Corporations Act 2001
Note: This Chapter applies to a CCIV in a modified form: see Division 4 of Part 8B.7 .
View history note
Hide history note(Repealed by No 76 of 2023, s 3, Sch 2[475] (effective 20 October 2023).) SECTION 960A 960A NO CONTRACTING OUT
A condition of a contract or other arrangement is void if it provides that a party to the contract is required or bound to waive any right under this Part, or waive the compliance with any requirement of this Part.
The obligations imposed on a person under this Part are in addition to any other obligations to which the person is subject under this Act or any other law.
This Division applies in relation to the provision of personal advice (the advice ) to a person (the client ) as a retail client.
961(2)
The individual who is to provide the advice is referred to in this Division as the provider .
961(3)
If 2 or more individuals are to provide the advice, each of those individuals is referred to in this Division as the provider .
961(4)
An individual is a provider for the purposes of this Division even if the individual is a representative of a financial services licensee and is to provide the advice on behalf of that licensee.
961(5)
If it is not reasonably possible to identify the individual who is to, or individuals who are to, provide the advice, the person who is to provide the advice isthe provider for the purposes of this Division.
961(6)
A person who offers personal advice through a computer program is taken to be the person who is to provide the advice, and is the provider for the purposes of this Division.
If a financial services licensee is acting as an authorised representative of another financial services licensee in relation to the advice, this Division applies to the first licensee in relation to the advice in that licensee ' s capacity as an authorised representative (rather than in the capacity of licensee).
The provider must act in the best interests of the client in relation to the advice.
961B(2)
The provider satisfies the duty in subsection (1), if the provider proves that the provider has done each of the following:
(a) identified the objectives, financial situation and needs of the client that were disclosed to the provider by the client through instructions;
(b) identified:
(i) the subject matter of the advice that has been sought by the client (whether explicitly or implicitly); and
(ii) the objectives, financial situation and needs of the client that would reasonably be considered as relevant to advice sought on that subject matter (the client ' s relevant circumstances );
(c) where it was reasonably apparent that information relating to the client ' s relevant circumstances was incomplete or inaccurate, made reasonable inquiries to obtain complete and accurate information;
(d) assessed whether the provider has the expertise required to provide the client advice on the subject matter sought and, if not, declined to provide the advice;
(e) if, in considering the subject matter of the advice sought, it would be reasonable to consider recommending a financial product:
(i) conducted a reasonable investigation into the financial products that might achieve those of the objectives and meet those of the needs of the client that would reasonably be considered as relevant to advice on that subject matter; and
(ii) assessed the information gathered in the investigation;
(f) based all judgements in advising the client on the client ' s relevant circumstances;
(g) taken any other step that, at the time the advice is provided, would reasonably be regarded as being in the best interests of the client, given the client ' s relevant circumstances.
Note: The matters that must be proved under subsection (2) relate to the subject matter of the advice sought by the client and the circumstances of the client relevant to that subject matter (the client ' s relevant circumstances). That subject matter and the client ' s relevant circumstances may be broad or narrow, and so the subsection anticipates that a client may seek scaled advice and that the inquiries made by the provider will be tailored to the advice sought.
Advice given by Australian ADIs - best interests duty satisfied if certain steps are taken
961B(3)
If:
(a) the provider is:
(i) an agent or employee of an Australian ADI; or
(ii) otherwise acting by arrangement with an Australian ADI under the name of the Australian ADI; and
(b) the subject matter of the advice sought by the client relates only to the following:
(i) a basic banking product;
(ii) a general insurance product;
(iii) consumer credit insurance;
(iv) a combination of any of those products;
the provider satisfies the duty in subsection (1) in relation to the advice given in relation to the basic banking product and the general insurance product if the provider takes the steps mentioned in paragraphs (2)(a), (b) and (c).
General insurance products - best interests duty satisfied if certain steps are taken
961B(4)
To the extent that the subject matter of the advice sought by the client is a general insurance product, the provider satisfies the duty in subsection (1) if the provider takes the steps mentioned in paragraphs (2)(a), (b) and (c).
Regulations
961B(5)
The regulations may prescribe:
(a) a step, in addition to or substitution for the steps mentioned in subsection (2), that the provider must, in prescribed circumstances, prove that the provider has taken, to satisfy the duty in subsection (1); or
(b) that the provider is not required, in prescribed circumstances, to prove that the provider has taken a step mentioned in subsection (2), to satisfy the duty in subsection (1); or
(c) circumstances in which the duty in subsection (1) does not apply.
For the purposes of this Division, something is reasonably apparent if it would be apparent to a person with a reasonable level of expertise in the subject matter of the advice that has been sought by the client, were that person exercising care and objectively assessing the information given to the provider by the client.
A reasonable investigation into the financial products that might achieve those of the objectives and meet those of the needs of the client that would reasonably be considered relevant to advice on the subject matter sought by the client does not require an investigation into every financial product available.
961D(2)
However, if the client requests the provider to consider a specified financial product, a reasonable investigation into the financial products that might achieve those of the objectives and meet those of the needs of the client that would reasonably be considered relevant to advice on the subject matter sought by the client includes an investigation into that financial product.
