ASIC Corporations (Professional Standards—Transitional) Instrument 2018/894

The instrument operates within the framework of Part 10.23A of the Act, which is itself a transitional schedule inserted by the amending Act (the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017). Several defined terms are central. A provisional relevant provider is a new adviser who has not yet met all education and training standards. The instrument delays the requirement for licensees to lodge notices about such providers until 15 November 2019 (section 5). Continuing professional development (CPD) refers to the ongoing education standard under subsection 921B(5) of the Act. Again, the notice‑lodging obligation is pushed to 15 November 2019 (section 6). The CPD year is the annual cycle for a licensee’s professional development activities; licensees must notify ASIC of the start date of their CPD year, and this notification requirement also begins on 15 November 2019 (section 7). Existing provider is a critical classification. Under the unmodified s 1546A of Part 10.23A, an existing provider is someone who gave personal advice to retail clients on relevant financial products before 1 January 2019 and is not banned or disqualified on that date. The instrument amends that definition to exclude any person who, on 1 January 2019, was banned or disqualified under Division 8 of Part 7.6, subject to an enforceable undertaking under s 93AA of the ASIC Act not to provide financial advice, or prohibited under foreign law from giving personal advice to retail clients (section 10(a)). This narrowing means such individuals cannot use the transitional pathways that existing providers enjoy (e.g., extended time to meet the exam requirement). Instead, they are treated as if they were not relevant providers before 1 January 2019, which may subject them to the full force of the new standards immediately upon regaining authorisation. Previously banned or prohibited advisers (section 10(b)) are deemed never to have been relevant providers before 1 January 2019 for the purposes of sections 1546C and 1546D, which govern when certain standards apply. Compliance scheme is defined in section 921G of the Act as a scheme for monitoring and enforcing compliance with professional standards. The instrument suspends the obligation to have and report on such a scheme until 31 October 2022 (section 13). The amending Act is referenced throughout; it is the legislation that inserted Division 8A (professional standards), Division 9 (notifications) and Part 10.23A (transitional). The instrument modifies how those divisions apply in the transitional period.

The primary duty‑bearers are financial services licensees who authorise relevant providers (i.e., individual financial advisers). Licensees must adjust their compliance calendars: all notice‑lodging obligations under Division 9 of Part 7.6 that would have commenced earlier are deferred to 15 November 2019 (sections 5‑8, 9(a)‑(b)). This gives licensees a short reprieve but also creates a concentrated compliance date. Licensees that employ or contract with advisers who were banned, disqualified or subject to enforceable undertakings as at 1 January 2019 need to reassess whether those advisers qualify as “existing providers”. Under the amended definition, they do not (section 10(a)). This has real consequences: an existing provider gets until 1 January 2021 to pass the exam and until 1 January 2024 to meet the higher education standard (per section 1546B of the Act). If an adviser is excluded from the definition, those extended deadlines do not apply, and the adviser may need to meet the standards immediately upon becoming authorised again. Similarly, if a person was banned and later has the ban lifted, the instrument’s modification of section 1546Z (section 12) means the licensee must notify ASIC of certain information after the banning or prohibition. That provision expands the trigger from the original paragraph (which only covered persons banned or disqualified on 1 January 2019) to also include persons subject to an enforceable undertaking or a foreign prohibition on that date.

The instrument also affects “previously banned or prohibited advisers” - those who were banned, disqualified or subject to a relevant undertaking on 1 January 2019 (section 10(b)). They are deemed not to have been relevant providers before 1 January 2019, which governs the application of sections 1546C and 1546D (which deal with when the education and training standards apply to such persons). The intended effect is that these advisers cannot rely on the transitional period to retrospectively characterise their earlier advice as compliant. This may complicate their return to the industry: they may need to satisfy the full professional standards from the date of re‑authorisation, without the phased deadlines available to genuine existing providers.

Finally, the exemption in Part 3 affects all licensees: until 31 October 2022, they are relieved from the obligation to have a compliance scheme and from lodging notices about compliance schemes under specified sections. This reduces immediate compliance costs and avoids the need to design, implement and audit a compliance scheme during a period when many other transitional obligations are phasing in. However, the suspension is finite; licensees must be prepared to comply from 1 November 2022.

The instrument imposes no free‑standing duties; it modifies duties that exist under the Act. The key duty on licensees is to lodge notices with ASIC at prescribed times. Sections 5‑8 make clear that these notice‑lodging duties do not crystallise until 15 November 2019. For example, the duty under section 1546VA (inserted by the instrument) says a requirement to lodge a notice about a provisional relevant provider applies on and after 15 November 2019. A licensee therefore had no obligation to lodge such notices before that date, even if the underlying Act might have seemed to require it earlier. This is a modification “despite anything else in this Part or Division 9 of Part 7.6” - an override clause.

