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This is a Bill, not an Act. For current law, see the Acts databases.

CORPORATIONS AMENDMENT (FURTHER FUTURE OF FINANCIAL ADVICE MEASURES) BILL 2011

2010-2011
The Parliament of the
Commonwealth of Australia
HOUSE OF REPRESENTATIVES
Presented and read a first time
Corporations Amendment (Further
Future of Financial Advice Measures)
Bill 2011
No. , 2011
(Treasury)
A Bill for an Act to amend the law in relation to
financial products, and for related purposes
i Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 No.
, 2011
Contents
1 Short
title
...........................................................................................
1
2 Commencement
.................................................................................
1
3 Schedule(s)
........................................................................................
2
Schedule 1--Amendments
3
Corporations Act 2001
3
Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 No. ,
2011 1
A Bill for an Act to amend the law in relation to
1
financial products, and for related purposes
2
The Parliament of Australia enacts:
3
1 Short title
4
This Act may be cited as the Corporations Amendment (Further
5
Future of Financial Advice Measures) Act 2011.
6
2 Commencement
7
(1) Each provision of this Act specified in column 1 of the table
8
commences, or is taken to have commenced, in accordance with
9
column 2 of the table. Any other statement in column 2 has effect
10
according to its terms.
11
12
2 Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011
No. , 2011
Commencement information
Column 1
Column 2
Column 3
Provision(s)
Commencement
Date/Details
1. Sections 1 to 3
and anything in
this Act not
elsewhere covered
by this table
The day this Act receives the Royal Assent.
2. Schedule 1
Immediately after the commencement of
Schedule 1 to the Corporations Amendment
(Future of Financial Advice) Act 2011.
1 July 2012
Note:
This table relates only to the provisions of this Act as originally
1
enacted. It will not be amended to deal with any later amendments of
2
this Act.
3
(2) Any information in column 3 of the table is not part of this Act.
4
Information may be inserted in this column, or information in it
5
may be edited, in any published version of this Act.
6
3 Schedule(s)
7
Each Act that is specified in a Schedule to this Act is amended or
8
repealed as set out in the applicable items in the Schedule
9
concerned, and any other item in a Schedule to this Act has effect
10
according to its terms.
11
12
Amendments Schedule 1
Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 No. ,
2011 3
Schedule 1--Amendments
1
2
Corporations Act 2001
3
1 Section 9 (after paragraph (b) of the definition of civil
4
penalty order)
5
Insert:
6
(ba) a refund order under section 1317GA;
7
2 Section 9 (paragraph (c) of the definition of civil penalty
8
order)
9
Before "1317H", insert "961M,".
10
3 Paragraph 199A(2)(b)
11
Before "1317H", insert "961M,".
12
4 Subsection 199A(3) (note 1)
13
Before "1317E", insert "961M,".
14
5 Subsection 769B(7)
15
After "Part 7.7" (wherever occurring), insert "or 7.7A".
16
6 Subdivision B of Division 3 of Part 7.7
17
Repeal the Subdivision.
18
7 Paragraph 947B(2)(f)
19
Omit "section 945B", substitute "section 961H".
20
8 Paragraph 947C(2)(g)
21
Omit "section 945B", substitute "section 961H".
22
9 Paragraph 953B(1)(c)
23
Omit "945A, 945B,".
24
10 Section 960
25
Insert:
26
Schedule 1 Amendments
4 Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011
No. , 2011
asset-based fee has the meaning given by section 964F.
1
11 Section 960
2
Insert:
3
basic banking product has the meaning given by section 961F.
4
12 Section 960
5
Insert:
6
conflicted remuneration has the meaning given by section 963A,
7
as affected by sections 963B, 963C and 963D.
8
13 Section 960
9
Insert:
10
custodian, in relation to a registrable superannuation entity, has the
11
same meaning as in the Superannuation Industry (Supervision) Act
12
1993.
13
14 Section 960
14
Insert:
15
group life policy for members of a superannuation entity has the
16
meaning given by subsection 963B(2).
17
15 Section 960
18
Insert:
19
life policy for a member of a default superannuation fund has the
20
meaning given by subsection 963B(3).
21
16 Section 960
22
Insert:
23
reasonable investigation has a meaning affected by section 961D.
24
17 Section 960
25
Insert:
26
reasonably apparent:
27
Amendments Schedule 1
Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 No. ,
2011 5
(a) in Division 2--has the meaning given by section 961C; and
1
(b) in Subdivision B of Division 5--has the meaning given by
2
section 964H.
3
18 Section 960
4
Insert:
5
registrable superannuation entity has the same meaning as in the
6
Superannuation Industry (Supervision) Act 1993.
7
19 Section 960
8
Insert:
9
responsible licensee, in relation to a contravention of a provision
10
of this Part, has the meaning given by section 961P.
11
20 Section 960
12
Insert:
13
RSE licensee has the same meaning as in the Superannuation
14
Industry (Supervision) Act 1993.
15
21 Section 960
16
Insert:
17
volume-based shelf-space fee has a meaning affected by
18
section 964A.
19
22 At the end of Division 1 of Part 7.7A
20
Add:
21
960B Obligations under this Part in addition to other obligations
22
The obligations imposed on a person under this Part are in addition
23
to any other obligations to which the person is subject under this
24
Act or any other law.
25
23 After Division 1 of Part 7.7A
26
Insert:
27
Schedule 1 Amendments
6 Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011
No. , 2011
Division 2--Best interests obligations
1
Subdivision A--Preliminary
2
961 Application of this Division
3
(1) This Division applies in relation to the provision of personal advice
4
(the advice) to a person (the client) as a retail client.
5
(2) The individual who is to provide the advice is referred to in this
6
Division as the provider.