It would reasonably be regarded as in the best interests of the client to take a step, if a person with a reasonable level of expertise in the subject matter of the advice that has been sought by the client, exercising care and objectively assessing the client ' s relevant circumstances, would regard it as in the best interests of the client, given the client ' s relevant circumstances, to take that step.
CCH note: This provision is modified by legislative instruments. See the CCH note at the end of the provision for details.
Each of the following is a basic banking product : (a) a basic deposit product; (b) a facility for making non-cash payments;
(c) (Repealed) (d) a facility for providing traveller ' s cheques; (e) any other product prescribed by regulations for the purposes of this paragraph.
CCH Note - modifying legislative instruments: Section 961F is modified by the following legislative instruments that commenced or were amended on or after 1 January 2022: Class Order 14/1262: Relief for 31 Day Notice Term Deposits.
For other modifying legislative instruments or class orders, please consult the legislative instruments or class orders directly. These are reproduced in the regulatory-resources section of the company-law practice area in CCH iKnowConnect.
The provider must only provide the advice to the client if it would be reasonable to conclude that the advice is appropriate to the client, had the provider satisfied the duty under section 961B to act in the best interests of the client.
Note: A responsible licensee or an authorised representative may contravene a civil penalty provision if a provider fails to comply with this section (see sections 961K and 961Q ). The provider may be subject to a banning order (see section 920A ).
If it is reasonably apparent that information relating to the objectives, financial situation and needs of the client on which the advice is based is incomplete or inaccurate, the provider must, in accordance with subsections (2) and (3), warn the client that:
(a) the advice is, or may be, based on incomplete or inaccurate information relating to the client ' s relevant personal circumstances; and
(b) because of that, the client should, before acting on the advice, consider the appropriateness of the advice, having regard to the client ' s objectives, financial situation and needs.
961H(2)
The warning must be given to the client at the same time as the advice is provided and, subject to subsection (3), by the same means as the advice is provided.
961H(3)
If a Statement of Advice is the means by which the advice is provided, or is given to the client at the same time as the advice is provided, the warning may be given by including it in the Statement of Advice.
Note: The Statement of Advice must at least contain a record of the warning (see paragraphs 947B(2)(f) and 947C(2)(g) ).
961H(4)
If 2 or more individuals provide the advice and one of those individuals provides a warning in accordance with this section, the other individuals are taken to have complied with this section.
961H(5)
Nothing in this section affects the duty of the provider under section 961B to make reasonable inquiries to obtain complete and accurate information.
Note: A responsible licensee or an authorised representative may contravene a civil penalty provision if a provider fails to comply with this section (see sections 961K and 961Q ). The provider may be subject to a banning order (see section 920A ).
If the provider knows, or reasonably ought to know, that there is a conflict between the interests of the client and the interests of:
(a) the provider; or
(b) an associate of the provider; or
(c) a financial services licensee of whom the provider is a representative; or
(d) an associate of a financial services licensee of whom the provider is a representative; or
(e) an authorised representative who has authorised the provider, under subsection 916B(3) , to provide a specified financial service or financial services on behalf of a financial services licensee; or
(f) an associate of an authorised representative who has authorised the provider, under subsection 916B(3) , to provide a specified financial service or financial services on behalf of a financial services licensee;
the provider must give priority to the client ' s interests when giving the advice.
Note: A responsible licensee or an authorised representative may contravene a civil penalty provision if a provider fails to comply with this section (see sections 961K and 961Q ). The provider may be subject to a banning order (see section 920A ).
961J(2)
If:
(a) the provider is:
(i) an agent or employee of an Australian ADI; or
(ii) otherwise acting by arrangement with an Australian ADI under the name of the Australian ADI; and
(b) the subject matter of the advice sought by the client relates only to the following:
(i) a basic banking product;
(ii) a general insurance product;
(iii) consumer credit insurance;
(iv) a combination of any of those products;
subsection (1) does not apply to the extent that the advice relates to a basic banking product or a general insurance product or a combination of those 2 products.
961J(3)
Subsection (1) does not apply to the extent that the subject matter of the advice sought by the client is a general insurance product.
A financial services licensee contravenes this section if the licensee contravenes section 961B , 961G , 961H or 961J .
Note: This subsection is a civil penalty provision (see section 1317E ).
961K(2)
A financial services licensee contravenes this section if:
(a) a representative, other than an authorised representative, of the licensee contravenes section 961B , 961G , 961H or 961J ; and
(b) the licensee is the, or a, responsible licensee in relation to that contravention.
Note: This subsection is a civil penalty provision (see section 1317E ).
A financial services licensee must take reasonable steps to ensure that representatives of the licensee comply with sections 961B , 961G , 961H and 961J .
Note: This section is a civil penalty provision (see section 1317E ).
This section applies if the client suffers loss or damage because of a contravention of a provision of this Division.
961M(2)
A Court may order that one or more of the following persons compensate the client for the amount of the loss or damage:
(a) if the person who contravenes the provision is a financial services licensee - that licensee;
(b) if the person who contravenes the provision is a representative of a financial services licensee, or 2 or more financial services licensees - the, or a, responsible licensee in relation to the contravention.
961M(3)
The Court may make the order under this section:
(a) on its own initiative, during proceedings before the Court; or
(b) on the application of ASIC; or
(c) on the application of the client.
