ASIC is inviting feedback on its proposal to remake a legislative instrument that gives relief for 31-day notice term deposits, with a minor amendment to the current settings around pre and post-maturity notices.
ASIC Class Order [CO 14/1262] Relief for 31-day notice term deposits gives 31-day notice term deposits of up to five years concessional regulatory treatment as 'basic deposit products' under the Corporations Act 2001.
As a condition of the current relief, authorised deposit-taking institutions (ADIs) are required to provide a pre-maturity notice to depositors before the term deposit rolls over into a new term and a post-maturity notice that notifies depositors of a grace period of seven days to exit the term deposit.
ASIC has received feedback that it is difficult for some ADIs to comply with the existing one business day timeframe required for post-maturity notices in Class Order [CO 14/1262]. This is due to mail delivery times where a term deposit customer has not opted in to receiving electronic communications.
To address these concerns, ASIC proposes to remake the legislative instrument, and give ADIs the option of combining the pre and post-maturity notices into a single notice that must be given to the depositor at least seven days, and no longer than 14 days, before maturity.
ADIs may continue to comply with the current one business day post-maturity notice if they prefer. The seven-day grace period will continue to apply as currently set out in Class Order [CO 14/1262].
ASIC considers the relief to still be a necessary and a useful part of the legislative framework, and to be operating effectively and efficiently, subject to the minor amendment detailed above.
