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This is a Bill, not an Act. For current law, see the Acts databases.
2013-2014
The Parliament of the
Commonwealth of Australia
HOUSE OF REPRESENTATIVES
Presented and read a first time
Corporations Amendment (Streamlining
of Future of Financial Advice) Bill 2014
No. , 2014
(Treasury)
A Bill for an Act to amend the law in relation to
financial products and financial advice, and for
related purposes
No. , 2014
Corporations Amendment (Streamlining of Future of Financial Advice)
Bill 2014
i
Contents
1
Short title ........................................................................................... 1
2
Commencement ................................................................................. 1
3
Schedule(s) ........................................................................................ 2
Schedule 1--Amendments
3
Corporations Act 2001
3
No. , 2014
Corporations Amendment (Streamlining of Future of Financial Advice)
Bill 2014
1
A Bill for an Act to amend the law in relation to
1
financial products and financial advice, and for
2
related purposes
3
The Parliament of Australia enacts:
4
1 Short title
5
This Act may be cited as the Corporations Amendment
6
(Streamlining of Future of Financial Advice) Act 2014.
7
2 Commencement
8
(1) Each provision of this Act specified in column 1 of the table
9
commences, or is taken to have commenced, in accordance with
10
column 2 of the table. Any other statement in column 2 has effect
11
according to its terms.
12
2
Corporations Amendment (Streamlining of Future of Financial Advice)
Bill 2014
No. , 2014
1
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
The day after this Act receives the Royal
Assent.
Note:
This table relates only to the provisions of this Act as originally
2
enacted. It will not be amended to deal with any later amendments of
3
this Act.
4
(2) Any information in column 3 of the table is not part of this Act.
5
Information may be inserted in this column, or information in it
6
may be edited, in any published version of this Act.
7
3 Schedule(s)
8
Each Act that is specified in a Schedule to this Act is amended or
9
repealed as set out in the applicable items in the Schedule
10
concerned, and any other item in a Schedule to this Act has effect
11
according to its terms.
12
Amendments Schedule 1
No. , 2014
Corporations Amendment (Streamlining of Future of Financial Advice)
Bill 2014
3
Schedule 1
--Amendments
1
2
Corporations Act 2001
3
1 Section 960
4
Insert:
5
consumer credit insurance has the same meaning as in the
6
Insurance Contracts Act 1984.
7
2 Section 960
8
Insert:
9
regulated superannuation fund has the same meaning as in the
10
Superannuation Industry (Supervision) Act 1993.
11
3 Section 960 (definition of renewal notice)
12
Repeal the definition.
13
4 Section 960 (definition of renewal notice day)
14
Repeal the definition.
15
5 Section 960 (definition of renewal period)
16
Repeal the definition.
17
6 Section 960 (definition of volume-based shelf-space fee)
18
Omit "a meaning affected", substitute "the meaning given".
19
7 Paragraph 961B(2)(a)
20
Repeal the paragraph.
21
8 After paragraph 961B(2)(b)
22
Insert:
23
(ba) identified the objectives, financial situation and needs of the
24
client that are disclosed to the provider by the client;
25
Schedule 1 Amendments
4
Corporations Amendment (Streamlining of Future of Financial Advice)
Bill 2014
No. , 2014
9 Paragraph 961B(2)(f)
1
Omit "relevant circumstances;", substitute "relevant circumstances.".
2
10 Paragraph 961B(2)(g)
3
Repeal the paragraph.
4
11 Subsection 961B(2) (at the end of the note)
5
Add "The provider need not inquire into circumstances that would not
6
reasonably be considered as relevant to the subject matter.".
