The Australian Securities and Investments Commission (ASIC) has opened consultation on the proposed extension of a legislative instrument that grants specific exemptions to insurers and intermediaries providing incidental retail cover within commercial insurance policies.
The instrument, officially titled ASIC Corporations (Incidental Retail Cover) Instrument 2022/716, is scheduled to lapse on Aug. 16.
It exempts providers from certain retail client requirements under Chapter 7 of the Corporations Act 2001 when the retail component is a minor, inseparable part of a broader wholesale insurance product.
According to ASIC, the exemption was introduced to limit unnecessary regulatory costs and ensure that compliance obligations meant for retail offerings are not mistakenly applied to business-focused insurance products.
After a recent review, ASIC concluded the relief remains effective and relevant. It is proposing to remake the instrument for a further five years, subject to ongoing regulatory oversight and stakeholder engagement.
The regulator has invited feedback by 5pm AEST on June 16 via [email protected].
The exemption covers scenarios where retail benefits, such as coverage for employees’ personal property, are embedded within business insurance products. However, the relief does not apply when such cover is optional or requires separate consent from the insured business.
The instrument’s continuation must comply with the Legislation Act 2003, which mandates the automatic repeal – or “sunsetting” – of legislative instruments after 10 years unless they are renewed.
In parallel, ASIC is consulting on its proposal to merge and extend three financial advice-related instruments, which are due to expire on Oct. 1. These instruments include:
ASIC has determined these instruments remain functionally sound and integral to the broader regulatory environment.
The proposed consolidation aims to streamline the framework with minimal changes. Submissions for this consultation are due by 5pm AEST on June 12.
In a separate notice, ASIC has issued a caution to company directors following several instances of alleged misuse of corporate funds, particularly involving small and medium-sized businesses.
The agency cited multiple cases where directors were accused of using company resources for personal expenses, contributing to company failures and leaving creditors – many of them small businesses – unpaid.
ASIC reminded directors of their fiduciary duties to act in the interests of the company and its stakeholders. Directors found in breach of these obligations may face civil penalties, criminal prosecution, or disqualification.
