ASIC has released a consultation paper on proposed guidance for the conflicted remuneration ban as outlined in the government’s Future of Financial Advice (FOFA) reforms.
On Friday, the corporate regulator released Consultation Paper 189 (CP 189) Future of Financial Advice: Conflicted remuneration.
“The ban on conflicted remuneration is a core element of the FOFA reforms so it’s important we get industry feedback on these proposals,” ASIC commissioner Peter Kell said.
“The purpose of this guidance is to help industry understand the practical operation of these provisions and how ASIC will administer them.
“In particular, we will focus on the substance of the payment or benefit rather than what it is called – renaming a banned commission something else won’t change its substance.
“ASIC wants to work through the FOFA changes in a way that helps industry comply, so we encourage feedback on our proposed approach.”
The ban on conflicted remuneration includes commissions and volume-based payments in relation to the distribution of and advice about retail investment products.
Such products include managed investments, superannuation, platforms and margin loans. There is also a ban on asset-based fees for borrowed amounts.
The ban on conflicted remuneration operates alongside other FOFA reforms including an obligation for advisers to act in the best interests of clients and a requirement for clients to opt-in to renew ongoing fee agreements.
The conflicted remuneration provisions are set out in Divisions 4 and 5 of Part 7.7A of the Corporations Act 2001 and commence on 1 July 2013.
Australian financial services licensees can choose to comply with these provisions and other FOFA reforms earlier. If they do so, they must register with ASIC.
Submissions to CP 189 close on 9 November 2012.