7
12 Subsections 961B(3) and (4)
8
Repeal the subsections, substitute:
9
Advice given by Australian ADIs--best interests duty satisfied if
10
certain steps are taken
11
(3) If:
12
(a) the provider is:
13
(i) an agent or employee of an Australian ADI; or
14
(ii) otherwise acting by arrangement with an Australian
15
ADI under the name of the Australian ADI; and
16
(b) the subject matter of the advice sought by the client relates
17
only to the following:
18
(i) a basic banking product;
19
(ii) a general insurance product;
20
(iii) consumer credit insurance;
21
(iv) a combination of any of those products;
22
the provider satisfies the duty in subsection (1) in relation to the
23
advice given in relation to the basic banking product and the
24
general insurance product if the provider takes the steps mentioned
25
in paragraphs (2)(b), (ba) and (c).
26
General insurance products--best interests duty satisfied if certain
27
steps are taken
28
(4) To the extent that the subject matter of the advice sought by the
29
client is a general insurance product, the provider satisfies the duty
30
in subsection (1) if the provider takes the steps mentioned in
31
paragraphs (2)(b), (ba) and (c).
32
Amendments Schedule 1
No. , 2014
Corporations Amendment (Streamlining of Future of Financial Advice)
Bill 2014
5
13 After subsection 961B(4)
1
Insert:
2
Client seeks scaled advice
3
(4A) To avoid doubt, nothing in this section prevents the provider and a
4
client from agreeing the subject matter of the advice sought by the
5
client.
6
Example: A client approaches the provider intending to seek advice on a
7
particular subject matter. As a result of discussion with the provider,
8
the client decides to instead seek advice on a narrower subject matter.
9
The provider and the client then agree the subject matter of the advice
10
sought by the client. The obligations of this Division apply to the
11
advice ultimately sought.
12
14 Section 961E
13
Repeal the section.
14
15 Section 961G
15
Omit ", had the provider satisfied the duty under section 961B to act in
16
the best interests of the client", substitute ", having regard to
17
section 961B".
18
16 Subsections 961J(2) and (3)
19
Repeal the subsections, substitute:
20
(2) If:
21
(a) the provider is:
22
(i) an agent or employee of an Australian ADI; or
23
(ii) otherwise acting by arrangement with an Australian
24
ADI under the name of the Australian ADI; and
25
(b) the subject matter of the advice sought by the client relates
26
only to the following:
27
(i) a basic banking product;
28
(ii) a general insurance product;
29
(iii) consumer credit insurance;
30
(iv) a combination of any of those products;
31
Schedule 1 Amendments
6
Corporations Amendment (Streamlining of Future of Financial Advice)
Bill 2014
No. , 2014
subsection (1) does not apply to the extent that the advice relates to
1
a basic banking product or a general insurance product or a
2
combination of those 2 products.
3
(3) Subsection (1) does not apply to the extent that the subject matter
4
of the advice sought by the client is a general insurance product.
5
17 Section 962CA
6
Repeal the section.
7
18 Subdivision B of Division 3 of Part 7.7A (heading)
8
Repeal the heading, substitute:
9
Subdivision B--Disclosure and termination
10
19 Subsection 962F(1)
11
Omit "or section 962K (the renewal notice obligation)".
12
20 Subsections 962F(2) and (3)
13
Omit "or section 962K".
14
21 Sections 962K, 962L, 962M and 962N
15
Repeal the sections.
16
22 Subdivision C of Division 3 of Part 7.7A
17
Repeal the Subdivision.
18
23 At the end of section 963A
19
Add:
20
Note:
A reference in this Subdivision (including sections 963A, 963B, 963C
21
and 963D) to giving a benefit includes a reference to causing or
22
authorising it to be given (see section 52).
23
24 Subsection 963B(1)
24
Omit "in the circumstances set out in any of the following paragraphs",
25
substitute "to the extent that one or more of the following paragraphs is
26
satisfied".
27
Amendments Schedule 1
No. , 2014
Corporations Amendment (Streamlining of Future of Financial Advice)
Bill 2014
7
25 Paragraph 963B(1)(a)
1
Omit "solely".
2
26 Paragraph 963B(1)(b)
3
Omit "solely".
4
27 Paragraph 963B(1)(c)
5
Repeal the paragraph.
