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APRA |
Australian Prudential Regulation Authority |
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ASIC |
Australian Securities and Investments Commission |
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ASIC Act |
Australian Securities and Investments Commission Act 2001 |
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ASX |
Australian Stock Exchange Limited |
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broad statutory scheme |
A compensation scheme established by statute in relation to a wide range of financial products, as distinct from the exchange fidelity funds/National Guarantee Fund |
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CASAC |
Companies and Securities Advisory Committee (now renamed the Corporations and Markets Advisory Committee) |
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CASAC Consultation Paper |
The Consultation Paper entitled Retail Client Compensation in Financial Markets dated Sept 2001 of the Companies and Securities Advisory Committee, available on www.camac.gov.au |
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client |
The term `client' is used in this paper to mean the client of an intermediary and a person acquiring a financial product from a product issuer where the circumstances are such as to require the issuer to be a financial services licensee |
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Corporations Act |
Corporations Act 2001 |
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defalcation |
This is wider than dishonest dealings — see footnote 91 |
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fidelity fund |
In this context, a fund established by an exchange to pay claims arising from the conduct (for example, fraudulent conduct) of members/participants of the exchange and their staff. |
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financial product |
This term includes securities, derivatives, units in managed investment schemes, superannuation and life and general insurance products, but does not include credit products. It is defined broadly in Division 3 of Part 7.1 of the new Chapter 7 of the Corporations Act, with specific inclusions and exclusions. |
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financial service |
In brief, a person provides a financial service if they provide financial product advice, deal in a financial product, make a market for a financial product, operate a registered scheme or provide a custodial and depository service.1 |
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financial service provider |
A provider of financial services (whether licensed or not) |
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financial services licensee |
A provider of financial services licensed under Part 7.6 of the new Chapter 7 of the Corporations Act |
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Financial Services Reform Act |
Financial Services Reform Act 2001 |
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Financial Services Reform regime |
The regime for the licensing of financial markets, clearing and settlement facilities and financial service providers, product disclosure and other matters included in the new Chapter 7 of the Corporations Act which was substituted by the Financial Services Reform Act. |
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Insurance (Agents and Brokers) Act |
Insurance (Agents and Brokers) Act 1984 |
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intermediary |
A person performing an intermediate role between the consumer and the product issuer. The person may be licensed in his own right or be an authorised representative. |
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market licensee |
An entity licensed under Part 7.2 to operate a financial market |
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market operator |
The operator of a financial market - for example, the Australian Stock Exchange Limited |
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National Guarantee Fund (NGF) |
The National Guarantee Fund which performs investor protection and clearing guarantee functions for certain transactions by participating organisations of the Australian Stock Exchange |
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new Chapter 7 |
Chapter 7 of the Corporations Act 1 inserted by the Financial Services Reform Act |
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prescribed CS (clearing and settlement) facility |
A licensed CS (clearing and settlement) facility (that is, licensed under Part 7.3 of the new Chapter 7) which is prescribed for the purpose of Division 4 of Part 7.11 (which facilitates electronic transfer of legal title to financial products) |
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retail client |
This term is defined in section 761G by reference to particular financial products, price paid and asset/income tests. Small businesses, as defined in that section, are also retail clients. |
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run-off cover |
Professional indemnity policies commonly provide cover only in relation to claims made or notified during the year for which the premium is paid. `Run-off cover' is additional and provides cover in relation to events occurring during the year for which the premium is paid but where the claims are made or notified in later years, when the licensee has ceased to carry on financial services business (and therefore does not hold a professional indemnity insurance policy). |
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SEGC |
Securities Exchanges Guarantee Corporation Limited which administers the National Guarantee Fund |
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subrogation |
The substitution of one person or entity for another ¾ the substituted person `stands in the shoes of' the first person and gains the same rights as belonged to that person (for example, against a fraudulent financial services licensee) |
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surety bond |
A guarantee by a person to pay an amount if another person fails to satisfy their own obligations |
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wholesale client |
A person who is not a retail client (see above) |
Note: references to particular sections and Parts in this paper are to sections and Parts of the Corporations Act, as amended by the Financial Services Reform Act, unless otherwise indicated.
1 Further details are to be found in Division 4 of Part 7.1 of the new Chapter 7.