Section 9 deals with notices about principal place of business and compliance scheme. It creates an interesting hybrid. For notices lodged under section 922H between 15 November 2019 and 31 December 2019, paragraphs 922E(1)(i) and 922F(1)(n) (concerning principal place of business and compliance scheme details) apply as if those paragraphs were in force from the start of that window. That means a short‑run requirement: during that six‑week period, a licensee lodging a change‑of‑details notice must include the new information about its compliance scheme (even though the compliance scheme framework itself was suspended until 31 October 2022 - see section 13). This creates a potential trap: the obligation to include compliance scheme information in a notice arises before the underlying obligation to have a compliance scheme is suspended? Actually, section 13 suspends the obligation to have a compliance scheme and to lodge notices in relation to a compliance scheme. Paragraph 9(d) adds a subsection (5) to section 1546W stating that a notice is not required under that section if a notice was lodged under section 922H between 15 November 2019 and 31 December 2019 that includes the information required by the modified provisions. So the duty to include compliance scheme information in a section 922H notice is not itself suspended; it applies during that window, but satisfying it may remove a later duty.

Section 13 gives licensees a right not to comply with the compliance scheme framework until 31 October 2022. This is an exemption, not a waiver. The language is “does not have to comply with”. So licensees cannot be penalised for not having a compliance scheme or for not lodging compliance‑scheme notices during that period.

For banned or prohibited advisers, the instrument grants a limited right: they are deemed not to have been relevant providers before 1 January 2019 (section 10(b)). This may affect whether they are subject to the new standards retrospectively. It also clarifies that section 921C (education and training standard) applies after 1 January 2021 or 2024 to persons who were existing providers but had ceased to be relevant providers between 2016 and 2020/2023. Those persons have a duty to meet the standard if they wish to return to advising. The instrument does not create rights for consumers directly; it primarily governs the timing and scope of licensee obligations.

The instrument itself does not prescribe penalties. Penalties for non‑compliance arise under the Act for the underlying duties. The key penalty provisions are in Part 7.6 of the Act. For example, a licensee that fails to lodge a notice required under Division 9 may be subject to civil penalties (the exact penalty provisions are not reproduced in the instrument, but section 1317E of the Act creates civil penalty provisions for certain Corporations Act obligations). Criminal penalties may also apply for false or misleading statements in notices.

Because the instrument modifies when duties apply, it effectively shifts the period of potential liability. If a licensee did not lodge a notice about a provisional relevant provider before 15 November 2019, it cannot be penalised for that non‑compliance because the duty did not exist until that date (section 5). After 15 November 2019, the duty exists and failure to comply within the timeframes in the Act may attract penalties. Similarly, during the suspension of the compliance scheme framework (until 31 October 2022), a licensee cannot be penalised for not having a compliance scheme or for not lodging compliance‑scheme notices. After that date, the exemption ends and full compliance is required.

The instrument also affects the enforceability of professional standards against previously banned advisers. By deeming them not to have been relevant providers before 1 January 2019, it removes any argument that they should be subject to the transitional timelines. If such an adviser later becomes authorised and does not meet the education and training standards, ASIC may take enforcement action (e.g., banning orders under Division 8). The instrument itself provides no enforcement mechanism; it is purely a modification of the Act’s transitional provisions. Enforcement rests with ASIC’s general powers under the Act and the ASIC Act. The practical enforcement risk for licensees is that they misclassify an adviser as an existing provider when the adviser is actually excluded under the amended definition, leading to non‑compliance with notification and training standards. ASIC may issue infringement notices, seek civil penalties, or impose banning orders on the licensee or the adviser.

The instrument modifies only Part 10.23A of the Corporations Act. It does not amend the Act directly; it uses the declaration and exemption powers under section 926A(2) to vary how the transitional provisions apply. The underlying Act’s professional standards regime (Division 8A of Part 7.6) and notification regime (Division 9) remain fully operative except as modified. For example, the definition of “existing provider” in section 1546A of the Act is overwritten for the purposes of the transitional provisions (section 10(a)). The instrument also inserts new sections into the transitional Part (e.g., 1546VA, 1546VB, 1546VC, 1546VD) that override other provisions of Part 10.23A and Division 9 by force of the “despite anything else” clause.

