Preview
Archived Posts Lists

Australian Regulatory Compliance Review
Australian Technology and IP Business
Credit Union and Mutual Law
National Consumer Credit Reform
Personal Property Securities Australia
Longview Business Insights
Australian Private Health Insurers
Wills, Trusts, Super
Mutuals Resource Centre

Resources

Commonwealth legislation
Corporate Governance
Not-for-Profit links
Regulator Links

March 6, 2013

ASIC guidance on FOFA conflicted remuneration ban

ASIC has published Regulatory Guide 246 Conflicted remuneration (RG 246) on complying with the provisions on conflicted remuneration and other banned remuneration in Divisions 4 and 5 of Part 7.7A of the Corporations Act 2001 which apply from 1 July 2013.

The Corporations Act prohibits:
(a) AFS licensees and their representatives (including authorised representatives) from accepting conflicted remuneration (s963E, 963G and 963H);
(b) product issuers and sellers from giving conflicted remuneration to AFS licensees and their representatives (s963K); and
(c) employers from giving their AFS licensee or representative employees conflicted remuneration for work they carry out as an employee (s963J).

The other forms of remuneration that are generally prohibited are:
(a) a platform operator accepting a volume-based shelf-space fee from a funds manager; and
(b) an AFS licensee, or its representative, who provides financial product advice to a retail client charging asset-based fees on borrowed amounts used to acquire financial products by, or on behalf of, the client.

Conflicted remuneration is any benefit given to an AFS licensee, or its representative, who provides financial product advice to retail clients that, because of the nature of the benefit or the circumstances in which it is given, could reasonably be expected to influence:
(a) the choice of financial product recommended to clients by the AFS licensee or representative; or
(b) the financial product advice given to clients by the AFS licensee or representative: s963A.

RG246 covers:

  • volume-based benefits
  • performance benefits for employees
  • volume-based shelf space fees
  • asset based fees on borrowed amounts
  • transitional provisions
  • the anti avoidance provision

ASIC has recognised that not all performance benefits provided to employees could reasonably be expected to influence the advice they provide.

Print This Post Print This Post

Posted 6th March 2013 by David Jacobson in Corporations Act, Financial Services, Future of Financial Advice Reforms