6
28 At the end of subsection 963B(1)
7
Add:
8
Example: If a benefit of $2000 is given and paragraph (1)(a) is satisfied in
9
relation to $500 of that benefit, and paragraph (1)(b) is satisfied in
10
relation to the remaining $1500 of that benefit, none of the benefit
11
would be conflicted remuneration.
12
Note:
Under the governing rules of some regulated superannuation funds, a
13
member may seek advice on the basis that the trustee of the fund will
14
pay the licensee or representative for the advice and then recover the
15
amount paid from the assets of the fund attributed to that member. In
16
that case, the member has caused or authorised the amount to be paid
17
to the licensee or representative and so, because of section 52 of this
18
Act, paragraph (1)(d) would apply to that amount. This does not affect
19
the trustee's obligations under section 62 of the Superannuation
20
Industry (Supervision) Act 1993 (which deals with the purposes for
21
which a trustee may act in maintaining a regulated superannuation
22
fund).
23
29 At the end of section 963B
24
Add:
25
(4) Despite section 963A, a monetary benefit given to a financial
26
services licensee who provides financial product advice to persons
27
as retail clients is not conflicted remuneration if:
28
(a) the benefit is given to the licensee in relation to the issue or
29
sale of a financial product to a person; and
30
(b) personal advice in relation to the product, or a class of
31
products of which the product is one, has not been given to
32
the person as a retail client by the licensee, or a
33
representative of the licensee, in the 12 months immediately
34
before the benefit is given.
35
Schedule 1 Amendments
8
Corporations Amendment (Streamlining of Future of Financial Advice)
Bill 2014
No. , 2014
(5) Despite section 963A, a monetary benefit given to a representative
1
of a financial services licensee who provides financial product
2
advice to persons as retail clients is not conflicted remuneration if:
3
(a) the benefit is given to the representative in relation to the
4
issue or sale of a financial product to a person; and
5
(b) personal advice in relation to the product, or a class of
6
products of which the product is one, has not been given to
7
the person as a retail client by the representative in the 12
8
months immediately before the benefit is given.
9
(6) Despite section 963A, a monetary benefit given to an employee of
10
a financial services licensee is not conflicted remuneration if:
11
(a) the benefit is given to the employee in relation to general
12
advice given by the employee to a retail client; and
13
(b) the employee has not given personal advice to the retail client
14
in the 12 months immediately before the benefit is given; and
15
(c) the financial product in relation to which the general advice
16
is given is a product issued or sold by the licensee.
17
(7) The regulations may, for the purposes of subsection (1), prescribe
18
either or both of the following:
19
(a) circumstances in which all or part of a benefit is taken to
20
satisfy one of the paragraphs in that subsection;
21
(b) the extent to which, or a method for working out the extent to
22
which, a benefit satisfies one of the paragraphs in that
23
subsection.
24
Note:
The expression intrafund advice is often used to describe financial
25
product advice given by a trustee (or an employee of, or another
26
person acting under arrangement with, the trustee) of a regulated
27
superannuation fund to its members, where that advice is not of a kind
28
to which the prohibition in section 99F of the Superannuation Industry
29
(Supervision) Act 1993 applies. (Section 99F of that Act prohibits
30
trustees of regulated superannuation funds from passing on the cost of
31
providing certain kinds of financial product advice in relation to one
32
member of the fund to another.)
33
30 Section 963C
34
Omit "Despite section 963A,", substitute "(1) Despite section 963A,".
35
Amendments Schedule 1
No. , 2014
Corporations Amendment (Streamlining of Future of Financial Advice)
Bill 2014
9
31 Section 963C
1
Omit "in the circumstances set out in any of the following paragraphs",
2
substitute "to the extent that one or more of the following paragraphs is
3
satisfied".
4
32 Paragraph 963C(a)
5
Omit "solely".