961M(4)
In determining the damage suffered by the client, the Courtmay include profits resulting from the contravention that are made by:
(a) if the person who contravenes the provision is a financial services licensee - the licensee; or
(b) if the person who contravenes the provision is a representative of a financial services licensee, or 2 or more financial services licensees:
(i) the representative; and
(ii) where the Court ' s order under subsection (2) relates to a financial services licensee that is the, or a, responsible licensee in relation to the contravention - the licensee.
961M(5)
An order under this section may be made whether or not the licensee against whom the order is made (or anyone else) has been convicted of an offence, or been the subject of a civil penalty order, in respect of the matter.
961M(6)
An action to recover the amount of the loss or damage may be begun at any time within 6 years after the contravention.
961M(7)
An order under this section may be enforced as if it were a judgement of the Court.
961M(8)
This section does not affect any liability that a person has under any other law.
The Court dealing with an action under subsection 961M(2) may, in addition to awarding loss or damage under that subsection and if it thinks it necessary in order to do justice between the parties:
(a) make an order declaring void a contract entered into by the client for or relating to a financial product or a financial service; and
(b) if it makes an order under paragraph (a) - make such other order or orders as it thinks are necessary or desirable because of that order.
961N(2)
Without limiting paragraph (1)(b), an order under that paragraph may include either or both of the following:
(a) an order for the return of money paid by a person;
(b) an order for the payment of an amount of interest specified in, or calculated in accordance with, the order.
The, or a, responsible licensee , in relation to a contravention of a provision of this Part, is: (a) if the person who contravenes the provision is a representative of only one financial services licensee - that financial services licensee; or (b) if the person who contravenes the provision is a representative of more than one financial services licensee:
(i) if, under the rules in section 917C , one of those licensees is responsible for the person ' s conduct - that licensee; or
(ii) if, under the rules in section 917C , 2 or more of those licensees are jointly and severally responsible for the person ' s conduct - each of those licensees.
An authorised representative of a financial services licensee contravenes this section if the authorised representative contravenes section 961B , 961G , 961H or 961J .
Note: This subsection is a civil penalty provision (see section 1317E ).
961Q(2)
Subsection (1) does not apply if:
(a) the licensee had provided the authorised representative with information or instructions about the requirements to be complied with in relation to the giving of personal advice; and
(b) the authorised representative ' s failure to comply with section 961B , 961G , 961H or 961J occurred because the representative was acting in reliance on that information or those instructions; and
(c) the representative ' s reliance on that information or those instructions was reasonable.
This Division applies in a case where:
(a) a financial services licensee, or a representative of a financial services licensee, enters into an ongoing fee arrangement with another person (the client ); and
(b) the arrangement has not terminated for any reason.
962(2)
This Division also applies in a case where:
(a) the rights of a financial services licensee, or a representative of a financial services licensee, under an ongoing fee arrangement are assigned to another person; and
(b) the arrangement has not terminated for any reason.
Ongoing fee arrangements
962A(1)
If: (a) a financial services licensee gives personal advice to a person as a retail client; and (b) that person enters into an arrangement with the financial services licensee, or a representative of the financial services licensee; and (c) under the terms of the arrangement, a fee (however described or structured) is to be paid during a period of more than 12 months;
the arrangement is an ongoing fee arrangement .
962A(2)
If: (a) a representative of a financial services licensee gives personal advice to a person as a retail client; and (b) that person enters into an arrangement with the representative or the financial services licensee; and (c) under the terms of the arrangement, a fee (however described or structured) is to be paid during a period of more than 12 months;
the arrangement is an ongoing fee arrangement .
Paying for advice by instalments
962A(3)
Despite subsections (1) and (2) , an arrangement is not an ongoing fee arrangement if each of the following is satisfied: (a) the total of the fees payable under the terms of the arrangement is fixed at the time the arrangement is entered into; (b) the total of the fees payable under the terms of the arrangement is specified in the arrangement; (c) the fees payable under the terms of the arrangement are to be paid by instalments over a fixed period specified in the arrangement; (d) the fees payable under the terms of the arrangement can reasonably be characterised as relating to personal advice given to the person before the arrangement is entered into; (e) under the terms of the arrangement, there is no fee payment of which, or the amount of which, is dependent on the amount invested by the person, or the amount in relation to which personal advice is given; (f) the person cannot opt out of payment of any of the fees payable under the terms of the arrangement.
Insurance premiums
962A(4)
Despite subsections (1) and (2) , an arrangement is not an ongoing fee arrangement if the only fee payable under the arrangement is an insurance premium.
Other prescribed arrangements
962A(5)
Despite subsections (1) and (2) , an arrangement is not an ongoing fee arrangement if it is an arrangement of a prescribed kind that relates to a fee that is prescribed as a product fee.
A fee that is payable under an ongoing fee arrangement is referred to in this Division as an ongoing fee .
Where: (a) a financial services licensee enters into an ongoing fee arrangement; and (b) the rights of the licensee under the arrangement have not been assigned to another person;
the licensee is the fee recipient in relation to the arrangement.