7
(3) If 2 or more individuals are to provide the advice, each of those
8
individuals is referred to in this Division as the provider.
9
(4) An individual is a provider for the purposes of this Division even if
10
the individual is a representative of a financial services licensee
11
and is to provide the advice on behalf of that licensee.
12
(5) If it is not reasonably possible to identify the individual who is to,
13
or individuals who are to, provide the advice, the person who is to
14
provide the advice is the provider for the purposes of this Division.
15
(6) A person who offers personal advice through a computer program
16
is taken to be the person who is to provide the advice, and is the
17
provider for the purposes of this Division.
18
961A Application to a financial services licensee acting as an
19
authorised representative
20
If a financial services licensee is acting as an authorised
21
representative of another financial services licensee in relation to
22
the advice, this Division applies to the first licensee in relation to
23
the advice in that licensee's capacity as an authorised
24
representative (rather than in the capacity of licensee).
25
Subdivision B--Provider must act in the best interests of the
26
client
27
961B Provider must act in the best interests of the client
28
(1) The provider must act in the best interests of the client in relation
29
to the advice.
30
Amendments Schedule 1
Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 No. ,
2011 7
(2) The provider satisfies the duty in subsection (1), if the provider
1
proves that the provider has done each of the following:
2
(a) identified the objectives, financial situation and needs of the
3
client that were disclosed to the provider by the client
4
through instructions;
5
(b)
identified:
6
(i) the subject matter of the advice that has been sought by
7
the client (whether explicitly or implicitly); and
8
(ii) the objectives, financial situation and needs of the client
9
that would reasonably be considered as relevant to
10
advice sought on that subject matter (the client's
11
relevant circumstances);
12
(c) where it was reasonably apparent that information relating to
13
the client's relevant circumstances was incomplete or
14
inaccurate, made reasonable inquiries to obtain complete and
15
accurate information;
16
(d) assessed whether the provider has the expertise required to
17
provide the client advice on the subject matter sought and, if
18
not, declined to provide the advice;
19
(e) if, in considering the subject matter of the advice sought, it
20
would be reasonable to consider recommending a financial
21
product:
22
(i) conducted a reasonable investigation into the financial
23
products that might achieve those of the objectives and
24
meet those of the needs of the client that would
25
reasonably be considered as relevant to advice on that
26
subject matter; and
27
(ii) assessed the information gathered in the investigation;
28
(f) based all judgements in advising the client on the client's
29
relevant circumstances;
30
(g) taken any other step that would reasonably be regarded as
31
being in the best interests of the client, given the client's
32
relevant circumstances.
33
Basic banking products--best interests duty satisfied if certain
34
steps are taken
35
(3)
If:
36
(a) the subject matter of the advice sought by the client is solely
37
a basic banking product; and
38
Schedule 1 Amendments
8 Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011
No. , 2011
(b) the provider is an agent or employee of an Australian ADI, or
1
otherwise acting by arrangement with an Australian ADI
2
under the name of the Australian ADI;
3
the provider satisfies the duty in subsection (1) if the provider takes
4
the steps mentioned in paragraphs (2)(a), (b) and (c).
5
General insurance products--best interests duty satisfied if certain
6
steps are taken
7
(4) If the subject matter of the advice sought by the client is solely a
8
general insurance product, the provider satisfies the duty in
9
subsection (1) if the provider takes the steps mentioned in
10
paragraphs (2)(a), (b) and (c).
11
Note:
A responsible licensee or an authorised representative may contravene
12
a civil penalty provision if a provider fails to comply with this section
13
(see sections 961K and 961Q). The provider may be subject to a
14
banning order (see section 920A).
15
Regulations
16
(5) The regulations may prescribe:
17
(a) a step, in addition to or substitution for the steps mentioned
18
in subsection (2), that the provider must, in prescribed
19
circumstances, prove that the provider has taken, to satisfy
20
the duty in subsection (1); or
21
(b) that the provider is not required, in prescribed circumstances,
22
to prove that the provider has taken a step mentioned in
23
subsection (2), to satisfy the duty in subsection (1); or
24
(c) circumstances in which the duty in subsection (1) does not
25
apply.
26
961C When is something reasonably apparent?
27
Something
is
reasonably apparent if it would be apparent to a
28
person with a reasonable level of expertise in the subject matter of
29
the advice that has been sought by the client, were that person
30
exercising care and objectively assessing the information given to
31
the provider by the client.
32
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Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 No. ,
2011 9
961D What is a reasonable investigation?
1
(1)
A
reasonable investigation into the financial products that might
2
achieve those of the objectives and meet those of the needs of the
3
client that would reasonably be considered relevant to advice on
4
the subject matter sought by the client does not require an
5
investigation into every financial product available.
6
(2) However, if the client requests the provider to consider a specified
7
financial product, a reasonable investigation into the financial
8
products that might achieve those of the objectives and meet those
9
of the needs of the client that would reasonably be considered
10
relevant to advice on the subject matter sought by the client
11
includes an investigation into that financial product.
12
961E What would reasonably be regarded as in the best interests of
13
the client?
14
It would reasonably be regarded as in the best interests of the client
15
to take a step, if a person with a reasonable level of expertise in the
16
subject matter of the advice that has been sought by the client,
17
exercising care and objectively assessing the client's relevant
18
circumstances, would regard it as in the best interests of the client,
19
given the client's relevant circumstances, to take that step.
20
961F What is a basic banking product?
21
Each of the following is a basic banking product:
22
(a) a basic deposit product;
23
(b) a facility for making non-cash payments (see section 763D)
24
that is related to a basic deposit product;
25
(c) an FHSA product of a kind mentioned in subparagraph (c)(i)
26
of the meaning of FHSA in section 8 of the First Home
27
Saver Accounts Act 2008 (first home saver accounts);
28
(d) a facility for providing traveller's cheques;
29
(e) any other product prescribed by regulations for the purposes
30
of this paragraph.
