23-048MR ASIC consults on ‘sunsetting’ class orders about financial requirements

ASIC is seeking feedback on proposals to remake class orders that impose financial resource requirements on the managed funds industry, as under the Legislation Act 2003, these class orders will expire if not remade.
In general, Legislative instruments, such as class orders, are repealed automatically („sunset“), after 10 years, unless action is taken to preserve them. The purpose of sunsetting is to ensure that instruments are kept up to date and only remain in force while they are fit for purpose, necessary and relevant. To preserve its effect, a legislative instrument, such as a class order, must be remade before the sunset date.
Indeed, ASIC has proposed to remake three class orders related to financial requirements for various entities operating in the financial services industry in Australia. These class orders are:
– Class Order [CO 13/760] Financial requirements for responsible entities and operators of investor directed portfolio services, which is set to expire on 1 October 2023.
– Class Order [CO 13/761] Financial requirements for custodial or depository service providers, which is also set to expire on 1 October 2023.
– ASIC Corporations (Financial Requirements for Corporate Directors of Retail Corporate Collective Investment Vehicles) Instrument 2022/449, which is set to expire on 1 October 2024.
ASIC believes that these 3 class orders are currently operating effectively and efficiently, and continue to form an essential part of the legislative framework. Therefore, ASIC proposes to issue a combined legislative instrument that will prescribe the financial resource requirements for responsible entities, IDPS operators, and corporate directors of retail CCIVs. However, ASIC plans to retain a separate legislative instrument for custodians.
The new legislative instruments will be drafted in ASIC’s current style and format, while preserving the current effect of the instrument. The proposed legislative instruments will have an expiry date of 1 October 2028.
ASIC is proposing to remake the class orders with minor changes and simplifications, and invites submissions from stakeholders on the proposals. Submissions are due by 31 March 2023.