Source: https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd1415a/15bd011
Timestamp: 2020-01-26 11:07:47
Document Index: 146245697

Matched Legal Cases: ['art 3', 'art 7', 'art 7', 'art 7', 'art 7', 'art 7', 'art 7', 'art 7']

Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 – Parliament of Australia
Home Parliamentary Business Bills and Legislation Browse Bills Digests Bills Digests alphabetical index 2014–15 Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014
Bills Digest no. 11 2014–15
PDF version [393KB]
Paula Pyburne, Law and Bills Digest Section
Kai Swoboda, Economics Section
Changes made by Bill now made by Regulations
Commencement: Sections 1–3 on Royal Assent; all other provisions on the day after Royal Assent.
The purpose of the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 (the Bill) is to repeal some of the ‘Future of Financial Advice’ (FOFA) measures introduced by the previous government. The Bill amends the Corporations Act to:
remove the need for clients to renew their ongoing fee arrangement with their adviser every two years (also known as the ‘opt-in’ requirement)
make the requirement for advisers to provide a fee disclosure statement applicable only to those clients who entered into their arrangement after 1 July 2013
remove from the list of steps an advisor may take in order to satisfy the best interests obligation the requirement that advisers must generally act and provide advice in the best interests of their clients (the ‘catch-all’ provision)[1]
facilitate the provision of advice limited to, say, a particular product or product range (scaled advice)—that is, personal advice that is limited in scope and
provide an exemption from the ban on conflicted remuneration for general advice, but not personal advice, in certain circumstances. Broadly, personal advice is advice directed at a person by an adviser with knowledge of the person’s objectives, financial situation and/or needs. General advice is advice that is not personal advice.
Changes made by Bill now made by Regulations.
The Bill was intended to commence on 1 July 2014 but was not passed by the Parliament in time. In the meantime, the Government has made Regulations which largely give effect to the amendments that would be made by the Bill.
The Regulations were made on 26 June 2014 and registered on 30 June 2014, on which date they became legally effective,[2] although they commenced on 1 July 2014.[3] The Government tabled the Regulations in both Houses of the Parliament on 15 July 2014.[4] Two motions to disallow were moved on that day but were unsuccessful. A further motion to partially disallow the Regulation remains open at the time of writing this Bills Digest.[5]
This Digest deals with the Bill as introduced and not with the Regulations. An Explanatory Statement to the Regulations is available.[6]
History of FOFA measures
The future of financial advice reforms (FOFA) were a package of amendments to the Corporations Act 2001[7] to change how financial advice is delivered to clients. The FOFA reforms were concerned with the way that financial advisers behave when giving advice, including how clients are charged and how fees are disclosed.
The FOFA reforms were the Labor Government’s response to the 2009 report by the Parliamentary inquiry into Financial Products and Services (PJC inquiry).[8] The impetus for the PJC inquiry was a number of significant corporate collapses, including Storm Financial and Opes Prime, which led to considerable losses for many retail investors.[9] The inquiry was particularly focussed on the role of financial advisers; the regulatory settings for the selling of financial products and services; the significance of adviser remuneration models—especially payments by commission, their potential for conflicts of interest and the need they create for appropriate disclosure; and generally, the appropriateness of advice and information provided to consumers about financial products and services.
The FOFA reforms were introduced into the Parliament in late 2011 and were implemented by two key pieces of legislation:[10]
the Corporations Amendment (Future of Financial Advice) Act 2012[11] (FOFA 1) which:
– required providers of financial advice to obtain client agreement to ongoing advice fees
– enhanced the requirement for disclosure of fees and services associated with ongoing fees and
– improved the ability of the Australian Securities and Investments Commission (ASIC) to supervise the financial services industry, through amendments to its licensing and banning powers for financial advisers
the Corporations Amendment (Further Future of Financial Advice Measures) Act 2012[12] (FOFA 2) which:
– required those providing personal financial advice to retail clients to act in the best interests of their clients, and to give priority to their client’s interests
– imposed a prospective ban on conflicted remuneration structures and
– applied existing regulatory mechanisms under the Corporations Act more directly to individual advisers as well as to licensees.
The implementation date for most of the FOFA reforms was originally 1 July 2012. However, Government amendments during the passage of legislation allowed that the provisions would be voluntary until 1 July 2013, after which time compliance with the relevant requirements would be mandatory.[13]
The Treasury describes the structure of the industry in this way:
Product manufacturers, or fund managers, are responsible for creating and managing financial products. Australia’s managed funds industry is one of the largest in the world, and the majority of these funds are attributable to the advanced superannuation system, which encourages employees to save for retirement throughout their working life. The pool of superannuation funds in Australia is roughly the same size as Australia’s economy.
Platforms act as intermediaries between product manufacturers and dealer groups. A product manufacturer will typically place their financial products on a platform to make their products accessible to dealer groups. A dealer group is made up of multiple representatives who are authorised by a licensee to provide financial advice under that licensee’s financial services licence. In Australia, there are more than 750 dealer groups who compare and assess financial products on platforms and select a range of products (commonly referred to an ‘approved product list’) for their aligned advisers to offer to their clients. Dealer groups also offer a range of other services, including back-end support and administrative functions.
Industry estimates indicate that there are around 18,000 financial advisers in Australia, who collectively manage over $500 billion of funds under advice and generate over $4 billion revenue per annum. Between 20 and 40 per cent of Australian adults use or have used a financial adviser.
The industry is relatively competitive, with around half the market accounted for by the top five firms, and the remaining half occupied by small and medium firms. Whilst there are some impediments for consumers switching financial products and advisers, the competitive nature and the need for advisers to act in the best interests of their clients ensures that clients have the ability to switch products and advisers.[14]
This graphic depicts the structure of the financial services industry according to the Treasury:
Source: the Treasury.[15]
Coalition policy position prior to the 2013 election
During the consultation about the proposed FOFA package in early 2011, the then Coalition spokesman on financial services, Senator Cormann, stated that the Coalition:
... supports the introduction of a statutory best interest duty [but] does not support Labor's push to force people to re-sign contracts with their advisers on a regular basis.