31
Schedule 1 Amendments
10 Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011
No. , 2011
Subdivision C--Resulting advice must be appropriate to the
1
client
2
961G Resulting advice must be appropriate to the client
3
The provider must only provide the advice to the client if it would
4
be reasonable to conclude that the advice is appropriate to the
5
client, had the provider satisfied the duty under section 961B to act
6
in the best interests of the client.
7
Note:
A responsible licensee or an authorised representative may contravene
8
a civil penalty provision if a provider fails to comply with this section
9
(see sections 961K and 961Q). The provider may be subject to a
10
banning order (see section 920A).
11
Subdivision D--Where resulting advice still based on
12
incomplete or inaccurate information
13
961H Resulting advice still based on incomplete or inaccurate
14
information
15
(1) If it is reasonably apparent that information relating to the
16
objectives, financial situation and needs of the client on which the
17
advice is based is incomplete or inaccurate, the provider must, in
18
accordance with subsections (2) and (3), warn the client that:
19
(a) the advice is, or may be, based on incomplete or inaccurate
20
information relating to the client's relevant personal
21
circumstances; and
22
(b) because of that, the client should, before acting on the advice,
23
consider the appropriateness of the advice, having regard to
24
the client's objectives, financial situation and needs.
25
(2) The warning must be given to the client at the same time as the
26
advice is provided and, subject to subsection (3), by the same
27
means as the advice is provided.
28
(3) If a Statement of Advice is the means by which the advice is
29
provided, or is given to the client at the same time as the advice is
30
provided, the warning may be given by including it in the
31
Statement of Advice.
32
Note:
The Statement of Advice must at least contain a record of the warning
33
(see paragraphs 947B(2)(f) and 947C(2)(g)).
34
Amendments Schedule 1
Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 No. ,
2011 11
(4) If 2 or more individuals provide the advice and one of those
1
individuals provides a warning in accordance with this section, the
2
other individuals are taken to have complied with this section.
3
(5) Nothing in this section affects the duty of the provider under
4
section 961B to make reasonable inquiries to obtain complete and
5
accurate information.
6
Note:
A responsible licensee or an authorised representative may contravene
7
a civil penalty provision if a provider fails to comply with this section
8
(see sections 961K and 961Q). The provider may be subject to a
9
banning order (see section 920A).
10
Subdivision E--Provider to give priority to the client's interests
11
961J Conflict between client's interests and those of provider,
12
licensee, authorised representative or associates
13
(1) If the provider knows, or reasonably ought to know, that there is a
14
conflict between the interests of the client and the interests of:
15
(a) the provider; or
16
(b) an associate of the provider; or
17
(c) a financial services licensee of whom the provider is a
18
representative; or
19
(d) an associate of a financial services licensee of whom the
20
provider is a representative; or
21
(e) an authorised representative who has authorised the provider,
22
under subsection 916B(3), to provide a specified financial
23
service or financial services on behalf of a financial services
24
licensee; or
25
(f) an associate of an authorised representative who has
26
authorised the provider, under subsection 916B(3), to provide
27
a specified financial service or financial services on behalf of
28
a financial services licensee;
29
the provider must give priority to the client's interests when giving
30
the advice.
31
Note:
A responsible licensee or an authorised representative may contravene
32
a civil penalty provision if a provider fails to comply with this section
33
(see sections 961K and 961Q). The provider may be subject to a
34
banning order (see section 920A).
35
(2) Subsection (1) does not apply if:
36
Schedule 1 Amendments
12 Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011
No. , 2011
(a) the subject matter of the advice sought by the client is solely
1
a basic banking product; and
2
(b) the provider is an agent or employee of an Australian ADI, or
3
otherwise acting by arrangement with an Australian ADI
4
under the name of the Australian ADI.
5
(3) Subsection (1) does not apply if the subject matter of the advice
6
sought by the client is solely a general insurance product.
7
Subdivision F--Responsibilities of licensees under this Division
8
961K Civil penalty provision--sections 961B, 961G, 961H and 961J
9
(1) A financial services licensee contravenes this section if the licensee
10
contravenes section 961B, 961G, 961H or 961J.
11
Note:
This subsection is a civil penalty provision (see section 1317E).
12
(2) A financial services licensee contravenes this section if:
13
(a) a representative, other than an authorised representative, of
14
the licensee contravenes section 961B, 961G, 961H or 961J;
15
and
16
(b) the licensee is the, or a, responsible licensee in relation to that
17
contravention.
18
Note:
This subsection is a civil penalty provision (see section 1317E).
19
961L Licensees must ensure compliance
20
A financial services licensee must take reasonable steps to ensure
21
that representatives of the licensee comply with sections 961B,
22
961G, 961H and 961J.
23
Note:
This section is a civil penalty provision (see section 1317E).
24
961M Civil action for loss or damage
25
(1) This section applies if the client suffers loss or damage because of
26
a contravention of a provision of this Division.
27
(2) A Court may order that one or more of the following persons
28
compensate the client for the amount of the loss or damage:
29
(a) if the person who contravenes the provision is a financial
30
services licensee--that licensee;
31
Amendments Schedule 1
Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 No. ,
2011 13
(b) if the person who contravenes the provision is a
1
representative of a financial services licensee, or 2 or more
2
financial services licensees--the, or a, responsible licensee in
3
relation to the contravention.
4
(3) The Court may make the order under this section:
5
(a) on its own initiative, during proceedings before the Court; or
6
(b) on the application of ASIC; or
7
(c) on the application of the client.