Section 10(b) interacts with sections 1546C and 1546D of the Act, which deal with the application of professional standards to persons who were banned or who ceased to be relevant providers. By deeming previously banned persons never to have been relevant providers before 1 January 2019, the instrument changes the outcome of those sections. For example, section 1546C applies Division 8A to a person who was not a relevant provider before 1 January 2019 as if they were a new entrant. The instrument ensures that previously banned advisers are treated as new entrants, with no transitional concessions.

The instrument also interacts with the ASIC Act: section 10(a) explicitly references enforceable undertakings under section 93AA of the ASIC Act as a disqualifying event. That means a person who gave an enforceable undertaking not to provide advice is treated the same as someone banned under the Corporations Act.

The exemption in Part 3 interacts with the compliance scheme provisions in the Act (sections 921H, 922D, 922E, 922F, 922L and 1546W). The instrument suspends those obligations but does not repeal them. After 31 October 2022, they revive automatically. Licensees must be careful not to assume the suspension is permanent; it is a transitional reprieve only.

There is no direct interaction with foreign law beyond recognising foreign prohibitions as a disqualifying event for existing provider status (section 10(a)(iii) and section 12(a)(iii)). That clause imports foreign regulatory actions into the Australian framework. A person prohibited from advising in a foreign country is treated as if banned in Australia for the purposes of the transitional provisions. This may create cross‑border compliance issues for licensees with international operations.

The instrument has been amended once. The original instrument (2018/894) was registered on 30 May 2018 and commenced on 11 October 2018. It contained only Part 1 (Preliminary) and Part 2 (Declaration). There was no Part 3. The definition of “compliance scheme” was added by amendment. The amending instrument (2019/1145) was registered on 15 November 2019 and commenced on the same day. It added the new Part 3 (Exemption), which contains the suspension of the compliance scheme framework. It also amended section 4 by inserting the definition of “compliance scheme” (referencing section 921G of the Act). This was necessary to give meaning to the new exemption provisions. The endnotes show that Part 3 was therefore “ad.” (added) and section 4 was “am.” (amended). The compilation status indicates the instrument is current as at 15 November 2019, with no further amendments. Notably, the instrument was amended only about a year after its original commencement, and the amendment created a significant additional concession. This suggests that the original instrument’s silence on the compliance scheme framework was causing concern or that licensees successfully lobbied for relief. The instrument history also notes that the first instrument was registered under F2018L01413 and the amending instrument under F2019L01456. No substantive amendments have been made to the notification date shifts (sections 5‑8) or the adviser classification changes (sections 10‑12). The instrument has not been repealed or replaced. Given the finite nature of the transitional provisions (many cease to apply after 2024), it is likely that the instrument will sunset or be revoked once the transitional period expires, but no such instrument has been included in the compilation.

There is no reference to any litigation concerning this instrument in the source text, and no court decisions are mentioned. As a legislative instrument made by ASIC under a delegated power, it is susceptible to judicial review on administrative law grounds (e.g., whether it is ultra vires the enabling provision, whether relevant considerations were taken into account, or whether the modification is reasonable). No known challenges have been reported. The instrument’s practical effect is to delay obligations and narrow transitional concessions, which could theoretically be challenged by a licensee who considers it exceeds the scope of section 926A(2) or that the modification is inconsistent with the Act. However, ASIC has broad powers under that subsection to grant relief from provisions of Part 7.6. The instrument uses both declaration and exemption powers. Any litigation would likely focus on whether the modification of the definition of “existing provider” goes beyond “modifying or varying” the transitional provisions, or whether it effectively changes the substantive law. The instrument’s “despite anything else” clauses attempt to preclude contrary interpretations. No litigation is recorded in the endnotes, and a search of general legal databases would be needed to confirm whether any challenge has been mounted. For the purposes of this deep dive, the known litigation history is nil.

