ASIC has added additional conditions to its definitions of conflicted remuneration in financial advice both in light of recent reforms and to address specific concerns.
Issued ahead of the life insurance framework deadline on January 1, Regulatory Guide 246 (RG 246) takes into account the additional provisions introduced in the Corporations Amendment (Life Insurance Remuneration Arrangements) Act 2017.
Aside from the broad ban on commissions involved in the sale of life insurance products, ASIC has also extended the ban on conflicted remuneration such that it applies even in instances where "information is given on, or dealing occurs in, a life risk insurance product, even in the absence of advice."
On top of this, RG 246 addresses the potential conflicts associated with conference benefits and commissions given by property developers to advisers in cases where the adviser recommends the use or establishment of a self-managed super fund to buy property.
Rules around the exclusion of benefits paid by clients from conflicted remuneration rules have also been tightened.
As ASIC explained, these benefits are excluded when "the licensee subsequently passes on the benefit, or a portion of the benefit, to one of its authorised representatives or other representatives; or the licensee passes on the benefit, or a portion of the benefit, to an authorised representative, and the authorised representative passes on the benefit, or a portion of the benefit, to another representative of the licensee (e.g. an employee of the authorised representative)."
"However, the exclusion will only apply if the client has authorised passing on the benefits in this way, and no AFS licensee or authorised representative that passes on a benefit has discretion over the portion of the benefit that is passed on," ASIC added.
"If a licensee or its representatives have this discretion, we do not consider that the benefit has been given at the client's direction or with their clear consent."