8
(4) In determining the damage suffered by the client, the Court may
9
include profits resulting from the contravention that are made by:
10
(a) if the person who contravenes the provision is a financial
11
services licensee--the licensee; or
12
(b) if the person who contravenes the provision is a
13
representative of a financial services licensee, or 2 or more
14
financial services licensees:
15
(i) the representative; and
16
(ii) where the Court's order under subsection (2) relates to a
17
financial services licensee that is the, or a, responsible
18
licensee in relation to the contravention--the licensee.
19
(5) An order under this section may be made whether or not the
20
licensee against whom the order is made (or anyone else) has been
21
convicted of an offence, or been the subject of a civil penalty order,
22
in respect of the matter.
23
(6) An action to recover the amount of the loss or damage may be
24
begun at any time within 6 years after the contravention.
25
(7) An order under this section may be enforced as if it were a
26
judgement of the Court.
27
(8) This section does not affect any liability that a person has under
28
any other law.
29
961N Additional powers of Court to make orders
30
(1) The Court dealing with an action under subsection 961M(2) may,
31
in addition to awarding loss or damage under that subsection and if
32
it thinks it necessary in order to do justice between the parties:
33
Schedule 1 Amendments
14 Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011
No. , 2011
(a) make an order declaring void a contract entered into by the
1
client for or relating to a financial product or a financial
2
service; and
3
(b) if it makes an order under paragraph (a)--make such other
4
order or orders as it thinks are necessary or desirable because
5
of that order.
6
(2) Without limiting paragraph (1)(b), an order under that paragraph
7
may include either or both of the following:
8
(a) an order for the return of money paid by a person;
9
(b) an order for the payment of an amount of interest specified
10
in, or calculated in accordance with, the order.
11
961P Responsible licensee
12
For the purposes of this Part, the, or a, responsible licensee, in
13
relation to a contravention of a provision of this Part, is:
14
(a) if the person who contravenes the provision is a
15
representative of only one financial services licensee--that
16
financial services licensee; or
17
(b) if the person who contravenes the provision is a
18
representative of more than one financial services licensee:
19
(i) if, under the rules in section 917C, one of those
20
licensees is responsible for the person's conduct--that
21
licensee; or
22
(ii) if, under the rules in section 917C, 2 or more of those
23
licensees are jointly and severally responsible for the
24
person's conduct--each of those licensees.
25
Subdivision G--Responsibilities of authorised representatives
26
under this Division
27
961Q Civil penalty provision--sections 961B, 961G, 961H and 961J
28
(1) An authorised representative of a financial services licensee
29
contravenes this section if the authorised representative
30
contravenes section 961B, 961G, 961H or 961J.
31
Note:
This subsection is a civil penalty provision (see section 1317E).
32
(2) Subsection (1) does not apply if:
33
Amendments Schedule 1
Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 No. ,
2011 15
(a) the licensee had provided the authorised representative with
1
information or instructions about the requirements to be
2
complied with in relation to the giving of personal advice;
3
and
4
(b) the authorised representative's failure to comply with
5
section 961B, 961G, 961H or 961J occurred because the
6
representative was acting in reliance on that information or
7
those instructions; and
8
(c) the representative's reliance on that information or those
9
instructions was reasonable.
10
24 After Division 3 of Part 7.7A
11
Insert:
12
Division 4--Conflicted remuneration
13
Subdivision A--Preliminary
14
963 Application to a financial services licensee acting as an
15
authorised representative
16
If a financial services licensee is acting as an authorised
17
representative of another financial services licensee in relation to
18
financial product advice, this Division applies to the first licensee
19
in relation to the advice in that licensee's capacity as an authorised
20
representative (rather than in the capacity of licensee).
21
Subdivision B--What is conflicted remuneration?
22
963A Conflicted remuneration
23
Conflicted remuneration means any benefit, whether monetary or
24
non-monetary, given to a financial services licensee, or a
25
representative of a financial services licensee, who provides
26
financial product advice to persons as retail clients that, because of
27
the nature of the benefit or the circumstances in which it is given:
28
(a) could reasonably be expected to influence the choice of
29
financial product recommended by the licensee or
30
representative to retail clients; or
31
Schedule 1 Amendments
16 Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011
No. , 2011
(b) could reasonably be expected to influence the financial
1
product advice given to retail clients by the licensee or
2
representative.
3
963B Monetary benefit given in certain circumstances not conflicted
4
remuneration
5
(1) Despite section 963A, a monetary benefit given to a financial
6
services licensee, or a representative of a financial services
7
licensee, who provides financial product advice to persons as retail
8
clients is not conflicted remuneration in the circumstances set out
9
in any of the following paragraphs:
10
(a) the benefit is given to the licensee or representative solely in
11
relation to a general insurance product;
12
(b) the benefit is given to the licensee or representative solely in
13
relation to a life risk insurance product, other than:
14
(i) a group life policy for members of a superannuation
15
entity (see subsection (2)); or
16
(ii) a life policy for a member of a default superannuation
17
fund (see subsection (3));
18
(c) each of the following is satisfied:
19
(i) the benefit is given to the licensee or representative in
20
relation to the issue or sale of a financial product to a
21
person;
22
(ii) financial product advice in relation to the product, or
23
products of that class, has not been given to the person
24
as a retail client by the licensee or representative;
25
(d) the benefit is given to the licensee or representative by a
26
retail client in relation to:
27
(i) the issue or sale of a financial product by the licensee or
28
representative to the client; or
29
(ii) financial product advice given by the licensee or
30
representative to the client;
31
(e) the benefit is a prescribed benefit or is given in prescribed
32
circumstances.
33
(2) A life risk insurance product is a group life policy for members of
34
a superannuation entity if the product is issued to an RSE licensee
35
of a registrable superannuation entity, or a custodian in relation to a
36
Amendments Schedule 1
Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 No. ,
2011 17
registrable superannuation entity, for the benefit of a class of
1
members of the entity.
