The Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014 was registered on Mon 30.6.2014, to give effect to the Government’s proposed amendments to the FoFA legislation to implement its 2013 election commitments.
The Regulation amends the Corporations Regulations 2001 to implement the time-sensitive FoFA changes until the measures contained in the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 can be passed by both Houses of Parliament. The Regulation makes “interim” changes (applicable from 1 July 2014 until 31 December 2015) to:
- remove the “catch-all” requirement from the best interests duty and
- facilitate “scaled advice”;
- remove the requirement for fee disclosure statements (FDS) to be sent to pre-1 July 2013 clients; and
- remove of the “opt-in” requirement so that investors will not be required to renew their ongoing fee arrangement with their adviser every 2 years.
The Regulation broadens the FoFA grandfathering arrangements for the ban on conflicted remuneration and specifies that benefits relating to general advice are not conflicted (subject to certain conditions to ensure that commission-style payments cannot be re-introduced). The Regulation also clarifies that bonuses paid in relation to “permissible revenue” are not conflicted remuneration and allows benefits to be paid under a “balanced scorecard arrangement”. The conflicted remuneration provisions have also been amended in relation to execution-only services and existing client-pays provisions, while the exemptions for basic banking products and training and education have been broadened.
Other amendments cover stamping fees for capital raisings; brokerage fees paid for financial products traded on the ASX24; “mixed benefits”; and ensuring that the wholesale and retail client distinction applies in respect of the FoFA provisions.
DATE OF EFFECT: The Regulation commences on 1 July 2014.
[LTN 123, 30/6/14]