, managed investment, fundraising and financial services provisions.
The report also details cases where the ASIC made a determination to adopt a no action position in relation to activity that I would deem to be non-compliance with the provisions, and features an appendix detailing the relief instruments it executed. For ease of reference, the appendix contains cross-references linking the instruments to the relevant paragraph(s) of the report. The appendix now also contains hyperlinks to the relevant ASIC Gazette where those instruments have been published.
1.4.1 ASIC’S POWERS
The ASIC holds extensive powers to grant an exemption or modification from the Financial Services Provisions (including from compliance with Chapter 5C (managed investment schemes), Chapter 6D (fundraising) and Chapter 7 (financial services)).
The ASIC exercises its discretion to modify or exclude particular obligations where it has formed the view that the responsibility of complying with the Financial Services Law significantly detracts from the objectives and purpose underlying the legislative provisions.
The ASIC releases copies of most exemption and/or modifications it has granted in the ASIC Gazette, which is available from the ASIC website.
If you wish to make an application for relief, your application must be in writing and should address the requirements set out in the ASIC’s Regulatory Guide [RG 51]. I am more than happy to assist you in making an application should you desire.
The rising road toll and community outrage about people driving whilst disqualified has had an impact upon the sentences which the Courts are imposing for this offence. The Courts are now handing down terms of imprisonment for defendants who appear before the Courts for driving whilst disqualified, even for first offenders.
It should also be noted that the Courts do not differentiate between a disqualification ordered by the Court, for example, a drink driving or other traffic offence, and a disqualification ordered by the Registrar of Motor Vehicles. For example, under the points demerit system or as a result of non-payment of fines.
A person who is found guilty of driving a motor vehicle whilst disqualified from holding or obtaining a driver’s licence or while a person’s licence is suspended, is liable for imprisonment for up to 6 months for a first offence and for a subsequent offence, for 2 years (Motor Vehicle Act, 1959, Section 91).
The Supreme Court has emphasised that the ordinary punishment for driving whilst disqualified must be imprisonment. The Courts retain discretion to suspend the sentence but only in special circumstances.
The Courts need to be made aware of the reason why the offending has occurred and whether there were any exceptional circumstances behind the offending. In addition, the Court will need to be made aware of the previous good character of the offender, the ramifications that a term of imprisonment would have on the offender and the likelihood of the offender responding to a final warning from the Court. All these factors and more, need to be taken into consideration by the Court as to why a person should not be imprisoned, especially for a first offender.
It is therefore important if you are disqualified for holding or obtaining a driver’s licence that you think first before getting into the driver’s seat of a motor vehicle and putting that motor vehicle in motion as the penalties associated by being caught driving whilst disqualified can result in you spending a period of time in prison.
Have you been injured at work or during the course of your employment? If so, you may be entitled to receive some compensation.
If you are employed or contracted to undertake work, you may receive compensation for an injury or illness that occurred at work or is related to work. It is not necessary to prove that someone was at fault.
In some situations it may be possible to make a claim for an injury at work against a third party if it can be shown that the third party was negligent.
If you do have a claim your solicitor is able to handle the negotiations with your employer, their insurer and if relevant, a third party.
Your capacity to work will be assessed and your solicitor will obtain medical reports from doctors relating to your injury or illness.
WHAT ARE YOU ENTITLED TO CLAIM FOR?
Weekly Payments
If you are unable to undertake your employment duties or unable to perform some of the
tasks that you would normally perform during the course of your employment and your employer is unable to find alternative employment, you are entitled to receive weekly payments.
Medical and Rehabilitation Expenses
These will be paid for by WorkCover on the condition that your medical and rehabilitation expenses are directly related to your injury.
Section 43 Lump Sum Payment of Compensation
If it is determined that your disability is permanent you will be entitled to a lump sum compensation payment depending upon the extent of any permanent disability sustained.
At Georgiadis Lawyers we can provide advice as to whether an offer being made is appropriate and if not, we can handle the dispute process on your behalf.
Section 42 Redemption Settlement
If there is an inability to work in the future, you may be entitled to a redemption settlement which redeems liability of WorkCover.
If you have a claim against a third party you may also be entitled to claim for pain and suffering.