2
(3) A life risk insurance product is a life policy for a member of a
3
default superannuation fund if:
4
(a) the product is issued to an RSE licensee of a registrable
5
superannuation entity, or a custodian in relation to a
6
registrable superannuation entity, for the benefit of a person
7
who is a member of the entity; and
8
(b) the person has not given written notice to an employer of the
9
person that the fund is the person's chosen fund, but the
10
employer of the person makes contributions to the fund for
11
the benefit of the person.
12
Note:
Superannuation guarantee surcharge may be imposed on an employer
13
if the employer does not make contributions to a superannuation fund
14
for the benefit of its employees. If an employee does not notify the
15
employer of the employee's chosen fund, the employer is still able to
16
satisfy its obligations by making contributions to certain funds (see the
17
Superannuation Guarantee (Administration) Act 1992).
18
963C Non-monetary benefit given in certain circumstances not
19
conflicted remuneration
20
Despite section 963A, a non-monetary benefit given to a financial
21
services licensee, or a representative of a financial services
22
licensee, who provides financial product advice to persons as retail
23
clients is not conflicted remuneration in the circumstances set out
24
in any of the following paragraphs:
25
(a) the benefit is given to the licensee or representative solely in
26
relation to a general insurance product;
27
(b) each of the following is satisfied:
28
(i) the benefit is of less than an amount prescribed;
29
(ii) identical or similar benefits are not given on a frequent
30
or regular basis;
31
(c) the benefit satisfies each of the following:
32
(i) the benefit has a genuine education or training purpose;
33
(ii) the benefit is relevant to the provision of financial
34
product advice to persons as retail clients;
35
(iii) the benefit complies with regulations made for the
36
purposes of this subparagraph;
37
(d) the benefit satisfies each of the following:
38
Schedule 1 Amendments
18 Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011
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(i) the benefit is the provision of information technology
1
software or support;
2
(ii) the benefit is related to the provision of financial
3
product advice to persons as retail clients in relation to
4
the financial products issued or sold by the benefit
5
provider;
6
(iii) the benefit complies with regulations made for the
7
purposes of this subparagraph;
8
(e) the benefit is given to the licensee or representative by a
9
retail client in relation to:
10
(i) the issue or sale of a financial product by the licensee or
11
representative to the client; or
12
(ii) financial product advice given by the licensee or
13
representative to the client;
14
(f) the benefit is a prescribed benefit or is given in prescribed
15
circumstances.
16
963D Benefits for recommending basic banking products not
17
conflicted remuneration
18
Despite section 963A, a monetary or non-monetary benefit given to
19
a financial services licensee, or a representative of a financial
20
services licensee, is not conflicted remuneration if:
21
(a) the benefit is remuneration for work carried out, or to be
22
carried out, by the licensee or representative as an agent or an
23
employee of an Australian ADI, or in otherwise acting by
24
arrangement with an Australian ADI under the name of the
25
Australian ADI; and
26
(b) access to the benefit, or the amount of the benefit, is solely
27
dependent on the licensee or representative recommending a
28
basic banking product; and
29
(c) the licensee or representative does not, in the course of
30
recommending that basic banking product, give other
31
financial product advice that does not relate to a basic
32
banking product.
33
Amendments Schedule 1
Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 No. ,
2011 19
Subdivision C--Ban on conflicted remuneration
1
963E Licensee must not accept conflicted remuneration
2
(1) A financial services licensee must not accept conflicted
3
remuneration.
4
Note:
This subsection is a civil penalty provision (see section 1317E).
5
(2) A financial services licensee contravenes this section if:
6
(a) a representative, other than an authorised representative, of
7
the licensee accepts conflicted remuneration; and
8
(b) the licensee is the, or a, responsible licensee in relation to the
9
contravention.
10
Note:
This subsection is a civil penalty provision (see section 1317E).
11
963F Licensee must ensure compliance
12
A financial services licensee must take reasonable steps to ensure
13
that representatives of the licensee do not accept conflicted
14
remuneration.
15
Note:
This section is a civil penalty provision (see section 1317E).
16
963G Authorised representative must not accept conflicted
17
remuneration
18
(1) An authorised representative of a financial services licensee must
19
not accept conflicted remuneration.
20
Note:
This subsection is a civil penalty provision (see section 1317E).
21
(2) Subsection (1) does not apply if:
22
(a) the licensee had provided the authorised representative with
23
information about the nature of the benefit to be accepted by
24
the authorised representative; and
25
(b) at the time the authorised representative accepted the benefit,
26
the representative was not aware that the benefit was
27
conflicted remuneration because the representative was
28
acting in reliance on that information; and
29
(c) the representative's reliance on that information was
30
reasonable.
31
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20 Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011
No. , 2011
963H Other representatives must not accept conflicted
1
remuneration
2
A representative, other than an authorised representative, of a
3
financial services licensee must not accept conflicted remuneration
4
unless it is in circumstances for which an employer of the licensee
5
or representative is liable under section 963J.
6
Note:
A representative who contravenes this section may be subject to a
7
banning order (see section 920A).
8
963J Employer must not give employees conflicted remuneration
9
An employer of a financial services licensee, or a representative of
10
a financial services licensee, must not give the licensee or
11
representative conflicted remuneration for work carried out, or to
12
be carried out, by the licensee or representative as an employee of
13
the employer.
14
Note:
This section is a civil penalty provision (see section 1317E).
15
963K Product issuer or seller must not give conflicted remuneration
16
An issuer or seller of a financial product must not give a financial
17
services licensee, or a representative of a financial services
18
licensee, conflicted remuneration.
