This legal briefing summarises the latest exposure draft regulations released by Treasury this afternoon to replace the existing grandfathering regulations which are enacted at present.
The regulations, which will apply to platform and non-platform operators, aim to ban conflicted remuneration for new clients from 1 July 2014 consistently regardless if paid by a platform operator or not.
The new exposure draft regulations provide for grandfathering of:
benefits given by a platform operator, provided that the benefits:
- are given under an arrangement that was entered into before the application day (ie 1 July 2013); and
- relates to a regulated acquisition under a custodial arrangement provided by a platform operator on the instructions of a person who was a client before 1 July 2014
benefits given by a person other than a platform operator, provided that the benefits are:
- given under an arrangement that was entered into before the application day (ie 1 July 2013); and
- given in relation to the acquisition of a financial product by a person who had an interest in the financial product immediately before 1 July 2014.
The new regulations also:
- enable buyer of last resort and other planner practice sale arrangements;
- aim to enable top ups;
- provide for continuation of grandfathering where a party changes; and
- attempt to address statutory severability issues, although in our view the regulation does not appear to achieve its purpose.
The regulations and accompanying explanatory statement are issued for public consultation and submissions due 18 March 2013.
ASIC has also released finalised guidance on conflicted remuneration in RG 246. The guide recognises that the Australian Government is consulting on grandfathering regulations and states that ASIC will update RG 246 to take into account the effect of the regulations after they have been finalised.