Federal Register of Legislation - Australian Government

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Regulations as made
These regulations amend the Corporations Regulations 2001 to provide for a scheme by which conflicted remuneration in relation to financial product advice that remains payable on or after 1 January 2021 will be rebated to affected retail customers by means of payments or other monetary benefits. The regulations also place record-keeping requirements on Australian financial services licensees who are required to rebate conflicted remuneration. These regulations also repeal provisions that grandfather conflicted remuneration that are contained in the Corporations Regulations 2001.
Administered by: Treasury
Registered 29 Nov 2019
Tabling HistoryDate
Tabled HR02-Dec-2019
Tabled Senate03-Dec-2019
To be repealed 02 Jan 2021
Repealed by Division 1 of Part 3 of Chapter 3 of the Legislation Act 2003
Table of contents.

Commonwealth Coat of Arms of Australia

 

Treasury Laws Amendment (Ending Grandfathered Conflicted Remuneration) Regulations 2019

I, General the Honourable David Hurley AC DSC (Retd), Governor‑General of the Commonwealth of Australia, acting with the advice of the Federal Executive Council, make the following regulations.

Dated 28 November 2019

David Hurley

Governor‑General

By His Excellency’s Command

Josh Frydenberg

Treasurer

 

  

  


Contents

1............ Name............................................................................................................................. 1

2............ Commencement............................................................................................................. 1

3............ Authority....................................................................................................................... 1

4............ Schedules...................................................................................................................... 1

Schedule 1—Amendments                                                                                                                          2

Corporations Regulations 2001                                                                                                         2

 


1  Name

                   This instrument is the Treasury Laws Amendment (Ending Grandfathered Conflicted Remuneration) Regulations 2019.

2  Commencement

             (1)  Each provision of this instrument specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

 

Commencement information

Column 1

Column 2

Column 3

Provisions

Commencement

Date/Details

1.  The whole of this instrument

1 January 2021.

1 January 2021

Note:          This table relates only to the provisions of this instrument as originally made. It will not be amended to deal with any later amendments of this instrument.

             (2)  Any information in column 3 of the table is not part of this instrument. Information may be inserted in this column, or information in it may be edited, in any published version of this instrument.

3  Authority

                   This instrument is made under the Corporations Act 2001.

4  Schedules

                   Each instrument that is specified in a Schedule to this instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument has effect according to its terms.

Schedule 1Amendments

  

Corporations Regulations 2001

1  After Subdivision 4 of Division 4 of Part 7.7A

Insert:

Subdivision 4ABan on conflicted remuneration (rebates)

7.7A.15AJ  What Subdivision is about

             (1)  This Subdivision is made for the purposes of subsection 963N(1) of the Act.

             (2)  This Subdivision provides for a scheme under which a person (the covered person) covered by section 963M of the Act in relation to conflicted remuneration must pay amounts, or provide monetary benefits, based on that conflicted remuneration, to product holders mentioned in section 963N of the Act.

7.7A.15AK  Obligations of covered person

             (1)  The covered person must pay amounts, or provide monetary benefits, to the product holders no later than 1 year after the day by which the covered person is legally obliged (disregarding Subdivision C of Division 4 of Part 7.7A of the Act) to give the conflicted remuneration to another person (see paragraph 963M(1)(a) of the Act).

             (2)  The amounts paid, or the amounts of the monetary benefit provided, to the product holders under subregulation (1) must be amounts that are just and equitable in the circumstances.

             (3)  For the purposes of subregulation (2), in determining whether an amount is just and equitable in the circumstances, take account of the following matters:

                     (a)  the amount of the conflicted remuneration;

                     (b)  the amount invested by each product holder in the financial products mentioned in subsection 963N(2) of the Act;

                     (c)  the structure of the fees (if any) that the product holders have paid in respect of those financial products;

                     (d)  the extent to which the sum of the amounts to be paid, and the amount of the monetary benefits to be provided, to the product holders under subregulation (2) equals the amount of, or the present value of, the conflicted remuneration;

                     (e)  any other relevant matter.