With the best interest duty in place, appropriate transparency of fees charged and an ongoing capacity for clients of financial advisers to opt out there is adequate consumer protection without the need to impose additional red tape.[16]
During the passage of FOFA 1 and FOFA 2, the Coalition opposed the originating Bills on the grounds of both process and policy. In terms of process, the Coalition argued that the initial implementation date of July 2012 was too early and that a full Regulation Impact Statement should be prepared.[17]
Consistent with that position, the Coalition members of the Parliamentary Joint Committee on Corporations and Financial Services, which inquired into the originating Bills for FOFA 1 and FOFA 2, dissented from the views of the majority of Committee members in the final Committee report.[18] The dissenting report included 16 recommendations for changes to FOFA 1 and FOFA 2, reflecting the Coalition’s concerns that the FOFA Bills were too complex, costly to implement and created unnecessary red tape.[19]
In the lead up to the 2013 Federal election, the Coalition’s policy evolved into a specific set of proposals including:
‘... the complete removal of opt-in
improving the best interest duty
providing certainty around the provision and availability of scaled advice and
refining the ban of commissions on risk insurance inside superannuation.’[20]
Those proposals are implemented by the amendments in this Bill.
Coalition Government actions on FOFA
Upon taking Government in September 2013, the Coalition proceeded with its election commitments in relation to FOFA 1 and FOFA 2.
On 29 January 2014, exposure draft legislation and regulations were released on the Treasury website. Submissions closed on 19 February 2014.[21]
The Bill was referred to the Senate Standing Committee on Economics (the Economics Committee) which reported on 16 June 2014.[22] The Economics Committee made two recommendations:
first, that the Explanatory Memorandum include a paragraph that clearly spells out the best interests obligations and the level of consumer protection they provide—and that the government consider whether any further strengthening is required to ensure that a provider cannot circumvent those obligations [23] and
second, that the Explanatory Memorandum make clear that it is not the government's intention to reintroduce commissions. To this end, the government should consider the provisions governing conflicted remuneration and redraft them to ensure that there is greater clarity around their implementation.[24]
Consistent with the policy positions of the Opposition and the Greens which are set out below, non‑Government Committee members provided dissenting reports. Relevant comments of submitters to the Economics Committee are canvassed under the heading ‘Key issues and provisions’ below.
The Senate Standing Committee for the Scrutiny of Bills (Scrutiny of Bills Committee) noted that the Australian Securities and Investments Commission (ASIC) had announced that it would not be taking enforcement action in relation to those FOFA provisions that the Government intended to repeal.[25]
The Scrutiny of Bills Committee expressed its:
... long-standing concern about the practice of “legislation by press release”, where the government treats proposed legislation as being the law from the time the intention to introduce it is made public. This expectation may mean that persons and officials may face uncertainty as to whether they should act on the basis of the law as it is planned to be enacted or the law as it currently exists. The underlying principle at stake is that it is for the Parliament, not the Executive branch of government, to determine persons’ legal rights and obligations. As such the committee is concerned that the regulator has announced that it will not enforce existing legal requirements but will act on the assumption that the bill will be passed in its current form.[26]
That being the case, the Scrutiny of Bills Committee has sought advice from the Parliamentary Secretary as to the justification for that approach.
Other relevant comments by the Scrutiny of Bills Committee in relation to the drafting of the Bill are canvassed under the heading ‘Key issues and provisions’ below.
In its report of 18 June 2014 the Parliamentary Joint Committee on Human Rights noted that it had deferred consideration of the Bill.[27]
As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act.[28] The Government considers that the Bill is compatible.
However, the Australian Consumers Association (Choice) was critical of the Government’s assertion, in the Statement of Compatibility with Human Rights that, to the extent that the Bill removes the need for financial advisers to mail out an annual fee disclosure statement, it increases the security of personal information and ‘this may advance the right to privacy for the affected clients’.[29] Choice claims that it is ‘farcical to claim that removing a provision to send client information through private mail protects privacy—information should not be so private that a client cannot easily receive it’.[30]
Bernie Ripoll, opposition spokesman on financial services, has defended Labor’s reforms, arguing that the FOFA laws ‘only came into full effect nine months ago and have barely had time to be fully appreciated by the sector or the consumer’.[31]
Senator Whish-Wilson of the Australian Greens (the Greens) said that the previous government had delivered sensible reforms to financial advice legislation to stop runaway rorts like Storm Financial, remove conflicts of interest in commissions and provide some simple consumer safeguards.[32]
Consumer groups such as Choice have not supported the repeal of elements of FOFA 1 and FOFA 2 expressing concern that:
The proposed changes will lead to costs to consumers as they reintroduce measures that encourage sales-driven practices in financial advice. With financial advisers working in boiler-room style sales cultures, consumers are highly likely to lose significant funds through further major market failures like Storm Financial. While no legislation can fully prevent a market failure, the original FOFA reforms aimed to curb the worst practices in the financial advice industry. The effects of recent major financial advice scandals have been catastrophic, resulting in consumers losing $5.7 billion in funds as well as their homes and certainty about retirement.[33]
On the other hand, industry stakeholder groups such as the Financial Services Council ‘welcome the proposed amendments as they eliminate and address’ regulatory ambiguities. This will enable ‘advice to be accessible and affordable’ and will retain ‘the consumer protection mechanisms built into the reforms’.[34]
In December 2013, the Treasurer announced the final terms of reference for the Financial System Inquiry which is to ‘examine how the financial system could be positioned to best meet Australia’s evolving needs and support Australia’s economic growth’.[35] The inquiry provided an interim report in July 2014.[36] According to Governance Institute:
... implementing the FOFA reforms prior to any deliberations or recommendations from the financial services inquiry on the needs of users with appropriate financial products and services could see the current proposed reforms subject to further amendment within a short space of time, should the financial services inquiry make recommendations to this effect. This will serve only to confuse both financial advisers and consumers.[37]
According to the Explanatory Memorandum ‘the Bill has no significant financial impact on Commonwealth expenditure or revenue’.[38]
Treasury estimates that ‘the ongoing cost savings are approximately $190 million per year, with one-off implementation savings of approximately $90 million’ and that ‘this represents just over half of the estimated $375 million ongoing costs of complying with FOFA’.[39]
The provisions of Chapter 7 of the Corporations Act aim to promote, amongst other things:
confident and informed decision making by consumers of financial products and services while facilitating efficiency, flexibility and innovation in the provision of those products and services[40] and
fairness, honesty and professionalism by those who provide financial services.[41]
Part 7.7A of the Corporations Act, governs the best interests obligations, charging ongoing fees to clients, as well as, amongst other things, the ban on conflicted remuneration.
