Commonwealth Consolidated Acts

CORPORATIONS ACT 2001 - SECT 985E

Requirement to make assessment of unsuitability

  (1)   The provider must not:

  (a)   issue the margin lending facility to the retail client; or

  (b)   increase the limit of the margin lending facility that was issued to the retail client;

on a day (the critical day ) unless the provider has, within 90 days (or other period prescribed by the regulations) before the critical day:

  (c)   made an assessment that:

  (i)   is in accordance with section   985F; and

  (ii)   covers a period in which the critical day occurs; and

  (d)   made the inquiries and verification in accordance with section   985G.

Note:   This subsection is a civil penalty provision (see section   1317E).

Increase in limit of standard margin lending facility

  (2)   For the purposes of paragraph   (1)(b), the limit of a standard margin lending facility is taken not to be increased if:

  (a)   apart from this subsection, there would be an increase in the limit; and

  (b)   the increase in the limit would result from an increase in the value, determined under the terms of the facility, of the secured property under the facility (as referred to in paragraph   761EA(2)(c)); and

  (c)   the increase in the value of the secured property does not result from the client contributing additional property to the secured property.

Regulations

  (3)   For the purposes of paragraph   (1)(b), the regulations may prescribe particular situations in which the limit of a margin lending facility is taken:

  (a)   to be increased, despite subsection   (2); or

  (b)   not to be increased.