The Treasury Laws Amendment (Ending Grandfathered Conflicted Remuneration) Bill 2019 has been introduced into the House of Representatives.
If passed the bill will amend the Corporations Act from 1 January 2021 to end the grandfathering arrangements for conflicted remuneration in relation to financial advice provided to retail clients.
The Bill also enables the regulations to provide for a scheme under which amounts that would otherwise have been paid as conflicted remuneration are rebated to affected customers.
This means that from 1 January 2021 all remuneration of a kind banned by Divisions 4 or 5 of Part 7.7A of the Act will be subject to the bans in those Divisions.
Under the grandfathering provisions:
- the bans on accepting and giving conflicted remuneration do not apply to benefits paid under arrangements entered into before 1 July 2013 except with respect to benefits given by a platform operator ;
- the ban on charging volume-based shelf space fees does not apply to benefits given under arrangements entered into before 1 July 2013 ; and
- the ban on charging asset-based fees to retail clients on borrowed amounts only applies to the extent that the borrowed amounts are used or are to be used to acquire financial products on or after 1 July 2013 .
The change responds to recommendation 2.4 of the Financial Services Royal Commission final report.