On 28 January 2014, ASIC announced that it has released a report (REP382) outlining decisions on relief applications between June and September 2013 from provisions of the Corporations Act 2001 (Cth), National Consumer Credit Protection Act 2009 (Cth) or the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth). Among other things, the report contains examples of situations where ASIC has provided no-action letters.

A no-action letter states to the applicant of the letter that ASIC does not intend to take regulatory action over a particular state of affairs or a particular conduct. It is not a legal opinion and it does not constitute legal advice, and, importantly, it can be withdrawn at any time. While a no-action letter is not a guarantee that ASIC will not take regulatory action in the future, it does provide some conform and a degree of certainty that ASIC is not expecting to take regulatory action in relation to the state of affairs or conduct in question.  

ASIC's Regulatory Guide 108 (RG108) is the "go to" guide for those who wish to apply to ASIC for a no-action letter. It explains how to make an application and sets out the factors ASIC considers when dealing with a request for a no-action letter (such as the contravention was due to inadvertence and that the adverse effects on third parties are minimal).

In REP382, under the heading "credit licensing", ASIC reported that it has provided a no-action letter in relation to the potential contravention for engaging in credit activities outside credit license authorisation. ASIC also reported that it has provided a no-action letter for early debit or payment of interest charges under a credit contract. For both scenarios, ASIC explained its reasons for providing a no-action letter.

If you experienced an unintended contravention of the relevant legislation as a result of conduct that is not inconsistent with the spirit and policy of the legislation, and you wish to apply to ASIC for a no-action letter, carefully considering REP382 in conjunction with RG108 will certainly assist you in preparing your case and presenting it to ASIC.

The Personal Property Securities Act 2009 (Cth) (PPSA) created a new comprehensive national regime for personal property securities in Australia.  The definition of security interest under the PPSA covers “traditional” security interests such as fixed and floating charges over the assets of companies (now known as general security interests) to interests which were not considered security interests in the pre-PPSA era.  An example here would be retention of title arrangements.

Under the PPSA, transitional security interests (TSIs) are those created under a security agreement which was entered into before 30 January 2012.  TSIs enjoy a two-year honeymoon period where they are “temporarily perfected”, which means that a TSI maintains its pre-PPSA priority as against post-PPSA perfected security interests.  30 January 2014 marks the end of this honeymoon period, and secured parties who have TSIs should consider registering them on the Personal Property Securities Register (PPSR) before 30 January 2014 so as to preserve the priority of the TSI.  A number of fees apply to using the PPSR, but registration of a TSI on does not attract any fee.  The Registrar gave examples of transactions which may have created TSIs.  They include leasing and hiring arrangements, retention of title supplies, and certain commercial consignment arrangements.

If you are a secured party with a TSI or your client falls under this description, now is the time to review the security interest in question and to take any necessary action to protect and preserve its priority.

This post first appeared on CPD Interactive's "Legal Natter's Blog".