Commonwealth Consolidated Regulations

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CORPORATIONS REGULATIONS 2001 - REG 7.1.29

Circumstances in which a person is taken not to provide a financial service

             (1)  For paragraph 766A(2)(b) of the Act, a person who provides an eligible service is taken not to provide a financial service if:

                     (a)  the person provides the eligible service in the course of conducting an exempt service; and

                     (b)  it is reasonably necessary to provide the eligible service in order to conduct the exempt service; and

                     (c)  the eligible service is provided as an integral part of the exempt service.

             (2)  For this regulation, a person provides an eligible service if the person engages in conduct mentioned in paragraphs 766A(1)(a) to (f) of the Act.

             (3)  For this regulation, a person who does any of the following provides an exempt service :

                     (a)  provides advice in relation to the preparation or auditing of financial reports or audit reports;

                     (b)  provides advice on a risk that another person might be subject to and identifies generic financial products or generic classes of financial product that will mitigate that risk, other than advice for inclusion in an exempt document or statement;

                     (c)  provides advice on the acquisition or disposal, administration, due diligence, establishment, structuring or valuation of an incorporated or unincorporated entity, if the advice:

                              (i)  is given to a person who is, or is likely to become, an interested party in the entity; and

                             (ii)  to the extent that it is financial product advice--is confined to advice on a decision about:

                                        (A)  securities of a body corporate, or related body corporate, that carries on or may carry on the business of the entity; or

                                        (B)  interests in a trust (other than a superannuation fund or a managed investment scheme that is registered or required to be registered), the trustee of which carries on or may carry on the business of the entity in the capacity of trustee; and

                            (iii)  does not relate to other financial products that the body corporate or the trustee of the trust may acquire or dispose of; and

                            (iv)  is not advice for inclusion in an exempt document or statement;

                     (d)  provides advice on financial products that are:

                              (i)  securities in a company (other than securities that are to be offered under a disclosure document under Chapter 6D of the Act); or

                             (ii)  interests in a trust (other than a superannuation fund or a managed investment scheme that is registered or required to be registered);

                            if the company or trust is not carrying on a business and has not, at any time, carried on a business;

                     (e)  provides advice in relation to the transfer of financial products between associates;

                      (f)  arranges for another person to engage in conduct referred to in subsection 766C(1) in relation to interests in a self managed superannuation fund in the circumstances in paragraphs (5)(b) and (c);

                     (g)  arranges for another person to engage in conduct referred to in subsection 766C(1), by preparing a document of registration or transfer in order to complete administrative tasks on instructions from the person;

                     (h)  provides advice about the provision of financial products as security, other than where the security is provided for the acquisition of other financial products.

          (3A)  For this regulation, a person also provides an exempt service if the person:

                     (a)  is registered as an auditor under Part 9.2 of the Act; and

                     (b)  performs any of the functions of a cover pool monitor mentioned in subsection 30(4) of the Banking Act 1959 .

             (4)  For this regulation, a person also provides an exempt service if:

                     (a)  the person provides advice to another person on taxation issues including advice in relation to the taxation implications of financial products; and

                     (b)  the person will not receive a benefit (other than from the person advised or an associate of the person advised) as a result of the person advised acquiring a financial product mentioned in the advice, or a financial product that falls within a class of financial products mentioned in the advice; and

                     (c)  either:

                              (i)  the advice does not constitute financial product advice to a retail client; or

                             (ii)  the advice constitutes financial product advice to a retail client and it includes, or is accompanied by, a written statement that:

                                        (A)  the person providing the advice is not licensed to provide financial product advice under the Act; and

                                        (B)  taxation is only one of the matters that must be considered when making a decision on a financial product; and

                                        (C)  the client should consider taking advice from the holder of an Australian Financial Services Licence before making a decision on a financial product.

             (5)  For this regulation, a person also provides an exempt service if:

                     (a)  the person provides advice in relation to the establishment, operation, structuring or valuation of a superannuation fund, other than advice for inclusion in an exempt document or statement; and

                     (b)  the person advised is, or is likely to become:

                              (i)  a trustee; or

                             (ii)  a director of a trustee; or

                            (iii)  an employer sponsor; or

                            (iv)  a person who controls the management;

                            of the superannuation fund; and

                     (c)  except for advice that is given for the sole purpose, and only to the extent reasonably necessary for the purpose, of ensuring compliance by the person advised with the SIS Act (other than paragraph 52(2)(f)), the SIS Regulations (other than regulation 4.09) or the Superannuation Guarantee (Administration) Act 1992 --the advice:

                              (i)  does not relate to the acquisition or disposal by the superannuation fund of specific financial products or classes of financial products; and

                             (ii)  does not include a recommendation that a person acquire or dispose of a superannuation product; and

                            (iii)  does not include a recommendation in relation to a person's existing holding in a superannuation product to modify an investment strategy or a contribution level; and

                     (d)  if the advice constitutes financial product advice provided to a retail client--the advice includes, or is accompanied by, a written statement that:

                              (i)  the person providing the advice is not licensed to provide financial product advice under the Act; and

                             (ii)  the client should consider taking advice from the holder of an Australian Financial Services Licence before making a decision on a financial product.

             (6)  In this regulation:

employer sponsor has the meaning given by subsection 16(1) of the SIS Act.

exempt document or statement has the meaning given by subsection 766B(9) of the Act.

generic means without reference to a particular brand or product issuer.

interested party means:

                     (a)  an associate within the meaning of Division 2 of Part 1.2 of the Act; or

                     (b)  a manager; or

                     (c)  an officer; or

                     (d)  a trustee or director of a trustee.

self managed superannuation fund has the meaning given by section 17A of the SIS Act.



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