Chapter 7 also contains definitions which are relevant to the Bill:
subsection 766B(1) of the Corporations Act, defines financial product advice as a recommendation or a statement of opinion, or a report of either of those things, that:
– is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products or
– could reasonably be regarded as being intended to have such an influence
subsection 766B(3) of the Corporations Act defines personal advice as financial product advice that is given or directed to a person (including by electronic means) in circumstances where:
– the provider of the advice has considered one or more of the person's objectives, financial situation and needs or
– a reasonable person might have expected the provider to consider one or more of those matters
subsection 766B(4) defines general advice as financial product advice that is not personal advice.
Best interests obligation
Division 2 of Part 7.7A of the Corporations Act sets out the requirement that an individual providing personal advice to a retail client must act in the best interests of the client and give priority to the client’s interest.[42]
Subsection 961B(1) of the Corporations Act establishes an obligation on the part of a provider to act in the best interests of his, or her, client.[43] Under subsection 961B(2) of the Corporations Act a provider will satisfy the duty to act in the best interests of his or her client if the provider engages in the conduct which is set out in paragraphs 961B(2)(a)–(g). Broadly, these are that the adviser has done each of the following:
(a) identified the objectives, financial situation and needs of the client that were disclosed to the provider by the client through instructions
(b) identified the subject matter of the advice that has been sought by the client and the client’s relevant objectives, financial situation and needs
(c) made reasonable inquiries to obtain complete and accurate information if it seems the information provided by the client is incomplete
(d) assessed whether the provider has the expertise required to provide the client advice on the subject matter sought and, if not, declined to provide the advice
(e) if it would be reasonable to consider recommending a financial product, considered and assessed a range of products that would meet the clients objectives and needs
(f) based all judgements in advising the client on the client’s relevant circumstances
(g) taken any other step that, at the time the advice is provided, would reasonably be regarded as being in the best interests of the client, given the client’s relevant circumstances.
These are referred to as ‘safe-haven’ or ‘safe harbour’ provisions.
Key issue—extent of the obligation
Paragraphs 961B(2)(a)–(f) set out specific forms of conduct but paragraph 961B(2)(g) requires the provider to prove that he, or she, has taken any other step that would reasonably be regarded as being in the best interests of the client, given the client’s relevant circumstances. Section 961E of the Corporations Act complements paragraph 961B(2)(g) by explaining the meaning of ‘best interests of the client’. It says:
It would reasonably be regarded as in the best interests of the client to take a step, if a person with a reasonable level of expertise in the subject matter of the advice that has been sought by the client, exercising care and objectively assessing the client’s relevant circumstances, would regard it as in the best interests of the client, given the client’s relevant circumstances, to take that step.[44]
Paragraph 961B(2)(g) is known as the ‘catch all’ provision.
According to the Financial Planning Association of Australia (FPA), the catch-all provisions set an unclear and unrealistic expectation for financial planners. The FPA argues, amongst other things, that the requirements in paragraph 961B(2)(g) to have taken any other step and in section 961E to take a step form an open-ended requirement that is practically impossible to satisfy.[45] In addition, according to the FPA, ‘the lack of clarity [of the duty] opens significant litigation risks for financial planners that are only tenuously connected to a consumer protection benefit’.[46]
Items 10 and 14 of the Bill repeal paragraph 961B(2)(g) and section 961E of the Corporations Act, respectively.
Choice refutes the comments of industry stakeholders that paragraph 961B(2)(g) is ‘too open ended’, and notes that ‘ASIC has provided detailed regulatory guidance about the best interests obligation’. It is concerned that, without paragraph 961B(2)(g), what remains of subsection 961B(2) of the Corporations Act functions as no more than a ‘‘tick-a-box’ checklist to assess if the best interest obligation has been met’.[47]
On the other hand, Ian Jackman SC opines that the abolition of paragraph 961B(2)(g) has ‘the result of neutralising the practical difficulties’ for a provider in positively proving that he, or she, has complied with the requirement.[48] In addition, Mr Jackman takes the view that the amendments would not materially reduce the protective efficacy of the best interests obligation. This is because, under the general law a financial adviser will ordinarily be obliged to act in the best interest of his, or her, client—although the scope and content of the obligation may vary depending on whether it arises out of a contract between the parties, or by way of a fiduciary duty owed by the financial adviser to his or her client.[49]
Without the catch-all provision aggrieved clients of providers would rely on:
subsection 961J(1) of the Corporations Act, which contains an overriding obligation on a provider to give priority to the client’s interest where there is a conflict
obligations on holders of an Australian Financial Services Licence (AFSL)[50] to ensure that financial services are provided efficiently, honestly and fairly[51] and to have in place adequate arrangements for the management of conflicts of interest[52] and
those contractual and fiduciary legal obligations outlined above.
Key issue—scaled advice
The second problem arising out of the best interests obligation in paragraph 961B(2)(g) of the Corporations Act is the perception by some in the financial services industry that it limits the capacity of a provider to give scaled advice. The term scaled advice is not defined in the Corporations Act.
