The Financial Services Reform Act 2001 (FSR Act) and consequential legislation was passed by the Federal Parliament, and received Royal Assent on September 27 2001. The start date for the FSR Act has been pushed back from October 1 2001 to March 11 2002 following consultation with key companies and industry associations from the financial services sector. A two-year transitional period will apply to licensing and disclosure provisions for existing participants.
The FSR Act has been hailed as a "revolutionary" piece of legislation by the Minister for Financial Services and Regulation, Joe Hockey. The Minister said: "This is a major change for the financial services industry."
While the major platform of the FSR Act is now in place, much of the detail has yet to be finalized, including the FSR Regulations and the Australian Securities and Investments Commission (ASIC) Policy Proposal Papers.
Exposure Drafts of the FSR Regulations have been released by the Treasury in three tranches, with the third tranche being released in late September. The draft FSR Regulations have been the subject of consultation with the private sector. The Treasury is involved with the second stage of developing the draft FSR Regulations, addressing major issues arising out of the consultation process. The Treasury has highlighted a number of issues it will consider, such as:
- whether wrap accounts and master funds are encompassed within the definition of financial market;
- the treatment of derivatives and in particular warrants; and
- the appropriate treatment of sub-custodians.