CORPORATIONS ACT 2001

CHAPTER 7 - FINANCIAL SERVICES AND MARKETS  

PART 7.7A - BEST INTERESTS OBLIGATIONS AND REMUNERATION  

Division 4 - Conflicted remuneration  

Subdivision B - What is conflicted remuneration?  

SECTION 963B   MONETARY BENEFIT GIVEN IN CERTAIN CIRCUMSTANCES NOT CONFLICTED REMUNERATION  

963B(1)  


A monetary benefit given to a financial services licensee, or a representative of a financial services licensee, who provides financial product advice to persons as retail clients is not conflicted remuneration in the circumstances set out in any of the following paragraphs:


(a) the benefit is given to the licensee or representative solely in relation to a general insurance product;


(b) each of the following is satisfied in relation to the benefit:


(i) the benefit is given to the licensee or representative in relation to a life risk insurance product or life risk insurance products;

(ii) none of the products is a group life policy for members of a superannuation entity (see subsection (2)) or a life policy for a member of a default superannuation fund (see subsection (3));

(iii) either:

(A) the benefit ratio for the benefit is the same for the year in which the product or products are issued as it is for each year in which the product or products are continued; or

(B) the benefit ratio requirements and clawback requirements in section 963BA are satisfied in relation to the benefit;


(ba) the benefit is given to the licensee or representative in relation to consumer credit insurance;


(c) each of the following is satisfied in relation to a financial product other than a life risk insurance product:


(i) the benefit is given to the licensee or representative in relation to the issue or sale of the financial product to a person;

(ii) financial product advice in relation to the product, or products of that class, has not been given to the person as a retail client by the licensee or representative in the 12 months immediately before the benefit is given;


(d) the benefit is given to the licensee or representative by a retail client in relation to:


(i) the issue or sale of a financial product by the licensee or representative to the client; or

(ii) financial product advice given by the licensee or representative to the client;


(e) the benefit is a prescribed benefit or is given in prescribed circumstances.

Note: Under the governing rules of some regulated superannuation funds, a member may seek advice on the basis that the trustee of the fund will pay the licensee or representative for the advice and then recover the amount paid from the assets of the fund attributed to that member. In that case, the member has caused or authorised the amount to be paid to the licensee or representative and so, because of section 52 of this Act, paragraph (1)(d) would apply to that amount. This does not affect the trustee ' s obligations under section 62 of the Superannuation Industry (Supervision) Act 1993 (which deals with the purposes for which a trustee may act in maintaining a regulated superannuation fund).

963B(2)  
A life risk insurance product is a group life policy for members of a superannuation entity if the product is issued to an RSE licensee of a registrable superannuation entity, or a custodian in relation to a registrable superannuation entity, for the benefit of a class of members of the entity.

963B(3)  
A life risk insurance product is a life policy for a member of a default superannuation fund if:


(a) the product is issued to an RSE licensee of a registrable superannuation entity, or a custodian in relation to a registrable superannuation entity, for the benefit of a person who is a member of the entity; and


(b) the person has not given written notice to an employer of the person that the fund is the person ' s chosen fund, but the employer of the person makes contributions to the fund for the benefit of the person.

Note: Superannuation guarantee surcharge may be imposed on an employer if the employer does not make contributions to a superannuation fund for the benefit of its employees. If an employee does not notify the employer of the employee ' s chosen fund, the employer is still able to satisfy its obligations by making contributions to certain funds (see the Superannuation Guarantee (Administration) Act 1992 ).

963B(3A)  


The benefit ratio for a benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to a life risk insurance product, or life risk insurance products, for a year is the ratio between:


(a) the benefit; and


(b) the policy cost payable for the product or products, or that part of the policy cost payable for the product or products to which the benefit relates, for the year.

963B(3B)  


The policy cost for a life risk insurance product, or products, for a year is the sum of:


(a) the premiums payable for the product, or products, for that year; and


(b) any fees payable for that year to the issuer of the product or products for that issue; and


(c) any additional fees payable because the premium for the product, or products, is paid periodically rather than in a lump sum; and


(d) any other amount prescribed by the regulations for the purposes of this paragraph.

963B(3C)  


However, the policy cost for a life risk insurance product, or products, does not include any amount prescribed by the regulations for the purposes of this subsection.

963B(4)  


The regulations may prescribe circumstances in which, despite a provision of this section, all or part of a benefit is to be treated as conflicted remuneration.

Note: The expression intrafund advice is often used to describe financial product advice given by a trustee (or an employee of, or another person acting under arrangement with, the trustee) of a regulated superannuation fund to its members, where that advice is not of a kind to which the prohibition in section 99F of the Superannuation Industry (Supervision) Act 1993 applies. (Section 99F of that Act prohibits trustees of regulated superannuation funds from passing on the cost of providing certain kinds of financial product advice in relation to one member of the fund to another.)

963B(5)  


This section applies despite section 963A and any regulations made for the purposes of section 963AA .

 

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