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A GLIMPSE AT THE FINANCIAL SERVICES REFORM ACT 2001

The Financial Services Reform Act commenced on the 11th of March 2002.

The Act and related legislation provide for a new regime for the regulation of financial products and services.

The main objectives of the Act are to:

(a) harmonise the regulation of all financial products, including:
· securities, futures and derivatives, foreign exchange;
· managed investment schemes, superannuation,
· life and general insurance;
· deposit accounts; and
· means of payments services such as smart cards and e-cash;
(b) provide a single licensing framework for financial product providers; and
(c) provide for a single uniform product disclosure standards regime

Generally there are far reaching changes, designed to bring all financial products and services under a single regulatory regime. This will have a major impact on all affected parties and ASIC expects that regulated bodies will plan well ahead to cope with the changes under the Act and to provide ASIC with all the information it needs to process the thousands of eventual licence applications.

• Whether someone is providing advice or is dealing is a fundamental question that needs to be answered at the beginning. The answer is essential for related questions such as:
  
• when do you need to be licensed;
  
• what kind of licence do you need;
  
• when does someone need to be authorised as a representative of a licensee;
  
• what competency and training requirements apply to a representative of a licensee; and
  
• what conduct and disclosure obligations apply.

The impact on the small to medium size financial advisory firms will be considerable and planning for the changes is essential.

LSOS Compliance and Regulation Solutions provides the convenience of a "one-stop" support resource, to individuals and corporations in meeting the requirements of FSR Act.

Disclaimer& copyright: The material contained in this article is not advice. Items and views expressed are general comments only and do not constitute or convey advice. We recommend that clients or potential clients seek our formal opinion on specific issues before acting in any area. The article is issued as private information to LSOS clients and potential clients only and as such it should be regarded as confidential and not be copied or made available to any person without the prior written approval of LSOS.

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POLICY STATEMENT 146 - TRAINING OF AUTHORISED REPRESENTATIVES

This policy statement gives guidance to securities dealers licensees, life insurance companies and life brokers (principals) on how they can meet their obligations to ensure that their authorised representatives providing financial services to retail consumers;

(a) have undertaken education and training that meets ASIC's requirements for knowledge, skills and integrity; and

(b) undergo continuing education.

The policy establishes the minimum requirements for training programs undertaken by authorised representatives or, where required, the individual assessment of representatives. The appropriate training courses are those recorded on the ASIC Register of Compliant Training and any individual assessment must be completed by an ASIC Authorised Assessor.

There was a two-year transitional period to give the licensees and principals time to:

• Review their policies about educating and training their representatives;
• Revise, where necessary, their training programs to meet ASIC's requirements for knowledge, skills and integrity; and
• Arrange for their training programs (or individual representatives) to be assessed by an authorised assessor.

Note: This process must be completed by 30 June 2002.

LSOS Compliance and Regulation Solutions provide the convenience of a "one-stop" support resource to individuals and corporations, in meeting PS146 requirements.

Disclaimer & copyright: The material contained in this article is not advice. Items and views expressed are general comments only and do not constitute or convey advice. We recommend that clients or potential clients seek our formal opinion on specific issues before acting in any area. The article is issued as private information to LSOS clients and potential clients only and as such it should be regarded as confidential and should not be copied or made available to any person without the prior written approval from LSOS.

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The text below has been reproduced from:

INFORMATION SHEET 1 - Overview

Office of the Federal Privacy Commissioner
www.privacy.gov.au

An Overview of the Privacy Amendment (Private Sector) Act 2000

What does the new Act do?
The Privacy Amendment (Private Sector) Act 2000 regulates the way the private sector organisations can collect, use, keep secure and disclose personal information. For the first time, it gives individuals the right to know what information an organisation holds about them and a right to correct that information if it is wrong.

The Act means consumers now have the right to know why a private sector organisation is collecting their personal information, what information it holds about them, how it will use the information and who else will get the information. Except for some special circumstances, consumers can ask to see this information and for the information to be corrected if it is wrong. Consumers can also make a complaint if they think their information is not being handled properly. A consumer could also apply to the Federal Court or the Federal Magistrate's court for an order to stop an organisation from engaging in conduct that breaches the NPPs.

Who will the new private sector provisions apply to?
The Act will apply to 'organisations' in the private sector. An organisation can be an individual, a body corporate, a partnership, an unincorporated association or a trust. It will cover

• businesses, including not-for-profit organisations such as charitable organisations, sports clubs and unions, with a turnover of more than $3 million
• federal government contractors
  
• health service providers that hold health information (even if their turnover is less than $3 million).
  
• organisations that carry on a business that collects or discloses personal information for a benefit, service or advantage (even if their turnover is less than $3 million).
  
• small businesses with a turn-over of less than $3 million that choose to opt-in
  
• incorporated State Government business enterprises
  
• any organisation that regulations say are covered.

Who is not covered by the new provisions?
The new provisions will not apply to:

• State or Territory Authorities eg Ministers, departments, courts and local government councils
  
• Political parties and acts of political representatives in relation to electoral matters
  
• Most small businesses with an annual turnover of less than $3 million
  
• Acts or practices in relation to employee records of an individual if the act or practice directly relates to a current or former employment relationship between the employer and the individual
  
• Act or practices of media organisations in the practice of journalism

When will the new provisions come into operation?
Most organisations, including all health services holding health information, will have 12 months to get ready for the new scheme. The new provisions will start to apply 21 December 2001. Small businesses (except health services) covered by the new provisions have an additional twelve months and the new provisions will apply in December 2002.

How will the Act work?
The National Privacy Principles set the base line standards for privacy protection. Organisations may have and enforce their own codes. These codes must be approved by the Privacy Commissioner as having obligations at least equivalent to the National Privacy Principles and meet other requirements. The code must have an independent code adjudicator to handle complaints. If the code does not provide for a complaints handling mechanism the Privacy Commissioner is the code adjudicator.

Organisations that do not have their own code must comply with The National Privacy Principles set out in the Privacy Amendment Act. The Privacy Commissioner handles complaints in these circumstances.

What are the National Privacy Principles (NPPs)?
The NPPs are ten principles or rules in the Act about how organisations should handle personal information. They cover collection (NPP1), use and disclosure (NPP 2), data quality (NPP3), data security (NPP 4) openness (NPP 5), access and correction (NPP6), identifiers (NPP7), anonymity (NPP 8), transborder flow of data (NPP 9) and sensitive information (NPP 10).

Will the NPPs apply to information organisations already hold?
Only some of the NPPs will apply to information organisations already hold when the new provisions start to apply. The NPPs relating to data security, data quality when information is used and disclosed, identifiers and transborder flow will apply regardless of when the information was collected. The principle relating to access and correction will apply to all information collected after the new provisions apply, and any already existing information that is used. Those principles relating to collection, use and disclosure, data quality when it is collected, and sensitive information will not apply to information collected before the new provisions start to apply.

What information is covered by the new provisions?
The Act covers personal information. It has special protection for personal information that is sensitive information. The Privacy Act only applies to information that is recorded in some form, which can include in an electronic record.

What is Personal Information?
Personal information is information or an opinion that can identify a person.

What is Sensitive Information?
Sensitive information is information about an individual's racial or ethnic origin, political opinions, membership of a political association, religious beliefs or affiliations, philosophical beliefs, membership of a professional or trade association, membership of a trade union, sexual preferences or practices, criminal record, or health information.

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