962C(2)
Where: (a) a representative of a financial services licensee enters into an ongoing fee arrangement; and (b) the rights of the representative under the arrangement have not been assigned to another person;
the representative is the fee recipient in relation to the arrangement.
962C(3)
Where the rights of a financial services licensee, or a representative of a financial services licensee, under an ongoing fee arrangement have been assigned to another person, the person who currently holds those rights is the fee recipient in relation to the arrangement.
(Repealed by No 19 of 2021, s 3, Sch 1 [ 4] (effective 1 July 2021).) Subdivision B - Client consent required for ongoing fee arrangements
(Repealed by No 19 of 2021, s 3, Sch 1 [ 4] (effective 1 July 2021).) SECTION 962E 962E CLIENT MAY TERMINATE ARRANGEMENT AT ANY TIME
(Repealed by No 67 of 2024, s 3, Sch 1[10] (effective 10 July 2024).) SECTION 962F ONGOING FEE ARRANGEMENT TERMINATES WITHOUT CONSENT 962F(1)
It is a condition of an ongoing fee arrangement that the arrangement terminates if: (a) the client has not given a written consent in relation to the arrangement that complies with the requirements in section 962G ; or (b) all of the following apply:
(i) the client has given a written consent in relation to the arrangement that complies with the requirements in section 962G ;
(ii) that consent has ceased to have effect under section 962H ;
(iii) the client has not given a new consent that meets the requirements in section 962G in relation to the arrangement in the period specified in paragraph 962H(1)(b) .
962F(2)
The client is not taken to have waived the client ' s rights under the condition in subsection (1) (subject to subsection (3) ), or to have entered into a new ongoing fee arrangement, if the client makes a payment of an ongoing fee after the arrangement terminates under subsection (1) .
962F(3)
However, if the client makes a payment of an ongoing fee after the arrangement terminates under subsection (1) , the fee recipient is not obliged to refund the payment.
Note: A Court may order that the fee recipient refund the amount (see section 1317GA ).
(Repealed by No 67 of 2024, s 3, Sch 1[10] (effective 10 July 2024).) SECTION 962G REQUIREMENTS FOR CONSENT 962G(1)
A written consent given in relation to an ongoing fee arrangement complies with the requirements in this section if: (a) before obtaining the consent, the fee recipient disclosed to the client, in writing, the matters set out in subsection (2) ; and (b) the consent is for:
(i) the ongoing fee arrangement to be entered into, or renewed (as the case requires); and
(c) the consent is signed by the client; and (d) the consent is dated; and (e) the fee recipient has the consent or a copy of the consent.
(ii) the ongoing fees disclosed as required under paragraph (2)(e) to be charged to the client; and
962G(2)
The matters that must be disclosed are as follows: (a) the name and contact details of the person who is the fee recipient under the ongoing fee arrangement; (b) an explanation of why the fee recipient is seeking the consent; (c) the maximum period until the consent will cease to have effect under section 962H ; (d) information about the services that the client will be entitled to receive under the arrangement during that period; (e) for each ongoing fee that the client will be required to pay under the arrangement during that period:
(i) the amount of the fee; or
(f) the frequency of the ongoing fees during that period; (g) a statement that the ongoing fee arrangement can be terminated by the client at any time; (h) a statement that the arrangement will terminate, and no further advice will be provided or fee charged under it, if the consent is not given; (i) the date on which the arrangement will terminate if the consent is not given; (j) information about any other matters prescribed by the regulations.
(ii) if the amount of the fee cannot be determined at the time of disclosure, a reasonable estimate of the amount of the ongoing fee and an explanation of the method used to work out the estimate;
A consent given in relation to an ongoing fee arrangement for the purposes of this Subdivision ceases to have effect: (a) unless paragraph (b) applies - at the end of the period of 150 days after the day determined under subsection (2) ; or (b) if a new consent that complies with the requirements in section 962G is given in relation to the arrangement in the period that starts 60 days before the day determined under subsection (2) and ends 150 days after that day - at the time that new consent is given.
Reference date for determining renewal period and cessation of consent
962H(2)
The day determined under this subsection for a consent (the current consent ) given in relation to an ongoing fee arrangement is the earlier of: (a) if the current consent specifies a day - that day; and (c) the anniversary of:
(i) if the current consent is the first consent given in relation to the arrangement - the day on which the ongoing fee arrangement was entered into; or
(ii) if the current consent is not the first consent given in relation to the arrangement - the day determined under this subsection for the previous consent.
It is a condition of the ongoing fee arrangement that the client may terminate the arrangement at any time.
962J(2)
A client may terminate the ongoing fee arrangement by giving notice to the fee recipient in relation to the ongoing fee arrangement, in writing, that the client wishes to terminate the arrangement.
962J(3)
If the client gives a notice under subsection (2) to terminate the ongoing fee arrangement, the arrangement terminates on the day on which the notice is given.
962J(4)
Any condition of the ongoing fee arrangement, or any other arrangement, that requires the client to pay an amount on terminating the ongoing fee arrangement is void to the extent that the amount exceeds the sum of: (a) any liability that the client has accrued but not satisfied under the ongoing fee arrangement before the termination; and (b) the costs of the current fee recipient incurred solely and directly because of the termination.