Several traps lurk in the instrument’s interaction with the Act’s timelines. First, the notice deferral to 15 November 2019 applies only to the requirement to lodge notices. The underlying obligation to have the information ready (e.g., that a provisional relevant provider exists, that an exam has been passed) may have accrued earlier. Licensees should not assume they can ignore data collection until November 2019; they need to have the data ready to lodge on that date. Second, section 9 creates a short‑lived window (15 November to 31 December 2019) during which a notice of change of details under section 922H must include compliance scheme information even though the compliance scheme framework itself is suspended. Licensees who lodged a section 922H notice during that window must ensure they included that information to avoid a later duty under section 1546W. This interplay is easy to overlook. Third, the definition of “existing provider” was amended retroactively? The instrument commenced on 11 October 2018, but the relevant date for the definition is 1 January 2019. A person who was not banned on that date remains an existing provider; a person who was banned loses that status. However, a person banned after 1 January 2019 but before the instrument commenced? The instrument seems to fix the date at 1 January 2019 for all purposes. A person banned on 2 January 2019 would still be an existing provider? The text says “on 1 January 2019 … is not banned”. So if the ban occurred later, the person remains an existing provider. That is a bright line rule, but it may produce anomalies. Fourth, section 10(b) deems a previously banned person not to have been a relevant provider before 1 January 2019. This deeming can affect liability for conduct before that date if the standards are applied retrospectively. Although the instrument says it is “for the purposes of sections 1546C and 1546D”, those sections govern when the new standards apply. There is a risk that ASIC could argue that such a person cannot rely on the transitional exemption for the exam deadline. Finally, the compliance scheme suspension (section 13) applies only to “a financial services licensee”. That term is defined in the Act broadly. However, the suspension does not extend to obligations of the responsible manager or the relevant provider personally, if any. Licensees should verify that no other provision requires individual compliance scheme‑related actions. Also, the suspension ends at 31 October 2022. The instrument does not provide a grace period after that date. Licensees must have a compliance scheme in place and all notices lodged from 1 November 2022. Since the suspension was known from November 2019, licensees have had almost three years to prepare, but if they postponed entirely, they face a hard deadline. Another subtlety: section 9(c) applies paragraph 922Q(2)(r) (relating to principal place of business) from 1 January 2020, while other paragraphs of 922Q(2) apply from 15 November 2019. This staggered start means licensees must check which content requirements apply to their notices at different times. The instrument also lacks a general transitional saving for notices lodged before its modification. A licensee who voluntarily lodged notices before the instrument commenced may need to re‑lodge after 15 November 2019? Probably not, but the instrument does not address it. The “despite anything else” clause suggests that any earlier notice is not required to be lodged, but it does not invalidate earlier voluntary lodgment. However, if the content requirements changed, earlier notices may be incomplete.

Compliance with this instrument is largely a matter of updating internal processes and calendars to reflect the modified timing. Licensees should first identify all relevant providers and classify them as either existing providers (who meet the definition in s 1546A as modified by s 10(a)), provisional relevant providers, or previously banned/prohibited advisers. For each category, check the applicable notice deadline. For notices about provisional relevant providers, CPD, CPD year start, and exam results, no action was required before 15 November 2019; from that date, the normal lodgment rules under Division 9 apply. The licensee should ensure its system captures the date on which a person becomes a provisional relevant provider and triggers a notice within the timeframe set by the Act (usually within prescribed days). For CPD, the licensee must lodge a notice about the education and training standard in subsection 921B(5) after the CPD year ends. The start of the CPD year must be notified. For existing providers, the exam pass must be notified after 15 November 2019. For notices under section 922H (change of details) lodged in the 15 November to 31 December 2019 window, the licensee must include information about principal place of business and compliance scheme. After that window, compliance scheme information is not required because the compliance scheme framework is suspended. But keep records: the suspension ends on 31 October 2022. From 1 November 2022, the full regime applies, including having a compliance scheme under s 921H and lodging notices under s 922D, 922E, 922F, 922L and 1546W. The licensee should begin designing and implementing a compliance scheme well before that date, as ASIC may require evidence of preparation. For banned or prohibited advisers as at 1 January 2019, the licensee must not treat them as existing providers. If such an adviser later becomes authorised, the licensee must apply the full professional standards (exam and education) without transitional extension. Additionally, under s 1546Z as modified by s 12, the licensee must notify ASIC of certain information after the banning or prohibition. That obligation arises when a person meets the expanded criteria (banned, disqualified, subject to enforceable undertaking, or foreign prohibition). The licensee should have a process to identify triggering events. The instrument does not specify the content of that notice; refer to the Act. Finally, maintain a compliance register tracking all notice lodgments and the exemptions relied upon. The exemption in Part 3 does not require an application; it is automatic. However, the licensee should document its reliance in case of ASIC inquiry. Given the complexity of the interaction between the instrument and the Act, legal advice tailored to the licensee’s specific adviser cohort is advisable. The instrument does not exempt licensees from record‑keeping obligations under the Act generally. Any notice that is lodged must be complete and accurate. Misclassification of an adviser as an existing provider when they are excluded could lead to later non‑compliance with professional standards deadlines, exposing the licensee to enforcement action. The safest approach is to err on the side of treating borderline cases as non‑existing providers, unless the adviser clearly meets the unmodified definition and was not banned on 1 January 2019.