Chapter 7 Corporations Act
The Chapter 7 Corporations Act is an Australian law that regulates the financial service industry. The act was passed by the Australian Securities & Investments Commission in 2001. Members of the financial service industry follow all aspects of the act or risk paying penalties.
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History
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The act was created as part of the Financial Services Reform Act. It specifically regulates firms that advise clients on financial services and products. The law was enacted over a 2-year rollout period so all firms could adjust to it.
Significance
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The act defines explicitly financial products and services. Most forms of insurance are considered financial products. It also defines financial markets and exceptions to financial product regulation. The act authorizes the Australian Securities & Investments Commission to supervise financial firms.
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Improvements
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In 2009, the Parliamentary Joint Committee on Corporations and Financial Services made recommendations to improve the act. The recommendations to the Australian Parliament include requiring financial advisers to promise to put clients' interests above their own and to improve conflict of interest disclosures. The recommendations are still under consideration.
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References
- Australian Securities & Investments Commission: ASIC and the Property Sector
- "The Executives Guide to Insurance and Risk Management"; Graeme Berwick; 2007
- Commonwealth Consolidated Acts: Corporations Act 2001
- Parliamentary of Australia Joint Committee: Chapter 7 Conclusion: Recommendations for Reform
Resources
- Photo Credit finance #3 image by Adam Borkowski from Fotolia.com
