ASIC releases final guidance on carbon products
The minimum training requirements for financial planners providing advice on carbon financial products has been finalised by the Australian Securities and Investments Commission (ASIC).
Under Regulatory Guide 146, financial planners must understand the characteristics of the three types of regulated emissions units: encompassing carbon units, Australian carbon credit units, and eligible international emissions units.
Advisers must also have knowledge of the risks associated with each type of regulated emission unit, including "restrictions on their use, transfer, and bankability for future use", according to RG146.
The process for acquiring, transferring and surrendering each type of unit must also be understood.
ASIC also requires that advisers have knowledge of the geopolitical context of carbon markets; the main participants in carbon markets; supply and demand factors; potential trading strategies; and the risks of carbon markets (ie, liquidity, pricing, credit, operational and regulatory risks).
In addition, advisers must have sound knowledge of the regulatory framework for the carbon pricing mechanism, along with an understanding of the legal environment and the taxation issues relating to carbon pricing, according to RG146.
The regulator has also released the updated, final version of Regulatory Guide 236, which answers the question: "Do I need an AFS [Australian Financial Services] licence to participate in carbon markets?"
RG236 provides a number of examples explaining which providers will be exempt from the licensing regime, and under which circumstances.
ASIC Commissioner John Price encouraged providers planning to offer financial services in emissions units to register with ASIC.
"The aim of the registration process is to enable people intending to either apply for an AFS licence or vary an existing licence to offer financial services in emissions units from 1 July 2012.
"By registering, people can offer financial services in emissions units until 31 December 2012 - provided they have applied for an AFS licence by 31 October 2012.
"From 1 January 2013, it will be an offence to provide financial services in emissions units without a licence, unless exempt," Price said.
Recommended for you
ASIC has cancelled a Sydney AFSL for failing to pay a $64,000 AFCA determination related to inappropriate advice, which then had to be paid by the CSLR.
A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments for investments.
Inefficient data processes and systems mean advisers are spending over half of their time on product implementation and administration at the expense of clients, according to research.
With the regulator announcing its enforcement focus for 2025 last week, law firm Hall & Wilcox examines the areas which have dropped down the list in priority for the regulator.