19
Note:
This section is a civil penalty provision (see section 1317E).
20
963L Volume-based benefits presumed to be conflicted
21
remuneration
22
It is presumed for the purposes of this Division that a benefit of
23
one of the following kinds is conflicted remuneration, unless the
24
contrary is proved:
25
(a) a benefit access to which, or the value of which, is wholly or
26
partly dependent on the total value of financial products of a
27
particular class, or particular classes:
28
(i) recommended by a financial services licensee, or a
29
representative of a financial services licensee, to retail
30
clients, or a class of retail clients; or
31
(ii) acquired by retail clients, or a class of retail clients, to
32
whom a financial services licensee, or a representative
33
Amendments Schedule 1
Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 No. ,
2011 21
of a financial services licensee, provides financial
1
product advice;
2
(b) a benefit access to which, or the value of which, is wholly or
3
partly dependent on the number of financial products of a
4
particular class, or particular classes:
5
(i) recommended by a financial services licensee, or a
6
representative of a financial services licensee, to retail
7
clients, or a class of retail clients; or
8
(ii) acquired by retail clients, or a class of retail clients, to
9
whom a financial services licensee, or a representative
10
of a financial services licensee, provides financial
11
product advice.
12
Division 5--Other banned remuneration
13
Subdivision A--Volume-based shelf-space fees
14
964 Application
15
(1) This Subdivision applies if:
16
(a) a financial services licensee or an RSE licensee (the platform
17
operator) is, or offers to be, the provider of a custodial
18
arrangement; and
19
(b) a monetary or non-monetary benefit is given, or to be given,
20
by a financial services licensee or an RSE licensee (the funds
21
manager) to the platform operator; and
22
(c) a financial product to which the custodial arrangement relates
23
is a financial product in which the funds manager deals (the
24
funds manager's financial product).
25
(2) In this Subdivision:
26
custodial arrangement has the same meaning as it has in
27
subsection 1012IA(1), subject to subsection (3).
28
provider has the same meaning as in subsection 1012IA(1).
29
(3) The definition of custodial arrangement in subsection 1012IA(1)
30
is to be read as if the reference in that definition to an instruction
31
included a reference to a direction to follow an investment strategy
32
of the kind mentioned in subsection 52(4) of the Superannuation
33
Industry (Supervision) Act 1993 that involves the acquisition of a
34
Schedule 1 Amendments
22 Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011
No. , 2011
particular financial product, or a financial product of a particular
1
kind.
2
(4) A reference to a kind of financial product in subsection (3) has the
3
same meaning in that subsection as it has in the definition of
4
custodial arrangement in subsection 1012IA(1).
5
964A Platform operator must not accept volume-based shelf-space
6
fees
7
(1) The platform operator must not accept the benefit if it is a
8
volume-based shelf-space fee.
9
Note:
This subsection is a civil penalty provision (see section 1317E).
10
(2) Subject to subsection (3), the benefit is presumed to be a
11
volume-based shelf-space fee if the benefit, or the value of benefit,
12
is wholly or partly dependent on the total number or value of the
13
funds manager's financial products of a particular class, or
14
particular classes, to which the custodial arrangement relates.
15
(3) If it is proved that all or part of the benefit is of a kind specified in
16
one of the following paragraphs then, to the extent that the benefit
17
is of that kind, it is not presumed to be a volume-based shelf space
18
fee:
19
(a) a reasonable fee for a service provided to the funds manager
20
by the platform operator or another person;
21
(b) a discount on an amount payable, or a rebate of an amount
22
paid, to the funds manager by the platform operator, the
23
value of which does not exceed an amount that may
24
reasonably be attributed to efficiencies gained by the funds
25
manager because of the number or value of financial products
26
in relation to which the funds manager provides services to
27
the platform operator, or through the platform operator to
28
another person.
29
Subdivision B--Asset-based fees on borrowed amounts
30
964B Application
31
This Subdivision applies where a financial services licensee, or a
32
representative of a financial services licensee, provides financial
33
product advice (the advice) to a person (the client) as a retail client.
34
Amendments Schedule 1
Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 No. ,
2011 23
964C Application to a financial services licensee acting as an
1
authorised representative
2
If a financial services licensee is acting as an authorised
3
representative of another financial services licensee in relation to
4
the advice, this Subdivision applies to the first licensee in relation
5
to the advice in that licensee's capacity as an authorised
6
representative (rather than in the capacity of licensee).
7
964D Financial services licensees must not charge asset-based fees
8
on borrowed amounts
9
(1) The financial services licensee must not charge an asset-based fee
10
on a borrowed amount used or to be used to acquire financial
11
products by or on behalf of the client.
12
Note:
This subsection is a civil penalty provision (see section 1317E).
13
(2) A financial services licensee contravenes this section if:
14
(a) a representative, other than an authorised representative, of
15
the licensee charges an asset-based fee on a borrowed amount
16
used or to be used to acquire financial products by or on
17
behalf of the client; and
18
(b) the licensee is the, or a, responsible licensee in relation to the
19
contravention.
20
Note:
This subsection is a civil penalty provision (see section 1317E).
21
Exceptions
22
(3) Subsections (1) and (2) do not apply in relation to a borrowed
23
amount if it is not reasonably apparent that the amount has been
24
borrowed.
25
(4) The regulations may provide that subsections (1) and (2) do not
26
apply in prescribed circumstances.
27
Duty to make reasonable inquiries
28
(5) Nothing in this section affects the duty of the financial services
29
licensee, or the representative of the financial services licensee,
30
under section 961B to make reasonable inquiries to obtain
31
complete and accurate information.