Scalable means that the requirement varies depending on the circumstances, including the potential impact of inappropriate advice on the client, the complexity of the advice and the financial literacy of the client. For example, where personal advice is provided for a relatively simple purpose, such as the purchase of car insurance or the opening of a deposit account, less extensive client inquiries are likely to be required than for advice about complex financial products, classes of financial products or strategies (such as tax-related strategies or higher risk strategies such as the use of margin lending in connection with the purchase of a financial product).[53]
It is claimed that one problem with paragraph 961B(2)(g) is that it requires providers ‘to undertake a fulsome investigation into the client’s objectives, financial situation and needs before any scaled advice can be provided’ and there is uncertainty currently about whether clients and advisers can agree on the scope of the advice to be provided.[54]
Item 13 of the Bill inserts proposed subsection 961B(4A) into the Corporations Act to put beyond doubt that the provider and a client may agree that the advice to be given is scaled advice. The Explanatory Memorandum provides the following example:
... a retail client, who does not want to spend too much money on financial advice, seeks advice on financial matters. After having a conversation about the client’s financial objectives, circumstances and needs, the client and provider agree that advice on superannuation, debt consolidation, and life insurance are topics that are particularly relevant to the client at this time.
The client, being only able to afford to receive advice on one of these topics, and having been informed and having considered the benefits and drawbacks of receiving advice on only one of these topics, can agree with the provider to receive advice on ... debt consolidation ...[55]
Item 7 of the Bill repeals paragraph 961B(2)(a) of the Corporations Act which is perceived to require a provider to ‘perform a full fact find’.[56] Item 8 of the Bill inserts proposed paragraph 961B(2)(ba) so that the provider’s obligation is limited to information which is disclosed to him, or her, by the client. Item 11 of the Bill adds to the existing note at the end of subsection 961B(2) to make clear that the provider need not inquire into circumstances that would not reasonably be considered as relevant to the subject matter. This has the effect of limiting the provider’s best interests obligation to the relevant subject matter rather than to all financial matters in relation to a client.
Existing section 961G imposes the appropriate advice requirement on a provider. Under section 961G, the provider must give advice which is appropriate to the client, subject to the provider having satisfied the best interests obligation in section 961B. A breach of sections 916B and/or 916G by the holder of an AFSL or the licence holder’s representative gives rise to a civil penalty.[57]
Item 15 of the Bill amends section 961G so that appropriate advice requirement is to be satisfied having regard to section 961B. The amendments make clear that the appropriate advice requirement and the best interests obligation in subsection 961B(2) are separate from each other and that both are to be satisfied.
Key issue—banking products
In its current form, subsection 961B(3) modifies the best interests obligation where the subject matter of the advice which is sought by the client is solely about a basic banking product, and the provider is an employee or agent of an Australian Deposit Taking Institution (ADI) or otherwise acting in arrangement with an ADI under the name of the ADI. In that case, the best interests duty will be satisfied if the provider takes the steps set out in paragraphs 961B(2)(a)–(c).
What is a basic banking product?
A basic banking product is each of the following:
a basic deposit product
a facility for making non-cash payments that is related to a basic deposit product
an first home saver account product of a kind mentioned in subparagraph 8(c)(i) of the First Home Saver Accounts Act 2008[58]
a facility for providing traveller’s cheques
any other product prescribed by regulations.[59]
According to the Explanatory Memorandum for the Corporations Amendment (Further Future of Financial Advice Measures) Bill 2012:
These obligations are based on what is already expected of providers under the obligation in the existing section 945A of the Corporations Act to have a reasonable basis for advice ... the arrangements do not require a provider to conduct a reasonable investigation. This means that there is no obligation on providers to consider products outside of those offered by the ADI for which they are working.[60]
Item 12 of the Bill repeals and replaces subsections 961B(3) and 961B(4). The amendments to subsection 961B(3) operate so that the best interests obligation will be satisfied by a provider who takes the steps set out in paragraphs 961B(2)(b), (ba) and (c) as long as:
the provider is an employee or agent of an ADI, or otherwise acting in arrangement with an ADI under the name of the ADI: proposed paragraph 961B(3)(a) and
the subject matter of the advice sought by the client relates only to a basic banking product, a general insurance product, consumer credit insurance[61] or a combination of any of those products: proposed paragraph 961B(3)(b) and
the advice given relates to the basic banking product or the general insurance product.
This means that the modified best interests obligation set out in proposed subsection 961B(3) does not apply where the advice given is solely about consumer credit insurance. In that case, all of the steps set out in subsection 961B(2) of the Corporations Act (as amended) must be satisfied.
Regulation 21 of the Insurance Contracts Regulations 1985[62] sets out the class of contracts of insurance which are consumer credit insurance. They are contracts that provide insurance cover in respect of:
the death of the insured or
the insured contracting a sickness or disease, sustaining an injury or becoming unemployed
where the insured is a natural person, and the amount of the liability of the insurer under the contract is ascertained by reference to a liability of the insured under a specified agreement to which the insured is a party.
Whilst it has been reported that banks want ‘to dilute the best interests duty of advisers to their clients’, the Australian Bankers Association has defended its position on the grounds that ‘FoFA was never intended to include bank tellers and bank specialists who provide information for customers wanting to open a bank account or get advice on other banking products’.[63]
This is consistent with the comments from the relevant Explanatory Memorandum which are outlined above.
Key issue—general insurance
In its current form subsection 961B(4) also contains a modified best interests obligation where the subject matter of the advice sought by the client is solely a general insurance product. In that case the best interests duty will be satisfied if the provider takes the steps set out in paragraphs 961B(2)(a)–(c). Proposed subsection 961B(4) of the Corporations Act[64] confirms that the modified best interests obligation set out in paragraphs 961B(2)(b), (ba) and (c) will apply where the subject matter of the advice sought by the client is a general insurance product.
Key issue—client priority obligation
Section 961J of the Corporations Act requires a provider to give priority to the interests of the client where they know, or reasonably ought to know, that there is a conflict between the interests of the client and those of a provider, a licensee for whom the provider is a representative, or an authorised representative who has authorised the provider to provide a specified financial service on behalf of a licensee under subsection 916B(3). To avoid possible circumvention of the provision, the obligation also extends to conflicts arising as a result of the interests of an associate, as defined in sections 10–17 of the Corporations Act.
Currently subsections 961J(2) and 961J(3) of the Corporations Act provide that where the subject matter of the advice sought by the client is a basic banking product or a general insurance product the client priority obligation does not apply. Item 16 of the Bill repeals and replaces subsections 961J(2) and (3) so that the provisions are consistent with the amendments to the modified best interests obligation set out above. The client priority obligation ‘will continue to apply to advice provided in relation to a consumer credit insurance product’.[65]
Division 3 of Part 7.7A of the Corporations Act sets out the provisions which regulate the charging of ongoing fees to clients in Subdivisions A–C.
