On 15 May 2013, the Parliamentary Joint Committee on Corporations and Financial Services (PJC) recommended that the Corporations Amendment (Simple Corporate Bonds and Other Measures) Bill 2013 (Bill) be passed. The Bill amends the Corporations Act to create an offence for a person to use the expressions “financial planner” and “financial adviser” unless that person holds an Australian financial services license (AFSL) that allows them to provide personal advice in relation to financial products.
The Bill is expected to pass before 30 June 2013 without further amendment. Our update on 25 March 2013 provides more information on this legislative change.
On 7 May 2013, Treasury released draft Corporations Amendment Regulation 2013 (No. N). The regulation extends the brokerage fee exemption to conflicted remuneration and provides that:
A “brokerage fee” is defined under the Corporations Act as a fee paid by a retail client to a provider, who deals on behalf of the client, in financial products traded on prescribed financial markets such as the ASX.
Corporations Amendment Regulation 2013 (No. 2) was registered on 16 May 2013. The regulation provides that the FOFA reforms only apply in respect of financial services provided to retail clients in Australia.
The regulation also confirms that the best interest obligation will not apply to persons who are exempt from licensing (and in some cases disclosure), under the following ASIC Class Orders:
Persons seeking to rely on these exemptions generally, and from the best interest obligation, must ensure they comply with the conditions set out in the Class Orders.
The majority of the FOFA reforms are generally set to commence on 1 July 2013.
We are available to assist you or provide you with further information on any of the aspects of the FoFA reforms. Please contact a member of our team listed in this publication.
The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.