32
Schedule 1 Amendments
24 Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011
No. , 2011
964E Authorised representatives must not charge asset-based fees
1
on borrowed amounts
2
(1) The authorised representative of the financial services licensee
3
must not charge an asset-based fee on a borrowed amount used or
4
to be used to acquire financial products by or on behalf of the
5
client.
6
Note:
This subsection is a civil penalty provision (see section 1317E).
7
Exceptions
8
(2) Subsection (1) does not apply in relation to a borrowed amount if it
9
is not reasonably apparent that the amount has been borrowed.
10
(3) The regulations may provide that subsection (1) does not apply in
11
prescribed circumstances.
12
Duty to make reasonable inquiries
13
(4) Nothing in this section affects the duty of the authorised
14
representative under section 961B to make reasonable inquiries to
15
obtain complete and accurate information.
16
964F What is an asset-based fee?
17
A fee for providing financial product advice to a person as a retail
18
client is an asset-based fee to the extent that it is dependent upon
19
the amount of funds used or to be used to acquire financial
20
products by or on behalf of the person.
21
964G Meaning of borrowed
22
(1) In this Subdivision:
23
borrowed means borrowed in any form, whether secured or
24
unsecured, including through:
25
(a) a credit facility within the meaning of the regulations; and
26
(b) a margin lending facility.
27
(2) To avoid doubt, an amount is no longer borrowed to the extent that
28
it has been repaid.
29
Amendments Schedule 1
Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 No. ,
2011 25
964H When is something reasonably apparent?
1
Something
is
reasonably apparent if it would be apparent to a
2
person with a reasonable level of expertise in the subject matter of
3
the advice that has been sought by the client, were that person
4
exercising care and objectively assessing the information given to
5
the financial services licensee, or the representative of the financial
6
services licensee, by the client.
7
25 Paragraph 965(a)
8
Omit "for the sole or dominant purpose", substitute "for the sole
9
purpose or for a purpose (that is not incidental)".
10
26 Section 1317DA (definition of corporation/scheme civil
11
penalty provision)
12
Repeal the definition, substitute:
13
corporation/scheme civil penalty provision means a provision
14
referred to in subsection 1317E(1), other than in paragraphs
15
1317E(1)(jaab) to (jg).
16
27 Section 1317DA (definition of financial services civil
17
penalty provision)
18
Repeal the definition, substitute:
19
financial services civil penalty provision means a provision
20
referred to in any of paragraphs 1317E(1)(jaab) and (jaai) to (jg).
21
28 Paragraphs 1317E(1)(j) to (jaae)
22
Repeal the paragraphs, substitute:
23
(j) subsection 601JD(3) (duties of members);
24
(ja) subsection 601UAA(2) (duties of officers of licensed trustee
25
company);
26
(jaaa) subsection 601UAB(2) (duties of employees of licensed
27
trustee company);
28
(jaab) subsection 674(2), 674(2A), 675(2) or 675(2A) (continuous
29
disclosure);
30
(jaac) subsection 798H(1) (complying with market integrity rules);
31
(jaad) subsections 961K(1) and (2) (financial services licensee
32
responsible for breach of certain best interests duties);
33
Schedule 1 Amendments
26 Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011
No. , 2011
(jaae) section 961L (financial services licensee to ensure
1
compliance with certain best interests duties);
2
(jaaf) subsection 961Q(1) (authorised representative responsible for
3
breach of certain best interests duties);
4
(jaag) section 962P (charging ongoing fee after termination of
5
ongoing fee arrangement);
6
(jaah) subsection 962S(1) (fee recipient must give fee disclosure
7
statement);
8
(jaai) subsections 963E(1) and (2) (financial services licensee
9
responsible for breach of ban on conflicted remuneration);
10
(jaaj) section 963F (financial services licensee must ensure
11
representatives do not accept conflicted remuneration);
12
(jaak) subsection 963G(1) (authorised representative must not
13
accept conflicted remuneration);
14
(jaal) section 963J (employer must not pay employees conflicted
15
remuneration);
16
(jaam) section 963K (financial product issuer or seller must not give
17
conflicted remuneration to financial services licensee or
18
representative);
19
(jaan) subsection 964A(1) (platform operator must not accept
20
volume-based shelf-space fees);
21
(jaao) subsections 964D(1) and (2) (financial services licensee
22
responsible for breach of asset-based fees on borrowed
23
amounts);
24
(jaap) subsection 964E(1) (authorised representative must not
25
charge asset-based fees on borrowed amounts);
26
(jaaq) section 965 (anti-avoidance of Part 7.7A provisions);
27
29 Paragraph 1317G(1A)(b)
28
After "financial services civil penalty provision", insert "not dealt with
29
in subsections (1E) to (1G)".
30
30 Subsections 1317G(1E) to (1G)
31
Repeal the subsections, substitute:
32
Best interests obligations and remuneration
33
(1E) A Court may order a person to pay the Commonwealth a pecuniary
34
penalty if:
35
Amendments Schedule 1
Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 No. ,
2011 27
(a) a declaration of contravention by the person has been made
1
under section 1317E; and
2
(b) the contravention is of one of the following provisions:
3
(i) subsections 961K(1) and (2) (financial services licensee
4
responsible for breach of certain best interests duties);
5
(ii) section 961L (financial services licensee to ensure
6
compliance with certain best interests duties);
7
(iii) subsection 961Q(1) (authorised representative
8
responsible for breach of certain best interests duties);
9
(iv) section 962P (charging ongoing fee after termination of
10
ongoing fee arrangement);
11
(v) subsection 962S(1) (fee recipient must give fee
12
disclosure statement);
13
(vi) subsections 963E(1) and (2) (financial services licensee
14
must not accept conflicted remuneration);
15
(vii) section 963F (financial services licensee must ensure
16
representatives do not accept conflicted remuneration);
17
(viii) subsection 963G(1) (authorised representative must not
18
accept conflicted remuneration);
19
(ix) section 963J (employer must not pay employees
20
conflicted remuneration);
21
(x) section 963K (financial product issuer or seller must not
22
give conflicted remuneration to financial services
23
licensee or representative);
24
(xi) subsection 964A(1) (platform operator) must not accept
25
volume-based shelf-space fees);
26
(xii) subsections 964D(1) and (2) (financial services licensee
27
must not charge asset-based fees on borrowed amounts);
28
(xiii) subsection 964E(1) (authorised representative must not
29
charge asset-based fees on borrowed amounts);
30
(xiv) section 965 (anti-avoidance of Part 7.7A provisions).
