The Government has released its first package of FoFA exposure draft regulations to set out details in relation to the ban on conflicted remuneration proposed by the FoFA Bills. The draft regulations propose to amend the Corporations Regulation 2001 to:
- exclude “product fees” from the proposed definition of an “ongoing fee arrangement”;
- introduce a delayed application date of 1 July 2013 for the ban on conflicted remuneration with respect to group life risk insurance inside choice superannuation funds and all life risk insurance policies in default superannuation funds;
- exclude benefits given for advice relating to interests in time-sharing schemes from the ban on conflicted remuneration;
- provide further details to the exemptions from the ban on conflicted remuneration for certain non-monetary (“soft-dollar”) benefits (eg education or training courses). The draft regs also prescribe $300 as the amount below which a non-monetary benefit is not conflicted remuneration, provided that identical or similar benefits are not given on a frequent or regular basis; and
- introduce record keeping requirements in relation to excluded soft-dollar benefits.
Date of effect: This package of FoFA regulations will generally commence on the commencement of corresponding provisions in the FoFA Bills (ie either on 1 July 2012 or immediately after). Note that the application of the FoFA provisions will be voluntary until 1 July 2013.
Further exposure draft regulations on grandfathering have also been released to clarify that the transitional arrangements for the ban on conflicted remuneration will not extend to benefits given in relation to new clients or new financial products (ie acquired after the application day). The “application day” means the earlier of the day on which a person elects to be bound by the obligations and prohibitions imposed under Pt 7.7A or 1 July 2013. When finalised, the grandfathering regulations will commence immediately after the commencement of the Further FoFA Bill.
Submissions are due by 5 June 2012.
[LTN 105, 1/6]