Key issue—opt in requirement
Division 3 of Part 7.7A of the Corporations Act defines what constitutes an ongoing fee arrangement, and distinguishes such an arrangement from other sorts of arrangements.
How do the ongoing fee arrangements operate?
An ongoing fee arrangement exists where the holder of an AFSL, or their representative, provides personal advice to a person as a retail client; where the client enters into an arrangement with the licensee or their representative; and under the terms of the arrangement, a fee is to be paid during a period of more than 12 months.[66]
Where an ongoing fee arrangement is to remain in place for longer than 24 months, it is a requirement that the client is given a renewal notice and a fee disclosure statement within 30 days of the second anniversary of the day on which the arrangement was entered into, or the second anniversary of the day of the provision of the last renewal notice.[67]
If the client does not respond to the renewal notice in writing within 30 days indicating a wish to renew the arrangement (that is he, or she, has ‘opted-in’), then the client is taken to have elected not to renew the arrangement.[68]
The Bill removes the ‘opt-in’ requirement; that is, the requirement for financial advisers to obtain their client’s approval, at least every two years, to continue an ongoing fee arrangement.
National Seniors Australia strongly disagrees with the proposal to remove the opt-in provisions arguing that:
Removing the opt-in requirement pushes the obligation onto consumers to externally monitor the performance of their portfolio and the appropriateness of their current services and fee structure. It is clear that advisers are far better equipped than consumers are to perform this task...
Without the opt-in requirement most consumers will remain inactive. Unaware of the services they are receiving and the associated fees and charges, they will not have the opportunity to determine if they are receiving value for money.[69]
CPA Australia and the Institute of Chartered Accountants also support the existing mandatory two year opt-in process as an important pillar of the FOFA reforms on the ground that it will ‘assist clients who are actively involved in planning their financial future to assess whether the services they are receiving reflect value for money before they decide to renew an ongoing fee arrangement’.[70]
Item 21 repeals sections 962K–962N of the Corporations Act to remove the requirement for financial advisers to obtain their client’s approval, at least every two years, to continue an ongoing fee arrangement. Importantly, section 962E, which provides that a person may terminate (opt-out) of an ongoing fee arrangement at any time, remains unchanged.
Key issue—fee disclosure statement
Section 962H outlines the information that must be included in a fee disclosure statement.
What information must a fee disclosure statement contain?
the amount of each ongoing fee paid by the client under the arrangement in the previous year
information about the services that the client was entitled to receive from the current and any previous fee recipient under the arrangement during the previous year
information about the services that the client received from the current and any previous fee recipient under the arrangement during the previous year
information about any other prescribed matters, including information that relates to a period that begins after the previous year.
Currently the requirement to provide a fee disclosure statement applies to all of the clients with whom there is an ongoing fee arrangement—including where those arrangements began, or the clients were engaged, prior to 1 July 2013.
According to the Financial Planning Association of Australia the requirements ‘detract from the policy objectives of FOFA by adding regulatory burdens with no clear connection to raising the quality or improving the culture of financial advice in Australia’.[71]
Pattinson Financial Services explains the problem as follows:
Unlike large advice businesses owned by the banks or supported by Industry Super Funds, small independently owned Financial Advice Businesses do not have the resources to interrogate and report on all legacy products our clients hold. In many cases these legacy products have excessive fees to exit. To service the clients’ best interest the advice business will ask a client to retain a product but in doing so would have created an expensive administrative burden that would ultimately be passed on to the client.[72]
Item 22 of the Bill repeals subdivision C of Division 3 of Part 7.7A of the Corporations Act—being sections 962R and 962S of the Corporations Act. The effect of the amendment is that a fee disclosure statement must be given only to those clients with whom there is an ongoing fee arrangement which was entered into from 1 July 2013.
Some industry stakeholders do not consider that the amendment goes far enough in that the contents of the fee disclosure statement are unchanged—with the requirement to identify not only what services the advice business provided but also which of these services the client actually used. The requirement is considered to place ‘an unreasonable administrative burden on small independently owned businesses’.[73]
However, National Seniors Australia has expressed concern that the amendment:
... will only guarantee adequate disclosure for consumers who entered into financial advice arrangements after 1 July 2013. This time-based discrimination will affect many older consumers denying them a fundamental benefit of the FOFA reforms and resulting in pre 1 July 2013 consumers receiving a significantly reduced and less useful level of disclosure.[74]
Section 963E of the Corporations Act provides that a financial services licensee must not accept conflicted remuneration. A breach of that prohibition gives rise to a civil penalty. Similarly the authorised representative of a financial services licensee must not accept conflicted remuneration.[75]
What is conflicted remuneration?
Conflicted remuneration is a monetary or non-monetary benefit given to the holder of an AFSL (or their representative) who provides financial product advice to a person who is a retail client where that benefit could reasonably be expected to influence the choice of financial product advice being recommended or the product advice given.[76]
Key issue—monetary benefits
Section 963B of the Corporations Act lists those monetary benefits which are not conflicted remuneration. In particular, paragraph 963B(1)(c) exempts a monetary benefit from the ban on conflicted remuneration if it is given in relation to the issue or sale of a financial product, and the holder of the AFSL (or their representative) has not provided financial product advice to the client in relation to the product—or products of that class—in the previous 12 months. This is referred to as the ‘execution-only exemption’.
Item 27 of the Bill repeals paragraph 963B(1)(c). Item 29 of the Bill inserts proposed subsections 963B(4)–(7). The effect of the amendments is to expand the ‘execution-only exemption’ so that a monetary benefit is not conflicted remuneration and will be permitted in respect of general advice, provided that no advice has been provided by the individual performing the execution service in the previous 12 months. The prohibition on receiving conflicted remuneration will remain in respect of personal advice.