(Repealed by No 19 of 2021, s 3, Sch 1 [ 19] (effective 1 July 2021).) SECTION 962L 962L MEANING OF RENEWAL PERIOD
(Repealed by No 67 of 2024, s 3, Sch 1[10] (effective 10 July 2024).) SECTION 962M 962M IF CLIENT NOTIFIES FEE RECIPIENT THAT CLIENT DOES NOT WISH TO RENEW
(Repealed by No 67 of 2024, s 3, Sch 1[10] (effective 10 July 2024).) SECTION 962N 962N IF CLIENT DOES NOT NOTIFY FEE RECIPIENT THAT CLIENT WISHES TO RENEW
(Repealed by No 67 of 2024, s 3, Sch 1[10] (effective 10 July 2024).) SECTION 962P 962P CIVIL PENALTY PROVISION - CHARGING ONGOING FEES AFTER ARRANGEMENT TERMINATED
(Repealed by No 67 of 2024, s 3, Sch 1[10] (effective 10 July 2024).) SECTION 962Q 962Q EFFECT OF TERMINATION
(Repealed by No 67 of 2024, s 3, Sch 1[10] (effective 10 July 2024).) Subdivision C - Account holder consent required for deducting ongoing fees from accounts
This section applies if: (a) an ongoing fee is, or will be, payable to a fee recipient under an ongoing fee arrangement; and (b) a person (the account holder ) holds an account with the fee recipient; and (c) the account is not:
(i) an account linked to a credit card; or
(d) the fee recipient proposes to deduct the amount of the ongoing fee from the account holder ' s account.
(ii) a basic deposit product; and
962R(2)
Subject to subsection (3) , the fee recipient must not deduct the amount of the ongoing fee from the account unless all of the following are satisfied: (a) the account holder has given the fee recipient written consent for the fee recipient to deduct amounts from the account in respect of ongoing fees under the ongoing fee arrangement; (b) the consent complies with the requirements in section 962T ; (c) at the time of making the deduction:
(i) the consent has not been withdrawn under paragraph 962U(1)(a) ; and
(ii) if the consent has been varied under paragraph 962U(1)(b) - the consent as varied still allows for the deduction to be made; and
(iii) the consent has not ceased to have effect under section 962V .
962R(3)
If the account holder holds the account jointly with one or more other persons, the fee recipient must not deduct the amount of the ongoing fee from the account unless all of the paragraphs in subsection (2) are satisfied in relation to the account holder as well as each of those other persons as account holders.
962R(4)
A person contravenes this subsection if the person contravenes subsection (2) or (3) .
Note: This subsection is a civil penalty provision (see section 1317E ).
This section applies if: (a) an ongoing fee is, or will be, payable to a fee recipient under an ongoing fee arrangement; and (b) a person (the account holder ) holds an account with another person (the account provider ) who is not the fee recipient; and (c) the account is not:
(i) an account linked to a credit card; or
(d) the fee recipient proposes to arrange with the account provider for the amount of the ongoing fee to be deducted from the account holder ' s account.
(ii) a basic deposit product; and
962S(2)
To avoid doubt, the fee recipient proposes to arrange with the account provider for the amount of the ongoing fee to be deducted from the account holder ' s account: (a) if the fee recipient is a financial services licensee - by doing so directly or through another entity such as a representative of the financial services licensee; or (b) if the fee recipient is a representative of a financial services licensee - by doing so directly or through another entity such as the financial services licensee.
Fee recipient must not arrange deductions without consent
962S(3)
Subject to subsection (4) , the fee recipient must not arrange for the account provider to deduct the amount from the account unless all of the following are satisfied: (a) the account holder has given the fee recipient written consent for the fee recipient to arrange for amounts to be deducted from the account in respect of ongoing fees under the ongoing fee arrangement; (b) the consent complies with the requirements in section 962T ; (c) the fee recipient has given a copy of the account holder ' s consent to the account provider; (d) at the time of giving the copy of the consent to the account provider:
(i) the consent has not been withdrawn under paragraph 962U(1)(a) ; and
(ii) if the consent has been varied under paragraph 962U(1)(b) - the consent as varied still allows for the deduction to be made; and
(iii) the consent has not ceased to have effect under section 962V .
962S(4)
If the account holder holds the account jointly with one or more other persons, the fee recipient must not arrange for deductions from the account unless all of the paragraphs in subsection (3) are satisfied in relation to the account holder as well as each of those other persons as account holders.
962S(5)
A person contravenes this subsection if the person contravenes subsection (3) or (4) .
Note: This subsection is a civil penalty provision (see section 1317E ).
Fee recipient must not accept deductions made without consent
962S(6)
Subject to subsection (7) , if the fee recipient has arranged with the account provider, with the account holder ' s consent, for an amount to be deducted from the account, the fee recipient must not accept payment of the amount unless at the time the payment is made to the fee recipient all of the following are satisfied: (a) the consent has not been withdrawn under paragraph 962U(1)(a) ; (b) if the consent has been varied under paragraph 962U(1)(b) - the consent as varied still allows for the deduction to be made; (c) the consent has not ceased to have effect under section 962V .
962S(7)
If the account holder holds the account jointly with one or more other persons, the fee recipient must not accept the payment unless all of the paragraphs in subsection (6) are satisfied in relation to the account holder as well as each of those other persons as account holders.
