Commonwealth Consolidated Acts Commonwealth Consolidated ActsWhen does a person provide a financial service ?
(1) For the purposes of this Division, subject to paragraph (2)(b), a person provides a financial service if they:
(a) provide financial product advice (see subsection (5)); or
(b) deal in a financial product (see subsection (7)); or
(c) make a market for a financial product (see subsection (11)); or
(d) operate a registered scheme; or
(e) provide a custodial or depository service (see subsection (12)); or
(ea) provide a superannuation trustee service; or
(eb) provide a claims handling and settling service; or
(f) operate a financial market (see subsection (15)) or clearing and settlement facility (see subsection (17)); or
(g) provide a service (not being the operation of a derivative trade repository) that is otherwise supplied in relation to a financial product (other than an Australian carbon credit unit or an eligible international emissions unit); or
(ga) operate the business and conduct the affairs of a CCIV, and the person is the corporate director of the CCIV; or
(h) engage in conduct of a kind prescribed in regulations made for the purposes of this paragraph.
Note: Paragraph (ga) means persons other than the corporate director will not be treated as providing that financial service if they operate the business and conduct the affairs of the CCIV while:
(a) acting as an agent of the CCIV, or as an agent or employee of the corporate director; or
(b) taking steps to wind up a sub - fund of the CCIV.
(1AA) Without limiting subsection (1), for the purposes of this Division, a financial product is a financial service .
(1A) Subject to paragraph (2)(b), the provision by a trustee company of a traditional trustee company service constitutes the provision, by the company, of a financial service for the purposes of this Division.
Note: Trustee companies may also provide other kinds of financial service mentioned in subsection (1).
(1B) The regulations may, in relation to a traditional trustee company service of a particular class, prescribe the person or persons to whom a service of that class is taken to be provided or supplied for the purposes of this Division. This subsection does not limit (and is not limited by) subsection (2).
Meaning of provides a crowd - funding service
(1C) Subject to paragraph (2)(b), the provision by a person of a crowd - funding service constitutes the provision, by the person, of a financial service for the purposes of this Division.
(1D) For the purposes of this Division, the persons to whom, and time when, a crowd - funding service is provided are as specified in subsections 766F(3) and (4) of the Corporations Act 2001 .
(2) The regulations may set out:
(a) the circumstances in which persons facilitating the provision of a financial service (for example, by publishing information) are taken also to provide that service; or
(b) the circumstances in which persons are taken to provide, or are taken not to provide, a financial service.
(4) For the purposes of this section, a person is not operating a registered scheme merely because:
(a) they are acting as an agent or employee of another person; or
(b) they are taking steps to wind up the scheme.
Meaning of financial product advice
(5) For the purposes of this section, financial product advice means a recommendation or a statement of opinion, or a report of either of those things, that:
(a) is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or
(b) could reasonably be regarded as being intended to have such an influence;
but does not include anything in:
(c) a document prepared in accordance with requirements of Chapter 7 of the Corporations Act, other than a document of a kind prescribed by regulations made for the purposes of this paragraph; or
(d) any other document of a kind prescribed by regulations made for the purposes of this paragraph.
(6) Advice given by a lawyer in his or her professional capacity about matters of law, legal interpretation or the application of the law to any facts is not financial product advice .
Meaning of dealing
(7) For the purposes of this section, the following conduct constitutes dealing in a financial product:
(a) applying for or acquiring a financial product;
(b) issuing a financial product;
(c) in relation to securities or interests in managed investment schemes--underwriting the securities or interests;
(d) varying a financial product;
(e) disposing of a financial product.
Note: A notified foreign passport fund is a managed investment scheme for the purposes of this Act and the Corporations Act, see subsection 5(2) of this Act and section 1213E of the Corporations Act.
(8) Arranging for a person to engage in conduct referred to in subsection (7) is also dealing in a financial product, unless the actions concerned amount to providing financial product advice.
