Australian Financial Services Licensing (AFSL) Forum

#3174 Reply

Megan Jaksa
Member

Whether the rebate will fall within the conflicted remuneration provisions will depend on how this rebate is paid and structured.

Conflicted remuneration is defined as any benefit given to an AFSL holder or representative that could reasonably be expected to influence the choice of financial product recommended by the licensee to retail clients, or could reasonably be expected to influence the financial product advice given by the licensee to retail clients. While volume-based benefits are presumed to be conflicted remuneration under s963L, benefits that are not volume-based may also be conflicted remuneration and therefore banned.

If the rebate is paid to you in response to your recommendation of certain products, the rebate could reasonably expected to influence the products you recommend to your retail clients. If so, it may be regarded as being conflicted remuneration. This is true even if you just provide general advice.

The Corporations Act also prohibits product issuers or sellers from giving an AFSL holder or representative conflicted remuneration.

It is difficult to determine whether a rebate will be conflicted remuneration without knowing specific details about the proposed benefit. You may wish to seek legal advice to ensure you are compliant with the financial services laws prior to 1 July 2013.

If you require further information, please contact our office to discuss.
Author: David Court

Co-contributor: Megan Jaksa

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