ASIC has remade a legislative instrument that gives relief for 31-day notice term deposits, with minor amendments to pre and post-maturity notice settings. This follows recent consultation with industry.
ASIC Corporations (31-day Notice Term Deposits) Instrument 2025/172 (Instrument) provides conditional relief so 31-day notice term deposits of up to five years can be treated as 'basic deposit products' under the Corporations Act 2001.
The Instrument continues the relief previously provided under ASIC Class Order [CO 14/1262], which will sunset on 1 April 2025.
Under Class Order [CO 14/1262], authorised deposit-taking institutions (ADIs) must give a pre-maturity notice to customers before the 31-day term deposit rolls over into a new term. A post-maturity notice must also be provided to customers within one business day that notifies them of the interest rate and seven-day grace period they have to exit the new term deposit.
The new Instrument will also give ADIs the alternative option of combining the pre and post-maturity notices into a single combined notice that must be given to customers at least five business days and no longer than 10 business days before maturity, while confirming the interest rate that applies to the new term deposit.
ADIs may provide a combined notice or continue to comply with the existing option if they prefer.
This amendment is in response to feedback from industry that it is difficult for some ADIs to comply with existing timeframes due to postal delivery timings. ADIs will be able to satisfy timeframes for the notices as long as they can demonstrate that they have taken 'reasonable steps' to meet the relevant timeframes.
The Instrument also introduces the ability to provide notices via electronic communication, reflecting ASIC class relief in ASIC Corporations (Facilitating Electronic Delivery of Financial Services Disclosure) Instrument 2015/647.
Consultation and feedback
On 10 December 2024, ASIC announced its intention to remake the relief in Class Order [CO 14/1262] and requested feedback on the proposal by 7 February 2025.
ASIC received four submissions in response to the public consultation. The three public submissions are available on CS 12 Proposed remake of ASIC Class Order [CO 14/1262] Relief for 31-day notice term deposits. All were supportive of the relief being remade and generally supported ASIC's proposal to provide an alternative option for ADIs to give customers a combined notice.
Background
Some ADIs issue term deposits that require customers to provide 31 days' notice before breaking a term deposit to help with liquidity management or to assist in meeting the Australian Prudential Regulation Authority's prudential liquidity standards for the liquidity coverage ratio under Prudential Standard APS 210 Liquidity.
The Instrument provides certainty for industry that 31-day notice term deposits will continue be treated as 'basic deposit products' and not be subject to more onerous regulatory requirements, including a higher level of training standards and more prescriptive disclosure obligations.
ASIC is Australia's corporate, markets and financial services regulator.