6
33 Subparagraph 963C(c)(ii)
7
Repeal the subparagraph, substitute:
8
(ii) the benefit is relevant to the carrying on of a financial
9
services business;
10
34 At the end of section 963C
11
Add:
12
(2) The regulations may, for the purposes of subsection (1), prescribe
13
either or both of the following:
14
(a) circumstances in which all or part of a benefit is taken to
15
satisfy one of the paragraphs in that subsection;
16
(b) the extent to which, or a method for working out the extent to
17
which, a benefit satisfies one of the paragraphs in that
18
subsection.
19
35 Section 963D
20
Repeal the section, substitute:
21
963D Benefits for employees etc. of ADIs
22
(1) This section applies if:
23
(a) a monetary or non-monetary benefit is given to a financial
24
services licensee, or a representative of a financial services
25
licensee; and
26
(b) the benefit is in whole or in part remuneration for work
27
carried out, or to be carried out, by the licensee or
28
representative:
29
(i) as an agent or employee of an Australian ADI; or
30
Schedule 1 Amendments
10
Corporations Amendment (Streamlining of Future of Financial Advice)
Bill 2014
No. , 2014
(ii) in otherwise acting by arrangement with an Australian
1
ADI under the name of the Australian ADI.
2
(2) If:
3
(a) access to the benefit, or the amount of the benefit, is in whole
4
or in part dependent on the licensee or representative
5
recommending:
6
(i) a basic banking product; or
7
(ii) a general insurance product; or
8
(iii) consumer credit insurance; and
9
(b) the licensee or representative does not, in the course of
10
recommending any, or any combination, of those products
11
give other personal advice that does not relate to any of those
12
products;
13
to the extent that the benefit relates to the recommendation of any,
14
or any combination of, the products mentioned in paragraph (a),
15
the benefit is not conflicted remuneration.
16
(3) The regulations may, for the purposes of subsection (2), prescribe
17
either or both of the following:
18
(a) circumstances in which all or part of a benefit relates to a
19
recommendation mentioned in the subsection;
20
(b) the extent to which, or a method for working out the extent to
21
which, a benefit relates to a recommendation mentioned in
22
the subsection.
23
36 Subsection 964(1)
24
Repeal the subsection, substitute:
25
(1) This Subdivision applies if:
26
(a) a financial services licensee or an RSE licensee (the platform
27
operator) is, or offers to be, the provider of a custodial
28
arrangement; and
29
(b) a funds manager issues or sells a financial product to which
30
the custodial arrangement relates; and
31
(c) a monetary or non-monetary benefit is given, or to be given,
32
by the funds manager to the platform operator.
33
Amendments Schedule 1
No. , 2014
Corporations Amendment (Streamlining of Future of Financial Advice)
Bill 2014
11
37 Subsection 964(2)
1
Insert:
2
funds manager means a financial services licensee or an RSE
3
licensee who issues or sells a financial product to which a custodial
4
arrangement relates.
5
38 Section 964A
6
Repeal the section, substitute:
7
964A Platform operator must not accept volume-based shelf-space
8
fees
9
(1) The platform operator must not accept the benefit if it is a
10
volume-based shelf-space fee.
11
Note:
This subsection is a civil penalty provision (see section 1317E).
12
(2) Subject to subsection (3), the benefit is a volume-based shelf-space
13
fee if:
14
(a) access to the benefit, or the value of the benefit, is wholly or
15
partly dependent on the total value or number of financial
16
products of a particular class, or particular classes, in relation
17
to which the platform operator provides custodial
18
arrangements; and
19
(b) because of the nature of the benefit or the circumstances in
20
which the benefit is given, it could reasonably be expected to
21
influence the platform operator:
22
(i) to increase the total number or value of the funds
23
manager's financial products in relation to which the
24
platform operator is prepared to provide custodial
25
arrangements; or
26
(ii) to give preferential treatment to the funds manager's
27
financial products in providing custodial arrangements.
