THE ROLLERCOASTER ride for lawyers and their responsibilities under the Financial Services Reform Act 2001(FSRA) seemed to be continuing last week with the release of an update on the progress of Australian financial services (AFS) licence applications.
However, the war has been fought and won and as the deadline for licences approaches this March, many lawyers will be able to consider themselves exempt.
Last week’s update by the Australian Securities and Investments Commission (ASIC) warned financial advisers to obtain a licence by the 10 March 2004 deadline. After this date, a person who operates a financial business must hold an AFS licence. That includes those who provide financial product advice, deal in a financial product, make a market for a financial product, operate as a registered scheme and provide custodial or depository services.
Speaking to Lawyers Weekly, Law Council of Australia president Bob Gotterson QC explained that lawyers only managed to gain an exemption from the licences last month after extensive lobbying from the Council. Still, he warned lawyers to be aware of where the regime applies and where it does not.
Exemptions brought about by Law Council lobbying in 2001 meant that some legal advice was not considered financial product advice. This included any advice given by a lawyer in the ordinary course of their professional activities, as well as advice given in a lawyer’s professional capacity about matters of law, legal interpretation and the application of the law.
“We were pleased to see ... that there was an exemption from the licensing regime for giving advice by a lawyer in their professional capacity,” Gotterson said. “So the giving of legal advice isn’t caught by the licensing requirements.”
Additional requests to ASIC and the Federal Treasury by the Law Council in December last year saw further exemptions for lawyers. The Council had been concerned at the number of instances where lawyers’ ordinary activities amounted to the provision of a financial service.
As a result, additional exemptions were made to the FSRA’s dealing and custodial and depository services provisions. “The result is that advice and work that lawyers do in the ordinary course of legal practice will be exempted from the financial services regime,” Gotterson said.
“The Law Council, through our business law section, lobbied to make a regulation which excepts from the licensing regime any financial dealing which is done in the ordinary course of legal practice,” he added.
The Law Council’s success has saved many lawyers and firms enormous additional cost as licence fees were likely to be between $200-300 per practitioner per year.
Gotterson stressed that lawyers would still have to ensure they were covered by the exemptions and that the licensing regime did not apply to them. Referring to his own comments about the current exemptions, he added that “one has to warn lawyers that that is a general statement of the situation and a careful study of the exempting provisions and regulations always needs to be undertaken where other activities are involved”.
The Law Council wants to assist in this process and is currently working on an information kit that will be available online.
“[The kit would] give guidance as to where the regime applies and where it does not. We’re hoping to have that done and have it available to the legal profession electronically as soon as we can,” Gotterson said.
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