             (4)  However, for the purposes of subregulation (2), in determining whether an amount is just and equitable in the circumstances, do not take account of the costs of the covered person in paying the amounts or providing the monetary benefits.

2  Subdivision 5 of Division 4 of Part 7.7A

Repeal the Subdivision.

3  After regulation 7.8.11A

Insert:

7.8.11B  Information to be shown in records: records of rebates in relation to conflicted remuneration

             (1)  For the purposes of paragraph 988E(g) of the Act, the following matters are specified in relation to records that must be kept by a financial services licensee who is a person covered by section 963M of the Act:

                     (a)  all conflicted remuneration that the financial services licensee is legally obliged (disregarding Subdivision C of Division 4 of Part 7.7A of the Act) to give another person for a financial year;

                     (b)  all amounts that the financial services licensee is required by regulation 7.7A.15AK to pay, and all monetary benefits that the financial services licensee is required by that regulation to provide, for a financial year, and the following:

                              (i)  all such amounts paid, and all such monetary benefits provided, by the financial services licensee for the financial year;

                             (ii)  all cases where the financial services licensee determined that an amount that was just and equitable in the circumstances for the purposes of subregulation 7.7A.15AK(2) was nil.

             (2)  For the purposes of section 988F of the Act, subregulation (3) sets out additional requirements for things to be contained in records, and relating to the level of detail to be shown in records, that are imposed in relation to records that must be kept by a financial services licensee who is a person covered by section 963M of the Act, for:

                     (a)  all amounts that the financial services licensee is required by regulation 7.7A.15AK to pay, and all monetary benefits that the financial services licensee is required by that regulation to provide; and

                     (b)  all cases where the financial services licensee determined that an amount that was just and equitable in the circumstances for the purposes of subregulation 7.7A.15AK(2) was nil.

             (3)  The requirements are as follows:

                     (a)  an explanation of how the financial services licensee ascertained the identity of the product holders;

                     (b)  an explanation of:

                              (i)  if paragraph (2)(a) applies—how the financial services licensee determined that the amounts to pay, or the amounts of the monetary benefit to provide, were just and equitable in the circumstances for the purposes of subregulation 7.7A.15AK(2); and

                             (ii)  if paragraph (2)(b) applies—how the financial services licensee determined that nil amounts were just and equitable in the circumstances for the purposes of subregulation 7.7A.15AK(2);

                     (c)  a description of the financial product or products to which the conflicted remuneration relates, including the following information:

                              (i)  the name of that product (or the names of those products);

                             (ii)  the product identification number of that product (or the product identification numbers of those products) (if any);

                     (d)  if paragraph (2)(a) applies:

                              (i)  the date by which the financial services licensee was required under regulation 7.7A.15AK to pay the amounts or provide the monetary benefits; and

                             (ii)  the date or dates on which the amounts were paid, or the monetary benefits were provided; and

                            (iii)  a description of the manner in which the amounts were paid, or the monetary benefits were provided.

4  In the appropriate position in Chapter 10

Insert:

Part 10.33Application provisions relating to the Treasury Laws Amendment (Ending Grandfathered Conflicted Remuneration) Regulations 2019

  

10.33.01  Application of end of grandfathering arrangements

                   The amendment made by item 2 of Schedule 1 to the Treasury Laws Amendment (Ending Grandfathered Conflicted Remuneration) Regulations 2019 applies to a benefit given on or after 1 January 2021, if the benefit is given under an arrangement entered into before, on or after the application day (within the meaning of subsection 1528(4) of the Act).

10.33.02  Application of record keeping requirements for rebate scheme

                   The amendment made by item 3 of Schedule 1 to the Treasury Laws Amendment (Ending Grandfathered Conflicted Remuneration) Regulations 2019 applies to financial records relating to periods ending after 1 January 2021.