ASIC no-action position update

As a result of regulatory relief given to Australia Post by the Government, the Australian Securities and Investment Commission (ASIC) has issued a no-action position in relation to breaches of certain provisions of the Corporations Act 2001 (Corporations Act) and Corporations Regulations 2001 (Corporations Regulations).

This no-action position applies in certain circumstances and subject to the conditions outlined in ASIC’s letter to the Insurance Council of Australia. This no-action position will cease when the regulatory relief given to Australia Post expires.

The National Insurance Brokers Association (NIBA) legal adviser, Mark Radford has prepared the following explanatory note in regards to the update:

Overview of changes

Regulatory relief has been given to Australia Post by the Australian Postal Corporation (Performance Standards) Amendment (2020 Measures No. 1) Regulations 2020 which temporarily adjusts Australia Post’s performance standards by relaxing some delivery timeframes until 30 June 2021 (‘postal standards relief’).

As a result of the postal standards relief, it may not be possible in all cases for insurers and others to comply with obligations regarding FSG and PDS delivery, to the extent those provisions require documents to be given within five business days of specified events.

Subject to conditions, ASIC has advised that it does not intend to take action against a regulated person (this applies to insurers, their agents and insurance brokers where relevant) for breaching the following provisions where the breach was due to the effect of the postal standards relief:

  • section 941D of the Corporations Act – the requirement to provide a Financial Services Guide within five business days of advice being provided in time-critical circumstances;
  • section 1012G of the Corporations Act – the requirement to provide a Product Disclosure Statement (PDS) within five business days of a product being issued in time-critical circumstances; and
  • regulation 7.9.15C(5)(b)(i) of the Corporations Regulations – the requirement to provide a document containing dollar disclosure within five business days of a general insurance product being issued.

ASIC’s no-action position will cease when the postal standards relief expires.

In relation to breaches of section 1012G and regulation 7.9.15C(5)(b)(i), for products issued from 14 January 2021, ASIC’s no-action position is subject to the following conditions:

  1. The issuer must extend the cooling-off period for consumers who are sent a PDS or dollar disclosure document by mail by an additional five days (‘additional cooling-off period’) over the period specified in section 1019B of the Corporations Act (‘statutory cooling-off period’);
  1. The regulated person must take reasonable steps to advise the consumer of the additional cooling-off period when the product is issued; and
  1. If a consumer seeks to return the product outside the statutory cooling-off period but within the additional cooling-off period, the issuer must allow the consumer to exercise their right of return, and they must refund the consumer in a way that is otherwise consistent with section 1019B.

For products issued before 14 January 2021, ASIC expects regulated persons to be flexible in their approach to resolving disputes. This includes where:

  • a dispute is received from a consumer about the delayed receipt of a disclosure document during a period where Australia Post’s performance standards are affected by the postal standards relief; and/or
  • a request has been made by a consumer before the date of this letter to return a financial product and receive a refund outside the statutory cooling-off period.

You can read the full ASIC letter here.