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CORPORATIONS ACT 2001 - SECT 991E

Obligations of financial services licensee in relation to dealings with non-licensees

Obligation to disclose if acting on own behalf

             (1)  Subject to the regulations, a financial services licensee must not, either personally or through an authorised representative, enter into a financial product transaction on their own behalf:

                     (a)  that relates to a financial product that is able to be traded on a licensed market; and

                     (b)  that is with a person (the non-licensee ) who is not a financial services licensee or an authorised representative;

if:

                     (c)  the licensee has not (in accordance with any applicable regulations made for the purposes of paragraph (2)(a)) disclosed to the non-licensee the fact that the licensee will be acting on their own behalf in the proposed dealing; or

                     (d)  the non-licensee has not (in accordance with any applicable regulations made for the purposes of paragraph (2)(b)) consented to the licensee so acting in the proposed dealing.

If the licensee is acting through an authorised representative, the disclosure referred to in paragraph (c) may instead be given by the representative.

Note:          Failure to comply with this subsection is an offence (see subsection 1311(1)).

             (2)  The regulations may deal with either or both of the following:

                     (a)  how a disclosure referred to in paragraph (1)(c) is to be made;

                     (b)  how a consent referred to in paragraph (1)(d) is to be given.

Obligation not to charge fee

             (3)  If a financial services licensee, either personally or through an authorised representative, enters into a transaction of sale or purchase of financial products on their own behalf:

                     (a)  that relates to a financial product that is able to be traded on a licensed market; and

                     (b)  that is with a person (the non-licensee ) who is not a financial services licensee or an authorised representative;

the licensee must only charge the non-licensee a brokerage, commission or other fee in respect of the transaction if the charge is permitted by the regulations.

Note:          Failure to comply with this subsection is an offence (see subsection 1311(1)).

Person may rescind contract if section contravened

             (4)  If subsection (1) or (3) is contravened in relation to a transaction (whether or not anyone is convicted of an offence in respect of the contravention), the non-licensee may, subject to subsection (5), rescind the contract effecting the transaction, unless the contract was for the purchase of financial products by the non-licensee and the non-licensee has disposed of those products.

             (5)  The right under subsection (4) to rescind the contract:

                     (a)  can only be exercised during the period of 14 days starting on:

                              (i)  unless subparagraph (ii) applies--the day on which the contract was entered into; or

                             (ii)  if regulations made for the purposes of this subparagraph specify a later day--that later day; and

                     (b)  is to be exercised by notice in writing to the licensee.

             (6)  Nothing in subsections (4) and (5) affects any other right that a person has.

Regulations may require records to be kept in relation to transactions entered into by licensee on own behalf

             (7)  The regulations may impose requirements for the keeping of records relating to financial products transactions entered into by a financial services licensee on their own behalf.



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