28
(3) If all or part of the benefit is of a kind specified in one of the
29
following paragraphs, then, to the extent that the benefit is of that
30
kind, it is not a volume-based shelf-space fee:
31
(a) a reasonable fee for a service provided to the funds manager
32
by the platform operator or another person;
33
Schedule 1 Amendments
12
Corporations Amendment (Streamlining of Future of Financial Advice)
Bill 2014
No. , 2014
(b) a discount on an amount payable, or a rebate of an amount
1
paid, to the funds manager by the platform operator, that can
2
reasonably be attributed to economies of scale that are
3
gained, or could reasonably be expected to be gained,
4
because of the number or value of the funds manager's
5
financial products in relation to which the platform operator
6
provides custodial arrangements;
7
(c) the benefit is for providing a custodial arrangement in
8
relation to a general insurance product or a life risk insurance
9
product;
10
(d) the benefit is for providing a custodial arrangement in
11
relation to a basic banking product.
12
39 Subsection 1317E(1) (table item 22)
13
Repeal the item.
14
40 Subparagraph 1317G(1E)(b)(v)
15
Repeal the subparagraph.
16
41 Part 10.18 (heading)
17
Repeal the heading, substitute:
18
Part 10.18--Transitional and application provisions
19
relating to the Future of Financial Advice
20
Measures
21
42 Before section 1526
22
Insert:
23
Division 1--Provisions relating to the Corporations
24
Amendment (Further Future of Financial Advice
25
Measures) Act 2012
26
43 At the end of Part 10.18
27
Add:
28
Amendments Schedule 1
No. , 2014
Corporations Amendment (Streamlining of Future of Financial Advice)
Bill 2014
13
Division 2--Provisions relating to the Corporations
1
Amendment (Streamlining of Future of Financial
2
Advice) Act 2014
3
1531A Definitions
4
In this Division:
5
commencement day means the day on which Schedule 1 to the
6
Corporations Amendment (Streamlining of Future of Financial
7
Advice) Act 2014 commences.
8
1531B Best interests obligation
9
The amendments made by items 7 to 16 of Schedule 1 to the
10
Corporations Amendment (Streamlining of Future of Financial
11
Advice) Act 2014 apply in relation to the provision of personal
12
advice to a person as a retail client on or after the commencement
13
day.
14
1531C Renewal notices (opt-in requirement)
15
(1) The amendments made by items 17 to 21 and items 39 and 40 of
16
Schedule 1 to the Corporations Amendment (Streamlining of
17
Future of Financial Advice) Act 2014 apply in relation to an
18
ongoing fee arrangement for those renewal notice days for the
19
arrangement that occur on or after the commencement day.
20
(2) In this item:
21
renewal notice day for an ongoing fee arrangement has the same
22
meaning as it has in Part 7.7A, as in force immediately before the
23
commencement day.
24
1531D Disclosure statements for pre-existing clients
25
The amendment made by item 22 of Schedule 1 to the
26
Corporations Amendment (Streamlining of Future of Financial
27
Advice) Act 2014 applies in relation to an ongoing fee arrangement
28
for those disclosure days for the arrangement that occur on or after
29
the commencement day.
30
Schedule 1 Amendments
14
Corporations Amendment (Streamlining of Future of Financial Advice)
Bill 2014
No. , 2014
1531E Conflicted remuneration
1
The amendments made by items 23 to 35 of Schedule 1 to the
2
Corporations Amendment (Streamlining of Future of Financial
3
Advice) Act 2014 apply in relation to a benefit if:
4
(a) the benefit is one to which Division 4 of Part 7.7A applies
5
under section 1528; and
6
(b) the benefit is given on or after the commencement day.
7
1531F Volume-based shelf-space fees
8
The amendments made by items 36 to 38 of Schedule 1 to the
9
Corporations Amendment (Streamlining of Future of Financial
10
Advice) Act 2014 apply to a benefit if:
11
(a) the benefit is one to which Subdivision A of Division 5 of
12
Part 7.7A applies under section 1529; and
13
(b) the benefit is given on or after the commencement day.
14