Proposed amendments to the Corporations Act to restrict the use
of the expressions "financial planner" and
Draft regulations extend the scope of the existing
stockbroking-related exemptions on the payment of brokerage
A new regulation clarifies FOFA's application to the
RESTRICTION ON THE USE OF THE TERMS "FINANCIAL
PLANNER" AND "FINANCIAL ADVISER"
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
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
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
brokerage frees are exempt from the ban on asset-based fees in
respect of borrowed amounts; and
fees can be paid by licensees that execute trades on behalf of
the retail clients of other licensees (who do not receive personal
advice), where those trades are requested by the client through the
non-executing licensee's online trading service.
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.
FURTHER CLARIFICATION AND EXEMPTIONS FROM FOFA
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:
CO 05/736 which provides relief to persons providing financial
services on low value non-cash payment facilities;
CO 05/1122 which provides relief to providers of generic
CO 08/01 which provides relief to group purchasing bodies,
bodies who deal in financial products by arranging for cover under
risk management products, and
CO 11/1227 which provides relief for trustees of super entities
regarding retirement estimates.
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.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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