ASIC today made a new legislative instrument to temporarily replace seven class orders relating to non-cash payment facilities that were due to expire (‘sunset’) between 1 April 2016 and 1 April 2017.
Relief for payments products
The ASIC Corporations (Non-cash Payment Facilities) Instrument 2016/211 continues existing exemptions from the normal obligations for the following classes of payment products:
- travellers’ cheques, which are exempt from the requirement to provide separate confirmation of transactions;
- loyalty schemes and road toll facilities, which are not subject to the financial services laws in the Corporations Act 2001 (Corporations Act);
- prepaid mobile facilities and some non-reloadable gift facilities, which are exempt from the licensing, conduct and disclosure obligations in the Corporations Act; and
- low value payments products, which are exempt from the licensing, conduct and disclosure obligations in the Corporations Act but subject to alternative disclosure and dispute resolution obligations.
The ASIC Corporations (Non-cash Payment Facilities) Instrument 2016/211 also preserves existing relief for financial services licensees from the need to hold a payment product authorisation in order to advise their clients on conventional payments products they may use to pay third parties for goods and services.
This relief was previously provided by:
- Class Order [CO 02/1075] Travellers’ cheques and confirmation of transactions, which is due to sunset on 1 April 2017;
- Class Order [CO 03/705] Non-cash payment facilities — licensing exemption, which is due to sunset on 1 April 2017;
- Class Order [CO 05/736] Low value non-cash payment facilities, which is due to sunset on 1 April 2016;
- Class Order [CO 05/737] Loyalty schemes, which is due to sunset on 1 April 2016;
- Class Order [CO 05/738] Gift facilities, which is due to sunset on 1 April 2016;
- Class Order [CO 05/739] Road toll facilities, which is due to sunset on 1 April 2016; and
- Class Order [CO 05/740] Prepaid mobile facilities, which is due to sunset on 1 April 2016.
Recommendation of the Financial System Inquiry
The Final Report of the Financial System Inquiry (FSI) recommended that the current graduation of retail payments regulation be enhanced by clarifying the thresholds at which ASIC or Australian Prudential Regulation Authority (APRA) regulation may apply.
The Government has agreed to this recommendation and indicated that APRA, ASIC and the Reserve Bank of Australia (RBA) will review the framework for payments system regulation and develop clear guidance. This work is still ongoing.
New instrument
In the context of this review, we have decided to temporarily roll-over the seven sunsetting class orders that relate to payments products for a period of three years. This will provide certainty to industry that the current policy settings and regulatory approach will continue while the Government, ASIC, APRA and the RBA consider what changes are required to implement the FSI’s recommendation.
The ASIC Corporations (Non-cash Payment Facilities) Instrument 2016/211 will cease in three years. Before this time we expect to consult publically on our relief in this area. Our consultation will be informed by any decision by Government to alter the ways in which payments products are regulated.
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ASIC Corporations (Non-cash Payment Facilities) Instrument 2016/211
Background
Under the Legislation Act 2003, all class orders are repealed automatically or ‘sunset’ after a specified period of time (mostly 10 years) unless we take action to exempt or preserve them. This ensures that legislative instruments like class orders are kept up to date and only remain in force while they are fit for purpose and relevant.
All government organisations are responsible for considering whether the legislative instruments they have made that are due to sunset will be relevant after their sunset date.