ASIC has issued Class Order [CO 10/116] Group purchasing bodies – variation of Class Order [CO 08/1] to provide certainty about who will be eligible for relief and to introduce greater flexibility for compliance with the conditions of AFS licensing relief for the insurance industry and some group purchasing bodies.
Class Order [CO 08/1] provides conditional exemptions from the Australian financial services (AFS) licensing and managed investment scheme registration requirements for certain group purchasing bodies that arrange cover for third parties under insurance (excluding certain foreign insurance).
Regulatory Guide 195 Group purchasing bodies for insurance and risk products (RG 195), which sets out ASIC’s policy on the relief in [CO 08/1] has been revised to include more specific guidance and more ‘real life’ examples.
Group purchasing bodies may be eligible for the relief if they are independent or are acting incidentally to their not-for-profit activities. Conditions apply to the relief to ensure that the risks to people who receive financial services from group purchasing bodies are minimised.
The class order includes a breach reporting obligation which will come into effect from the first time that the group purchasing body acquires, renews or renegotiates the terms of the insurance cover on or after 30 June 2010 but in any event not later than 30 June 2011.
Group purchasing bodies arrange or hold cover under risk management products for others but do not issue risk management products or provide any financial product advice other than as a result of providing certain general information.
As group purchasing bodies generally do not just obtain cover for members on a one-off basis, they may be carrying on a financial services business and therefore require an AFS licence. Some group purchasing bodies may enter into arrangements that constitute a managed investment scheme that requires registration under the Corporations Act.
ASIC considers that requiring all group purchasing bodies to hold an AFS licence and comply with the management investment scheme registration requirements would impose a disproportionate cost burden on group purchasing bodies. The relief will ensure that eligible group purchasing bodies can continue to enter group purchasing arrangements for the benefit of their members or clients.
The class order will commence after it has been gazetted.
