Document ID: chunk:federal_register_of_legislation:F2017L00636:body:0:p4
Version: federal_register_of_legislation:F2017L00636
Segment Type: other
Provision Reference: 
Character Range: 7325–10084

client initiated increase and an acceptable benefit ratio of 0.6 applies for a benefit provided for the second year in relation to the $150 increase: subsection (4). Therefore, a benefit of up to $90 may be given in relation to this increase. An acceptable benefit ratio of 0.2 applies for a benefit provided for the second year in relation to the $1,050 balance of the policy cost: subsection (3). Therefore, a benefit of up to $210 may be given in relation to the $1050 balance of the policy cost. Accordingly, the maximum total benefit that may be given for the second year is $300.
       Note 2: The examples in this section do not include GST. Depending on the circumstances, a commission given to a licensee or representative may or may not include GST. Where a commission includes a GST component, the GST component is not intended to be a benefit for the purposes of the conflicted remuneration provisions in Division 4 of Part 7.7A of the Act: see paragraph 1.29 of the Explanatory Memorandum to the Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016.

6 Acceptable repayment
(1) This section applies in relation to a benefit:
           (a) given to a financial services licensee, or a representative of a financial services licensee, in relation to a life risk insurance product for:
(i) the year (first year) in which the product is first issued to a retail client; or
(ii) the year (second year) immediately following the first year; and
           (b) for which the obligation referred to in paragraph 963BA(3)(a) of the Act requires repayment of all or part of the benefit.
(2)  This section determines amounts that are acceptable repayments for the purposes of paragraph 963BA(3)(b) of the Act.
           Note:  Where there is more than one reduction in policy cost during the first two years for a product or one or more reductions followed by the product being cancelled or not continued during the first two years, separate acceptable repayment amounts are determined in relation to each reduction, cancellation or non-continuation.
Acceptable repayment where trigger event in first year—100% clawback
(3) The amount worked out in accordance with subsection (4) is an acceptable repayment in relation to a benefit given for the first year in relation to circumstances where, in the first year:
           (a) the life risk insurance product is cancelled or not continued; or
           (b) the policy cost for the product for the first year is reduced.
           Note 1: The circumstances in which the policy cost for the first year is reduced include circumstances in which the policy cost for the first year is increased and subsequently reduced (whether or not the reduced policy cost is less than the initial