31
(1F) The maximum amount that the court may order the person to pay
32
for contravening a provision mentioned in paragraph (1E)(b)
33
(except a provision mentioned in subparagraph (1E)(b)(iv) or (v))
34
is:
35
(a) $200,000 for an individual; or
36
(b) $1 million for a body corporate.
37
Schedule 1 Amendments
28 Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011
No. , 2011
(1G) The maximum amount that the court may order the person to pay
1
for contravening a provision mentioned in
2
subparagraph (1E)(b)(iv) or (v) is:
3
(a) $50,000 for an individual; or
4
(b) $250,000 for a body corporate.
5
31 After paragraph 1317P(1)(b)
6
Insert:
7
(ba) a refund order has been made against the person; or
8
32 Subsection 1317S(1) (paragraph (a) of the definition of
9
eligible proceedings)
10
After "588W,", insert "961M, 1317GA,".
11
33 At the end of Chapter 10
12
Add:
13
Part 10.18--Transitional provisions relating to the
14
Corporations Amendment (Further Future
15
of Financial Advice Measures) Act 2011
16
17
1526 Definitions
18
(1) In this Part:
19
amending Act means the Corporations Amendment (Further
20
Future of Financial Advice Measures) Act 2011.
21
custodial arrangement has the same meaning as it has in
22
subsection 1012IA(1), subject to subsection (2).
23
platform operator means the provider of a custodial arrangement,
24
or custodial arrangements.
25
provider, in relation to a custodial arrangement, has the same
26
meaning as in subsection 1012IA(1).
27
(2) The definition of custodial arrangement in subsection 1012IA(1)
28
is to be read as if the reference in that definition to an instruction
29
included a reference to a direction to follow an investment strategy
30
Amendments Schedule 1
Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 No. ,
2011 29
of the kind mentioned in subsection 52(4) of the Superannuation
1
Industry (Supervision) Act 1993 that involves the acquisition of a
2
particular financial product, or a financial product of a particular
3
kind.
4
1527 Application of best interests obligations
5
Division 2 of Part 7.7A, as inserted by item 23 of Schedule 1 to the
6
amending Act, applies in relation to the provision of personal
7
advice to a person as a retail client on or after the day on which
8
that item commences (whether or not the advice was sought before
9
that day).
10
1528 Application of ban on conflicted remuneration
11
(1) Subject to subsection (2), Division 4 of Part 7.7A, as inserted by
12
item 24 of Schedule 1 to the amending Act, does not apply to a
13
benefit given to a financial services licensee, or a representative of
14
a financial services licensee, if:
15
(a) the benefit is given under an arrangement entered into before
16
the day on which that item commences; and
17
(b) the benefit is not given by a platform operator.
18
(2) The regulations may prescribe circumstances in which that
19
Division applies to a benefit given to a financial services licensee,
20
or a representative of a financial services licensee, where:
21
(a) the benefit is given under an arrangement entered into before
22
the day on which that item commences; and
23
(b) the benefit is not given by a platform operator.
24
(3) The regulations may prescribe other circumstances in which that
25
Division applies, or does not apply, to a benefit given to a financial
26
service licensee or a representative of a financial services licensee.
27
1529 Application of ban on other remuneration--volume-based
28
shelf-space fees
29
(1) Subject to subsection (2), Subdivision A of Division 5 of
30
Part 7.7A, as inserted by item 24 of Schedule 1 to the amending
31
Act, does not apply to a benefit given to a financial services
32
licensee, or an RSE licensee, under an arrangement entered into
33
before the day on which that item commences.
34
Schedule 1 Amendments
30 Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011
No. , 2011
(2) The regulations may prescribe circumstances in which that
1
Subdivision applies to a benefit given to a financial services
2
licensee, or an RSE licensee, under an arrangement entered into
3
before the day on which that item commences.
4
1530 Regulations do not apply where an acquisition of property
5
otherwise than on just terms would result
6
Regulations made for the purposes of subsection 1528(2), 1528(3)
7
or 1529(2) do not apply to the extent that the operation of the
8
regulations would result in an acquisition of property (within the
9
meaning of paragraph 51(xxxi) of the Constitution) from a person
10
otherwise than on just terms (within the meaning of that
11
paragraph).
12
1531 Application of ban on other remuneration--asset-based fees on
13
borrowed amounts
14
(1) Subdivision B of Division 5 of Part 7.7A, as inserted by item 24 of
15
Schedule 1 to the amending Act, applies to asset-based fees
16
charged on or after the day on which that item commences on
17
borrowed amounts, but only to the extent that those amounts are
18
used or to be used to acquire financial products on or after that day.
19
(2) Despite subsection (1), that Subdivision does not apply to an
20
asset-based fee charged on or after the day on which that item
21
commences, to the extent that the operation of that Subdivision
22
would result in an acquisition of property (within the meaning of
23
paragraph 51(xxxi) of the Constitution) from a person otherwise
24
than on just terms (within the meaning of that paragraph of the
25
Constitution).
26
34 Schedule 3 (table items 270A, 270B and 270C)
27
Repeal the items.
28

 

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