Those who support the consumer protection aspects of FOFA do not support these amendments, arguing that ‘consumers should be able to expect that the advice given to them is an unbiased advice. Receiving a commission in return for advice may dampen the public confidence in the sector especially in view of the financial scandals that took place during the financial crisis’.[77] Groups such as National Seniors Australia have expressed concern that ‘providing a general exemption on the ban on conflicted remuneration will result in reduced quality of advice provided to consumers leading to major consumer detriment’.[78]
The recently released white paper by the Financial Planning Association does not support the removal of the ban on conflicted remuneration on general advice stating:
This measure potentially reintroduces commissions into the advice space, especially in connection to superannuation and investment products.
Commissions must not be permitted to be paid under general advice. The return of commissions on investments (including upfront or trail commissions), or in superannuation, should be opposed.[79]
ADIs tend to think that customers understand that financial institutions will favour their own products. Bank of Queensland argues, for example, that when a consumer engages with a financial institution with respect to financial and wealth products he, or she, would have an expectation that the financial institution will offer its own products and that ‘it is highly unrealistic to expect that there would be no bias towards an organisation’s own products or that the organisation’s own products would not feature in the recommendations made to consumers’.[80]
Key issue—non-monetary benefits
What is a non-monetary benefit?
Non-monetary benefits could take a number of forms, including:
free or subsidised business equipment or services (for example, computers and other hardware, software, information technology support and stationery)
hospitality-related benefits (e.g. tickets to sporting events or concerts and subsidised travel)
shares or other interests in a product issuer or licensed dealer group
marketing assistance and
promotion or other ways of recognising an employee based on product recommendations or sales.[81]
Section 963C of the Corporations Act lists those non-monetary benefits which are not conflicted remuneration. Item 33 of the Bill repeals and replaces paragraph 963C(c)(ii) of the Corporations Act to broaden the existing ‘education and training exemption’ from the prohibition on receiving conflicted remuneration. The effect of the amendment is to include education and training that relates to the carrying on of a financial services business.
According to Treasury the amendment will allow industry to ‘use the training exemption for a wider range of activities, including administrative, dealing or trading activities’. Further, it ‘is not expected to have any material impact on consumers’.[82]
Key issue—basic banking products
Section 963D of the Corporations Act provides that certain remuneration paid to an employee of an ADI is not conflicted remuneration. Item 35 repeals and replaces section 963D of the Corporations Act so that where a benefit is received due to recommending a basic banking product, a general insurance product or consumer credit insurance and the holder of the AFSL (or their representative) does not give other personal advice not relating to those products, then the benefit is not conflicted remuneration.
Key issue—regulation making power
Items 29, 34 and 35 of the Bill insert regulation making power[83] to clarify the operation of the exemptions to the ban on conflicted remuneration. According to the Scrutiny of Bills Committee:
These items introduce regulation-making powers that will allow for clarification to be made, by regulation, to the operation of existing exemptions to the ban on conflicted remuneration. Under the current provisions, the regulations may allow for certain benefits to be excluded from the ban on conflicted remuneration but do not allow for regulations to clarify the operation of the existing exemptions.
The explanatory memorandum justifies this approach by reference to the ‘complexity of payment arrangements within the financial advice industry,’ noting that ‘there is a possibility that future remuneration structures may be developed that are inadvertently captured by the ban on conflicted remuneration’ (at p. 36). In light of this explanation, the committee leaves the question of whether the proposed approach is appropriate to the Senate as a whole.[84]
Key issue—grandfathering arrangements
When FOFA 2 was enacted, it contained an applications provision at section 1528. Essentially, the provision applies so that the conflicted remuneration provisions would not apply to a benefit given to the holder of an AFSL or their representative if the benefit was given under an arrangement that was entered into before 1 July 2013. These benefits are considered to be grandfathered.
Some submitters expressed concern about how the grandfathering would operate if, for example, a financial adviser was to sell his or her business. That is—would the sale have the effect of altering the pre-1 July 2013 arrangement to such an extent that it would be a new arrangement and thereby be captured by the FOFA 2 provisions?[85]
Law firm Minter Ellison claims that holders of an AFSL continue to face difficulties with respect to existing arrangements—despite regulatory guidance which has been issued by ASIC that such changes will not result in a loss of grandfathering where they are not material.[86] However, Minter Ellison considers that ASIC’s guidance does not provide certainty for industry participants and suggests that this Bill should remedy that uncertainty by specifying the circumstances in which changes will be permitted.[87]
According to ASIC, at the date of issuing the regulatory guidance, the Australian Government was consulting on regulations that will modify the scope of the transitional provisions in subsection 1528(1).[88]
Other banned remuneration
Division 5 of Part 7.7A of the Corporations Act contains provisions relating to other banned remuneration—that is, receiving volume-based shelf-space fees[89] or receiving asset based fees on borrowed amounts.[90]
How do volume-based shelf-space fees work?
A platform operator is the holder of an AFSL or is a registrable superannuation entity (as defined in the Superannuation Industry (Supervision) Act 1993) that offers to be the provider of a custodial arrangement.[91]
Broadly a custodial arrangement[92] is an arrangement where the client may instruct the platform to acquire certain financial products, and the products are then either held on trust for the client, or the client retains some interest in the product. This will include arrangements where the client may direct the platform to follow an investment strategy of the kind mentioned in the Superannuation Industry (Supervision) Act.[93]
A shelf-space fee is a fee for making the product available through the platform. It also includes a discount on an amount payable, or a rebate of an amount paid, by a fund manager for its products being available through the platform.[94]
A benefit is generally presumed to be a volume-based shelf-space fee if the benefit, or the value of the benefit, is wholly or partly dependent on the total number or value of the funds manager’s financial products to which the custodial arrangement relates.[95] This includes fees that are based on past, current or projected volumes, even if other factors were considered in determining the value of the benefit. It also includes a fee paid by a fund manager, calculated by reference to each of its products on the platform.[96]
Item 38 of the Bill repeals and replaces section 964A of the Corporations Act to clarify the drafting of the ban on volume-based shelf-space fees. In particular the amendments highlight that incentive payments between fund managers and platform operators to give preferential treatment to certain products on the platform shelf—which could potentially influence advice provided to the client—are prohibited.[97]
Writing about the impact of the enactment of FOFA 1 and FOFA 2, academic Paul Latimer stated:
Ideally, one result of FOFA will be to accelerate the replacement of the commission salesman by the development of the financial advice industry into a profession providing conflict-free independent professional advice, with its members paid as a professional by fee for service, and not dependent on commissions and bonuses paid by product wholesalers and product manufacturers.[98]
As stated above, the purpose of the Bill is to repeal some of the FOFA measures. The Bill delivers a range of measures which will provide clarity and efficiencies for industry stakeholders. However, it removes some of the consumer protections that were part of the original FOFA package. It may be that the cost of those efficiencies, particularly the repeal of the opt-in provision for on-going fee arrangements will be borne by older, or less financially savvy, Australians.