962S(8)
A person contravenes this subsection if the person contravenes subsection (6) or (7) .
Note: This subsection is a civil penalty provision (see section 1317E ).
962S(9)
However, subsection (8) does not apply if an amount accepted in contravention of subsection (6) or (7) is repaid into the account holder ' s account within 10 business days of the day on which the payment was accepted.
The requirements for the consent are: (a) before obtaining the consent, the fee recipient disclosed to the account holder, in writing, the matters set out in subsection 962G(2) ; and (b) the consent is given by the account holder for the ongoing fees disclosed under paragraph (a) , to be deducted from the account; and (c) the consent specifies the name of the account holder and the account number; and (d) for each amount to be deducted, the consent specifies:
(i) the amount to be deducted; or
(e) the consent is signed by the account holder; and (f) the consent is dated; and (g) any other requirements prescribed by the regulations.
(ii) if the amount to be deducted cannot be determined at the time the consent is given, a reasonable estimate of that amount and an explanation of the method used to work out the estimate; and
Note: If the account is held jointly, these paragraphs must be satisfied in relation to each account holder: see subsections 962R(3) and 962S(4) .
If a person (the account holder ) who holds an account gives consent to a fee recipient under section 962R or 962S for the purposes of this Subdivision, the account holder may: (a) withdraw the consent at any time, by notice in writing to the fee recipient; and (b) vary the consent at any time, by notice in writing to the fee recipient.
962U(2)
If the fee recipient receives a notice from the account holder under subsection (1) , the fee recipient must within 10 business days of receipt: (a) give written confirmation to the account holder that the notice was received; and (b) if the fee recipient gave a copy of the account holder ' s consent to an account provider under paragraph 962S(3)(c) - give the account provider a copy of the notice.
962U(3)
(Repealed by No 67 of 2024, s 3, Sch 1[15] (effective 10 July 2024).)
A consent given in relation to an ongoing fee arrangement for the purposes of this Subdivision ceases to have effect: (a) unless paragraph (b) or (c) applies - at the end of the period of 150 days after the anniversary of the day on which the ongoing fee arrangement was entered into; or (b) if the ongoing fee arrangement is terminated - at the time the ongoing fee arrangement terminates; or (c) if a new consent is given in relation to the ongoing fee arrangement for the purposes of this Subdivision - at the time that new consent is given.
962V(2)
If: (a) a consent given in relation to an ongoing feearrangement for the purposes of this Subdivision ceases to have effect under subsection (1) ; and (b) a fee recipient gave a copy of the consent to an account provider under paragraph 962S(3)(c) ;
the fee recipient must give written notice of the cessation to the account provider within 10 business days of the cessation.
962V(3)
(Repealed by No 67 of 2024, s 3, Sch 1[17] (effective 10 July 2024).)
Any condition of the ongoing fee arrangement, or any other arrangement, that requires the client to do either or both of the following is void: (a) to give consent under this Subdivision in relation to the deduction of ongoing fees relating to the ongoing fee arrangement; (b) not to vary or withdraw such consent.
It is a condition of the ongoing fee arrangement that the arrangement terminates if any of the following provisions have not been complied with in relation to the arrangement, whether by the current or a previous fee recipient: (a) section 962R (fee recipient must not deduct ongoing fees without consent); (b) section 962S (fee recipient must not arrange for deduction of ongoing fees without consent or accept such deductions).
962WA(2)
The client is not taken to have waived the client ' s rights under the condition in subsection (1) (subject to subsection (3) ), or to have entered into a new ongoing fee arrangement, if the client gives consent that covers the deduction of ongoing fees from the account, after the arrangement terminates under subsection (1) .
962WA(3)
However, if the client gives consent for deduction of ongoing fees from the account after the arrangement terminates under subsection (1) , the fee recipient is not obliged to refund an amount deducted, or received as a result of a deduction made, in accordance with that consent.
Note: A Court may order that the fee recipient refund amounts deducted without consent(see section 1317GB ).
A fee recipient in relation to an ongoing fee arrangement must keep records sufficient to enable the fee recipient ' s compliance with this Division in relation to the ongoing fee arrangement to be readily ascertained.
Note 1: Failure to comply with this subsection is an offence: see subsection 1311(1) .
Note 2: For preservation of records, see section 1101C .
962X(2)
The regulations may specify records that the fee recipient must keep as part of the obligation in subsection (1) .
For the purposes of this Division, the Minister may approve one or more forms for giving consent in relation to one or more of the following: (a) entering into an ongoing fee arrangement; (b) renewing an ongoing fee arrangement; (c) deducting an amount in respect of ongoing fees from an account; (d) arranging to deduct an amount in respect of ongoing fees from an account.
Note: Despite consent being given in an approved form, an account provider (other than the fee recipient) may request additional information from the fee recipient before deducting ongoing fees from an account.
962Y(2)
If the Minister has approved a form under subsection (1) , a consent given for the purposes of this Division must be in the approved form.
If, under this Division, a person is required to give more than one notice or form to the same person, the information may be combined and given in a single notice or form.
962YA(2)
If a single notice or form is given under subsection (1) , the single notice or form must satisfy all of the requirements for giving each notice or form and clearly state the purposes for which it is being given.