(9) A person is taken not to deal in a financial product if the person deals in the product on their own behalf, unless:
(a) the person is an issuer of financial products; and
(b) the dealing is in relation to one or more of those products.
(10) The regulations may prescribe conduct that is taken to be, or not to be, dealing in a financial product. Regulations made for the purposes of this subsection have effect despite anything else in this section.
Meaning of makes a market for a financial product
(11) For the purposes of this section, a person makes a market for a financial product if:
(a) either through a facility, at a place or otherwise, the person regularly states the prices at which they propose to acquire or dispose of financial products on their own behalf; and
(b) other persons have a reasonable expectation that they will be able to regularly effect transactions at the stated prices; and
(c) the actions of the person do not, or would not if they happened through a facility or at a place, constitute operating a financial market because of the effect of paragraph (16)(a).
Meaning of provide a custodial or depository service
(12) For the purposes of this section, a person (the provider ) provides a custodial or depository service to another person (the client ) if, under an arrangement between the provider and the client, or between the provider and another person with whom the client has an arrangement, (whether or not there are also other parties to any such arrangement), a financial product, or a beneficial interest in a financial product, is held by the provider in trust for, or on behalf of, the client or another person nominated by the client.
(14) However, the following conduct does not constitute providing a custodial or depository service :
(a) the operation of a clearing and settlement facility;
(b) the operation of a registered scheme, or the holding of the assets of a registered scheme;
(ba) the operation of a notified foreign passport fund;
(bb) the holding of the assets of a notified foreign passport fund;
(i) a regulated superannuation fund; or
(ii) an AFCA regulated superannuation scheme; or
(iii) an approved deposit fund; or
(iv) a pooled superannuation trust;
(d) the provision of services to a related body corporate;
(da) operating as a CCIV;
(db) operating the business and conducting the affairs of a CCIV;
(dc) holding the money or property of a CCIV;
(e) any other conduct of a kind prescribed by regulations made for the purposes of this paragraph.
Note: Holding the assets of a sub - fund of a CCIV is covered by paragraph (dc) and does not constitute providing a custodial or depository service .
Meaning of financial market
(15) For the purposes of this section, a financial market is a facility through which:
(a) offers to acquire or dispose of financial products are regularly made or accepted; or
(b) offers or invitations are regularly made to acquire or dispose of financial products that are intended to result or may reasonably be expected to result, directly or indirectly, in:
(i) the making of offers to acquire or dispose of financial products; or
(ii) the acceptance of such offers.
(16) However, the following conduct does not constitute operating a financial market for the purposes of this section:
(a) a person making or accepting offers or invitations to acquire or dispose of financial products on the person's own behalf, or on behalf of one party to the transaction only;
(b) conducting treasury operations between related bodies corporate;
(c) conducting an auction of forfeited shares;
(d) any other conduct of a kind prescribed by regulations made for the purposes of this paragraph.
Meaning of clearing and settlement facility
(17) For the purposes of this section, a clearing and settlement facility is a facility that provides a regular mechanism for the parties to transactions relating to financial products to meet obligations to each other that:
(a) arise from entering into the transactions; and
(b) are of a kind prescribed by regulations made for the purposes of this paragraph.
(18) However, the following conduct does not constitute operating a clearing and settlement facility for the purposes of this section:
(a) an ADI (within the meaning of the Banking Act 1959 ) acting in the ordinary course of its banking business;
(b) a person acting on their own behalf, or on behalf of one party to a transaction only;
(c) a person who provides financial services to another person dealing with the other person's accounts in the ordinary course of the first person's business activities;
(d) the actions of a participant in a clearing and settlement facility who has taken on the delivery or payment obligations, in relation to a particular financial product, of another person who is a party to a transaction relating to a financial product;
(e) conducting treasury operations between related bodies corporate;
(h) operating a facility for the exchange and settlement of non - cash payments between providers of non - cash payment facilities;
(i) any other conduct of a kind prescribed by regulations made for the purposes of this paragraph.