[1]. The ‘catch-all’ provision is at paragraph 961B(2)(g) of the Corporations Act 2001, accessed 20 June 2014.
[2]. Legislative Instruments Act 2003, section 31, accessed 20 June 2014.
[3]. Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014, regulation 2, accessed 20 June 2014.
[4]. Australia, House of Representatives, ‘Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014’,Votes and proceedings, HVP 56 [proof], 15 July 2014, p. P707; Australia, Senate, ‘Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014’, Senate, Journals, 43, 15 July 2014, p. 1179, both accessed 21 July 2014.
[5]. Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014, accessed 5 August 2014.
[6]. Explanatory Statement, Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014.
[7]. Corporations Act 2001, accessed 20 June 2014.
[8]. Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into financial products and services in Australia, Parliament of Australia, Canberra, November 2009, accessed 20 June 2014.
[9]. Ibid., Terms of reference, p. vii.
[10]. Further information about the originating Bills, including links to the debate, the Bills Digests and committee consideration are available at the Bills homepages: Parliament of Australia, ‘Corporations Amendment (Future of Financial Advice) Bill 2012 homepage’, Australian Parliament website, and Parliament of Australia, ‘Corporations Amendment (Further Future of Financial Advice Measures) Bill 2012 homepage’, Australian Parliament website, both accessed 20 June 2014.
[11]. Corporations Amendment (Future of Financial Advice) Act 2012, accessed 20 June 2014.
[12]. Corporations Amendment (Further Future of Financial Advice Measures) Act 2012, accessed 20 June 2014.
[13]. Treasury, ‘Future of financial advice: implementation’, Treasury website; B Shorten (Minister for Financial Services and Superannuation), Government's financial advice reforms pass the parliament, media release, 34, 20 June 2012, both accessed 20 June 2014.
[14]. The Treasury, Submission to the Senate Economics Committee, Inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, 24 April 2014, pp. 4–5, accessed 9 July 2014.
[15]. Ibid., p. 4.
[16]. M Cormann (Shadow Assistant Treasurer, Shadow Minister for Financial Services and Superannuation), Shorten conflict undermines FOFA reform effort, media release, 29 August 2011, accessed 20 June 2014.
[17]. J Hockey, ‘Second reading speech: Corporations Amendment (Future of Financial Advice) Bill 2011, Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011’, House of Representatives, Debates, 19 March 2012, p. 3301, accessed 20 June 2014.
[18]. Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into the provisions of the Corporations Amendment (Future of Financial Advice) Bill 2011 and Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011, Commonwealth of Australia, February 2012, accessed 20 June 2014.
[19]. Coalition Members, Dissenting report, Parliamentary Joint Committee on Corporations and Financial Services, ibid., pp. 151–189, accessed 20 June 2014.
[20]. Liberal Party of Australia, The Coalition's policy to boost productivity and reduce regulation, Coalition policy document, Election 2013, July 2013, p. 26, accessed 20 June 2014.
[21]. The Treasury, ‘Exposure draft - FOFA amendments’, Treasury website, accessed 20 April 2014.
[22]. Details of the inquiry including the terms of reference, submissions to the Committee and the Committee report are available at the inquiry homepage, accessed 20 June 2014.
[23]. Economics Legislation Committee, Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, The Senate, Canberra, 16 June 2014, p. 50, accessed 15 July 2014.
[24]. Ibid., pp. 76–77.
[25]. P Martin, ‘Legal uncertainty gives financial planners free rein on advice’, The Sydney Morning Herald, 27 February 2014, p. 25, accessed 20 June 2014.
[26]. Standing Committee for the Scrutiny of Bills, Alert Digest No. 5 of 2014, Senate, Canberra, 14 May 2014, p. 4, accessed 20 May 2014.
[27]. Parliamentary Joint Committee on Human Rights, Ninth report of the 44th Parliament, Commonwealth of Australia, June 2014, p. 131, accessed 20 June 2014.
[28]. The Statement of Compatibility with Human Rights can be found at pages 39–41 of the Explanatory Memorandum to the Bill.
[29]. Explanatory Memorandum, Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, p. 40, accessed 20 June 2014.
[30]. Australian Consumers Association (Choice), Submission to the Senate Economics Committee, Inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, 30 April 2014, p. 5, accessed 20 June 2014.
[31]. B Ripoll, ‘FoFA changes pitch savers against financial Goliaths’, The Australian Financial Review, 27 March 2014, p. 51, accessed 20 June 2014.
[32]. P Whish-Wilson, ‘Matters of public importance: future of financial advice’, Senate, Debates, 25 March 2014, p. 1964, accessed 20 June 2014.
[33]. Australian Consumers Association (Choice), Submission to the Senate Economics Committee, op. cit., p. 6. See also: National Seniors Council, Submission to the Senate Economics Committee, Inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, April 2014, p. 4, accessed 20 June 2014.
[34]. Financial Services Council, Submission to the Senate Economics Committee, Inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, 5 May 2014, p. 6, accessed 20 June 2014.
[35]. J Hockey (Treasurer), Financial system inquiry, media release, 20 December 2013, accessed 20 June 2014.
[36]. Treasury, Financial system inquiry: interim report, Commonwealth of Australia, July 2014, accessed 5 August 2014.
[37]. Governance Institute of Australia, Submission to the Senate Economics Committee, Inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, 30 April 2014, p. 3, accessed 23 June 2014.