If an ongoing fee arrangement terminates for any reason, the fee recipient must not charge a fee that purports to be an ongoing fee under the arrangement.
Note: This section is a civil penalty provision (see section 1317E ).
To avoid doubt, if, under an ongoing fee arrangement, the continued provision of a service to the client by the fee recipient in relation to the arrangement is dependent on the continued payment of an ongoing fee, on termination of the arrangement, the obligation to continue to provide the service also terminates.
If a financial services licensee is acting as an authorised representative of another financial services licensee in relation to financial product advice, this Division applies to the first licensee in relation to the advice in that licensee ' s capacity as an authorised representative (rather than in the capacity of licensee).
Conflicted remuneration means any benefit, whether monetary or non-monetary, given to a financial services licensee, or a representative of a financial services licensee, who provides financial product advice to persons as retail clients that: (a) because of the nature of the benefit or the circumstances in which it is given:
(i) could reasonably be expected to influence the choice of financial product recommended by the licensee or representative to retail clients; or
(b) is not given to the licensee or representative by a person who is a retail client in relation to a financial product or financial service provided by the licensee or representative to the client.
(ii) could reasonably be expected to influence the financial product advice given to retail clients by the licensee or representative; and
963A(2)
For the purposes of this Subdivision, a reference to giving a benefit includes a reference to causing or authorising the benefit to be given.
The regulations may prescribe circumstances, in addition to those set out in section 963A , in which a benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to a life risk insurance product, or life risk insurance products, is conflicted remuneration .
A monetary benefit given to a financial services licensee, or a representative of a financial services licensee, who provides financial product advice to persons as retail clients is not conflicted remuneration in the circumstances set out in any of the following paragraphs: (a) the benefit is given to the licensee or representative solely in relation to a general insurance product; (b) each of the following is satisfied in relation to the benefit:
(i) the benefit is given to the licensee or representative in relation to a life risk insurance product or life risk insurance products;
(ii) none of the products is a life risk insurance product covered by subsection (2) ;
(ba) the benefit is given to the licensee or representative in relation to consumer credit insurance; (bb) each of the following is satisfied in relation to the benefit:
(iii) either:
(A) the benefit ratio for the benefit is the same for the year in which the product or products are issued as it is for each year in which the product or products are continued; or
(B) the benefit ratio requirements and clawback requirements are satisfied in relation to the benefit;
(i) the benefit is given to the licensee or representative by a trustee or trustees of a regulated superannuation fund;
(ii) the benefit is given in relation to financial product advice that is personal advice, which is provided by the licensee or representative to a retail client, about the client ' s interest in the fund;
(iii) the benefit is charged against the client ' s interest in the fund, or against the interests of the client and other members of the fund;
(c) - (d) (Repealed) (e) the benefit is a prescribed benefit or is given in prescribed circumstances.
[ CCH Note: S 963B(1) will be amended by No 67 of 2024, s 3, Sch 1[93], by inserting " subject to section 963BB (which is about informed consent for commissions), " before " the benefit " in para (a), " subject to section 963BB (which is about informed consent for commissions), " before " each of the following " in para (b) and " subject to section 963BB (which is about informed consent for commissions), " before " the benefit " in para (ba) (effective 9 July 2025).]
963B(2)
A life risk insurance product is covered by this subsection if: (a) the product is issued to an RSE licensee of a registrable superannuation entity, or a custodian in relation to a registrable superannuation entity, for the benefit of a class of members of the entity; or (b) both of the following apply:
(i) the product is issued to an RSE licensee of a registrable superannuation entity, or a custodian in relation to a registrable superannuation entity, for the benefit of a person who is a member of the entity;
(ii) the person has not given written notice to an employer of the person that the fund is the person ' s chosen fund, but the employer of the person makes contributions to the fund for the benefit of the person.
Note: Superannuation guarantee surcharge may be imposed on an employer if the employer does not make contributions to a superannuation fund for the benefit of its employees. If an employee does not notify the employer of the employee ' s chosen fund, the employer is still able to satisfy its obligations by making contributions to certain funds: see the Superannuation Guarantee (Administration) Act 1992 .
963B(3)
(Repealed by No 76 of 2023, s 3, Sch 2 [ 481] (effective 20 October 2023).)
963B(3A)
The benefit ratio for a benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to a life risk insurance product, or life risk insurance products, for a year is the ratio between: (a) the benefit; and (b) the policy cost payable for the product or products, or that part of the policy cost payable for the product or products to which the benefit relates, for the year.
963B(3B)
The policy cost for a life risk insurance product, or products, for a year is the sum of: (a) the premiums payable for the product, or products, for that year; and (b) any fees payable for that year to the issuer of the product or products for that issue; and (c) any additional fees payable because the premium for the product, or products, is paid periodically rather than in a lump sum; and (d) any other amount prescribed by the regulations for the purposes of this paragraph.
963B(3C)
However, the policy cost for a life risk insurance product, or products, does not include any amount prescribed by the regulations for the purposes of this subsection.
963B(4)
The regulations may prescribe circumstances in which, despite a provision of this section, all or part of a benefit is to be treated as conflicted remuneration.
