A T O home
Legal Database
Search   
for 
 
Access the database 
Browse database
Searches  
View last document
Quick access 
View legislation
View a document
Email Cross Reference Material Previous/Next Section Contents Previous/Next Result
Printable version
Printable
version

CORPORATIONS ACT 2001

CHAPTER 7 - FINANCIAL SERVICES AND MARKETS    View history reference

PART 7.5 - COMPENSATION REGIMES FOR FINANCIAL MARKETS    View history reference

Division 3 - Approved compensation arrangements    View history reference

Subdivision D - Are compensation arrangements adequate?    View history reference

SECTION 885C  THE LOSSES TO BE COVERED  

 View history reference

885C(1)  [Losses covered]  


Subject to section 885D, the compensation rules must cover losses (Division 3 losses) of a kind described in the following paragraphs:


(a) a person (the client) gave money or other property, or authority over property, to a person (the participant):


(i) who was a participant in the market at that time; or

(ii) who the client reasonably believed to be a participant in the market at that time and who was a participant in the market at some earlier time; and


(b) the money or other property, or the authority, was given to the participant in connection with effecting a transaction, or proposed transaction, covered by provisions of the operating rules of the market relating to transactions effected through the market; and


(c) the effecting of the transaction through the market constitutes or would constitute the provision of a financial service to the client as a retail client; and


(d) the client suffers a loss because of:


(i) if the client gave the participant money or other property - the defalcation or fraudulent misuse of the money or other property by the participant; or

(ii) if the client gave the participant authority over property - the fraudulent misuse of that authority by the participant.

885C(2)  [Relevance of conviction or prosecution]  


The compensation rules must provide that a claim relating to an alleged loss caused by defalcation or fraudulent misuse may be allowed even if:


(a) the person against whom the defalcation or misuse is alleged has not been convicted or prosecuted; and


(b) the evidence on which the claim is allowed would not be sufficient to establish the guilt of that person on a criminal trial in respect of the defalcation or fraudulent misuse.

885C(3)  [Exclusions]  


The compensation rules may exclude losses of a kind described above that occur in specified situations. However, the compensation arrangements will not be adequate unless the Minister is satisfied that those exclusions are appropriate.


 



This information is provided by CCH Australia Limited. View the disclaimer and notice of copyright.
Top of page
More information on page