[38]. Explanatory Memorandum, Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, op. cit., p. 5.
[39]. The Treasury, Submission to the Senate Economics Committee, op. cit., p. 17.
[40]. Corporations Act, paragraph 760A(a).
[41]. Corporations Act, paragraph 760A(b).
[42]. Division 2 was inserted into Part 7.7A of the Corporations Act by FOFA 2.
[43]. The term provider is defined in section 961 of the Corporations Act as a person who is a representative of a financial services licensee and who provides the advice on behalf of the licensee. It also extends to a person who provides personal advice through a computer program.
[44]. Corporations Act, section 961E.
[45]. Financial Planning Association of Australia, Submission to the Senate Economics Committee, Inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, 30 April 2014, p. 4, accessed 20 May 2014.
[47]. Australian Consumers Association (Choice), Submission to the Senate Economics Committee, op. cit., p. 7. See: Australian Securities and Investments Commission (ASIC), ‘Licensing: financial product advisors–conduct and disclosure’, regulatory guide 175, ASIC website, October 2013, accessed 21 June 2014.
[48]. Financial Services Council, Submission to the Senate Economics Committee, op. cit. See Ian Jackman SC, Memorandum of Professional Advice which is annexed to the submission, p. 7, paragraph 14.
[49]. Ibid., p. 8, paragraph 22.
[50]. Corporations Act, section 911A.
[51]. Corporations Act, paragraph 912A(1)(a).
[52]. Corporations Act, paragraph 912A(1)(aa).
[53]. ASIC, Access to financial advice in Australia, report, 224, ASIC, December 2010, p. 33, accessed 22 May 2014.
[54]. National Insurance Brokers Association, Submission to the Senate Economics Committee, Inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, [2014], p. 5, accessed 25 June 2014.
[55]. Explanatory Memorandum, Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, op. cit., p. 12.
[56]. Ibid., p. 13.
[57]. Corporations Act, section 961K.
[58]. First Home Saver Accounts Act 2008, subparagraph 8(c)(i), accessed 16 July 2014.
[59]. Corporations Act, section 961F.
[60]. Revised Explanatory Memorandum, Corporations Amendment (Further Future of Financial Advice Measures) Bill 2012, p. 16, accessed 30 June 2014.
[61]. Item 1 of the Bill inserts into section 960 of the Corporations Act the definition of consumer credit insurance which has the same meaning as in the Insurance Contracts Act 1984, accessed 30 June 2014.
[62]. Insurance Contracts Regulations 1985, accessed 30 June 2014.
[63]. A Main, ‘Bankers come out swinging over FoFA’, The Weekend Australian, 24 May 2014, p. 31, accessed 30 June 2014.
[64]. Inserted by item 12 of the Bill.
[65]. Explanatory Memorandum, Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, op. cit., p. 15.
[66]. Corporations Act, subsections 962A(1) and (2).
[67]. Corporations Act, subsection 962L(1).
[68]. Corporations Act, section 962N.
[69]. National Seniors Australia, Submission to the Senate Economics Committee, op. cit., p. 5, accessed 30 June 2014.
[70]. CPA Australia and the Institution of Chartered Accountants, Submission to the Senate Economics Committee, Inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, 30 April 2014, p. 4, accessed 30 June 2014.
[71]. Financial Planning Association of Australia, Submission to the Senate Economics Committee, op. cit., p. 8.
[72]. Pattinson Financial Services, Submission to the Senate Economics Committee, Inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, 30 April 2014, p. 1, accessed 30 June 2014.
[73]. Ibid., and Menico Tuck Parrish Financial Services, Submission to the Senate Economics Committee, Inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, 28 April 2014, p. 1, accessed 30 June 2014.
[74]. National Seniors Australia, Submission to the Senate Economics Committee, op. cit., p. 6.
[75]. Corporations Act, section 963G.
[76]. Corporations Act, section 963A.
[77]. M Nehme, Submission to the Senate Economics Committee, Inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, 29 April 2014, p. 4, accessed 30 June 2014.
[78]. National Seniors Australia, Submission to the Senate Economics Committee, op. cit., p. 8.
[79]. Financial Planning Association of Australia (FPA), The future of the financial planning profession, white paper, FPA, May 2014, p. 9, accessed 30 June 2014.
[80]. Bank of Queensland, Submission to the Senate Economics Committee, Inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, 30 April 2014, p. 2, accessed 30 June 2014.
[81]. Australian Securities and Investments Commission, Conflicted remuneration, regulatory guide 246, ASIC, March 2013, pp. 12–13, accessed 30 June 2014.
[82]. The Treasury, Submission to the Senate Economics Committee, op. cit., p. 34.
[83]. Proposed subsections 963B(7), 963C(2) and 963D(3) of the Corporations Act respectively.
[84]. Standing Committee for the Scrutiny of Bills, Alert Digest No. 5 of 2014, op. cit., p. 4.
[85]. Financial Industry Network Australia, Submission to the Senate Economics Committee, Inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, April 2014, accessed 7 July 2014.
[86]. ASIC, Conflicted remuneration, op. cit., pp. 50–54.
[87]. Minter Ellison Lawyers, Submission to the Senate Economics Committee, Inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, 30 April 2014, p. 8, accessed 27 May 2014.
[88]. Australian Securities and Investments Commission, Conflicted remuneration, op. cit., p. 6.
[89]. Corporations Act, section 964A.
[90]. Corporations Act, section 964D–964E.
[91]. Corporations Act, section 964.
[92]. Corporations Act, section 1012IA.
[93]. Revised Explanatory Memorandum, Corporations Amendment (Further Future of Financial Advice Measures) Bill 2012, op. cit., p. 37.
[94]. M Daley and E Setio, ‘Are you FOFA ready? Other banned remuneration’, Clayton Utz website, 11 April 2013, accessed 7 July 2014.
[95]. Corporations Act, subsection 964A(2).
[96]. ASIC, Conflicted remuneration, op. cit., p. 41.
[97]. The Treasury, Submission to the Senate Economics Committee, op. cit., p. 34.
[98]. P Latimer, Submission to the Senate Economics Committee, Inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, 15 March 2014, p. 8, accessed 7 July 2014.