Licensing and disclosure: Making the transition to the FSR regime

LICENSING AND DISCLOSURE: MAKING THE TRANSITION TO THE FSR REGIME
SECTION 1.1: LICENSING — WHAT IS THE TRANSITION PERIOD?
Note 1: Investment advice business has the meaning given by s77 of the old
Corporations Act.
Note 2: At the end of the transition period, solicitors and accountants will be
subject to the new regulatory regime unless they receive the benefit of the
relevant exemptions in s766B(5) and regulation 7.1.29.
These exemptions are different from the investment advice business exemption
in s77 of the old Corporations Act and should be carefully considered before
they are relied upon.
Example A
An accountant who starts public practice after FSR commencement gives
incidental investment advice as part of that practice 6 months after FSR
commencement. Under regulation 10.2.38, the accountant will have up to 18
months to obtain an AFS licence authorising the provision of financial product
advice. At the end of the transition period, the accountant or solicitor will be
subject to the new regulatory regime.
Example B
A solicitor in public practice who starts public practice after FSR
commencement gives incidental investment advice as part of that practice. The
solicitor is not covered by the exemption in s766B(5) and would be subject to
the requirement to hold an AFS licence under the FSR Act. Under regulation
10.2.38, the solicitor will have the benefit of the transition period. At the end
of the transition period, the accountant or solicitor will be subject to the new
regulatory regime.
REPRESENTATIVES
1.1.8 Under the transitional provisions, the transition period for a
current financial service provider will generally apply to its
representatives. However, special arrangements apply for
insurance agents and insurers: see Section 1.5 of this guide.
Note 1: Under s1436 of the transitional provisions, a representative for this
purpose is broadly defined to include:
(a) an agent (however described) of the principal;
(b) an employee or director of the principal;
(c) any other person who is authorised to carry on activities for or on behalf of
the principal.
Note 2: Representatives will remain subject to their principal’s old regulatory
regime for the principal’s transition period, in relation to activities they carry
on as a representative: see paragraph 1.2.13 of this guide.
Australian Securities and Investments Commission — October 2001
Page 16