15 March 2021
Designations can change how a product, client, advice or service is categorised, and remove an existing statutory exemption or exclusion. A designation can be applied to:
Under the FMC Act, we have powers to make designations that change the way products and other matters are regulated.
To find out more information on the class designations and other notices we have granted, see the Class legislative notices summary on the Regulation Updates page.
Businesses can apply for a designation, providing reasons why they believe a designation is justified.
Before we exercise our designation power, we must consider:
We must also consult with substantially affected parties.
Designations cannot be made for financial products that have already been issued or transferred.
A designation can change how a financial product is categorised under the FMC Act. This will change the statutory obligations that apply. There are four classes of financial products under the FMC Act. They are: equity, debt, managed investment products and derivatives. The way a financial product is regulated depends on the product’s category.
The table below provides an idea of what can change with a designation.
Designation that changes how a product is categorised |
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Designations may declare that: | Comments |
a security is a financial product of a particular kind | We can call in securities that are not financial products into the FMC regime. |
a security that would otherwise be a financial product of one kind is a financial product of a different kind | We can recategorise a financial product (eg from equity to debt) |
a security that would otherwise be a financial product is not a financial product | We can exclude financial products from the FMC Act regime |
Related powers:
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Designations can remove an existing statutory exemption available to an offer or person. This can be used to prevent abuse of the statutory exemptions, or to avoid the use of the exemptions in unintended circumstances.
The table below shows how a designation can remove an existing exemption for a product or a service.
Designation that removes the application of a statutory exemption |
|
Designations may declare that: | Comments |
an offer of issued financial products that is exempt from disclosure under Part 3 due to an exclusion under Part 1 of Schedule 1, be required to provide disclosure | We can stop a Schedule 1 exclusion applying to an offer and bring the offer back within the Part 3 disclosure regime. |
an offer of financial products for sale that would not otherwise require disclosure under Part 3, does require disclosure | We can call-in offers of products for sale to be regulated under the Part 3 disclosure regime. |
a person, service, or conduct not be subject to certain exemptions from financial advice provider licensing in s 389(2) | We can call-in certain financial advice providers (who would otherwise not be required to be licensed) to be licensed under the FMC Act. |
a person, service, or conduct not be subject to certain exemptions from DIMS licensing in s 389(3) | We can call-in certain DIMS providers (who would otherwise not be required to be licensed) to be licensed under the FMC Act. |
a person, service, or conduct to not have exemptions or exclusions that would otherwise apply under section 238 (1)(a) to (h) section 285, section 287, or section 309 |
We can:
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Designations can declare that a person or class of persons that would otherwise be a wholesale investor or wholesale client is a retail investor or retail client for the purposes of the FMC Act.
We can call in wholesale clients and wholesale investors to the protections of the FMC Act that apply in relation to regulated offers of financial products or provision of regulated financial advice to retail clients if we think they need these protections and the statutory test for a designation is met.
Designations can change how financial advice and financial advice services are regulated under the FMC Act. This will change the statutory obligations that apply. The table below provides an idea of what can change with a designation.
Designation that changes how financial advice and financial advice services are regulated |
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Designations may declare that: | Comments |
Advice that would not otherwise be financial advice is financial advice | We can call-in advice, that is not financial advice, into the FMC regime. |
Advice that would otherwise be financial advice is not financial advice | We can exclude certain advice, that would otherwise be financial advice, from being financial advice under the FMC regime |
Financial advice that would not otherwise be regulated financial advice is regulated financial advice | We can call-in financial advice that would not otherwise be regulated financial advice, so that it is subject to regulation under the FMC regime. |
Financial advice that would otherwise be regulated financial advice is not regulated financial advice | We can exclude certain financial advice, that would otherwise be regulated financial advice, from being regulated under the FMC regime. |
A service that would not otherwise be a financial advice service is a financial advice service | We can call-in a service that is not a financial advice service into the FMC Act regime. |
A service that would otherwise be financial advice service is not a financial advice service | We can exclude a service, that would otherwise be a financial advice service, from being regulated under the FMC regime. |
Before you apply
Clarify if you should apply for a designation or an exemption. Only apply for a designation if you have products or services that have extraordinary characteristics that you think should fit a different category or should not be regulated at all.
Apply for an exemption if you think some aspects of the regulatory regime need to be adjusted for the circumstances.
Please note that designations cannot be retrospective. That means that we are unable to make designations for financial products that have already been issued or transferred. If you want to alter disclosure obligations for financial products that have already been issued or transferred, then you should consider applying for an exemption.
Your application should provide the following details:
Designation fees are set by regulations. Before we can begin processing your application, you need to make a payment of $1,265 to cover the application fee of $115 and an advance fee for fees and costs to be incurred. We will charge any additional time spent on an hourly basis (the hourly rate for FMA Board members is $230 and the hourly rate for FMA staff is $178.25).
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