963B(5)
This section applies despite section 963A and any regulations made for the purposes of section 963AA .
Benefit ratio requirements
963BA(1)
The benefit ratio requirements are satisfied in relation to a benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to a life risk insurance product, or life risk insurance products, if the benefit ratio for the benefit for: (a) the year in which the product or products are issued; and (b) each year during which the product or products are continued;
is equal to or less than that determined by ASIC under subsection (2) as an acceptable benefit ratio for that year.
963BA(2)
ASIC may, by legislative instrument, determine an acceptable benefit ratio, or a way of working out an acceptable benefit ratio, for a benefit for a year.
Clawback requirements
963BA(3)
The clawback requirements are satisfied in relation to a benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to a life risk insurance product, or life risk insurance products, if: (a) the arrangement under which the benefit is payable includes an obligation to repay all or part of the benefit if:
(i) the product, or one of the products, is cancelled or is not continued, other than because a claim is made under the insurance policy or because other prescribed circumstances exist; or
(ii) the policy cost for the product, or one of the products, during a year or across 2 years is reduced, other than in prescribed circumstances;
within 2 years after the product is first issued to a retail client; and
(b) the amount to be repaid under the obligation is equal to or greater than the amount determined by ASIC under subsection (4) as an acceptable repayment.963BA(4)
ASIC may, by legislative instrument, determine the amount, or a way of working out the amount, that is an acceptable repayment for the purposes of paragraph (3)(b) .
[
CCH Note:
S 963BB will be inserted by No 67 of 2024, s 3, Sch 1[96] (effective 9 July 2025). S 963BB will read:
then the consent has effect as varied for the purposes of this section.]
SECTION 963BB INFORMED CONSENT FOR CERTAIN INSURANCE COMMISSIONS
963BB(1)
If a financial services licensee or a representative of a financial services licensee provides, or is likely to provide, personal advice to a retail client in relation to a financial product (the
relevant product
) that is a general insurance product, a life risk insurance product, or consumer credit insurance, paragraphs
963B(1)(a)
,
(b)
and
(ba)
do not apply to a monetary benefit given in connection with the issue or sale of the relevant product to the client unless:
(b)
before the issue or sale of the relevant product, the client consented to the monetary benefit being given; and
(c)
before the consent was given, the following information was disclosed to the client:
(i)
the name of the insurer under the relevant product (if known);
(ii)
for a general insurance product
-
the rate of the monetary benefit, expressed as a percentage range of the policy cost for the product;
(iii)
for a life risk insurance product or consumer credit insurance
-
the rate of the monetary benefit, expressed as a percentage of the policy cost payable for the product;
(iv)
if more than one monetary benefit will be given in connection with the issue or sale of the relevant product
-
the frequency of giving those monetary benefits and the period over which monetary benefits covered by the consent could be given, including any renewals; and
(v)
the nature of any services that the financial services licensee or representative will provide the client (if any) in relation to the relevant product; and
(vi)
a statement that it is a requirement of the law that client consent must be obtained before the payment of an insurance commission;
(vii)
the fact that the consent is irrevocable; and
(d)
the licensee or representative has:
(i)
the client
'
s written consent or a copy of the client
'
s written consent; or
(ii)
if the consent was not obtained in writing
-
a written record of the client
'
s consent; and
(e)
the licensee or representative gives a copy of the written consent, or a copy of the record of the consent, to the client as soon as reasonably practicable after the consent is obtained.
963BB(2)
To avoid doubt:
(a)
if information meeting the requirements of paragraph
(1)(c)
has already been disclosed to the client, that paragraph does not require the information to be disclosed again; and
(b)
a consent to a particular rate or frequency of a monetary benefit given for the purposes of subsection
(1)
is taken to also be a consent to a rate or frequency that is less than that disclosed to the client before that consent was given, as mentioned in subparagraph
(1)(c)(ii)
,
(iii)
or
(iv)
.
Renewals of general insurance products
963BB(3)
For the purposes of subsection
(1)
, a consent (the
original consent
) to a monetary benefit given in connection with the issue or sale to a retail client of a general insurance product is taken to also be a consent to a monetary benefit (a
renewal benefit
) being given in connection with a renewal of that product if:
(a)
the information disclosed to the client before the original consent was given included the fact that the original consent would cover renewals of the general insurance product; and
(b)
the rate of the renewal benefit is equal to or less than that disclosed to the client before the original consent was given, as mentioned in subparagraph
(1)(c)(ii)
.
Transfer of financial product advice business
963BB(4)
For the purposes of subsection
(1)
, a consent to a monetary benefit being given to a financial services licensee (the
original recipient
) or a representative of a financial services licensee (also the
original recipient
) is taken to also be a consent to the monetary benefit being given to another person (the
new recipient
) if:
(a)
the original recipient
'
s financial product advice business is wholly or partly sold or transferred to:
(i)
another financial services licensee; or
(ii)
a representative of another financial services licensee; or
(iii)
another representative of the financial services licensee that is the original recipient; and
(b)
the new recipient is:
(i)
if subparagraph
(a)(i)
applies
-
that other licensee; or
(ii)
if subparagraph
(a)(ii)
applies
-
that representative of another licensee; or
(iii)
if subparagraph
(a)(iii)
applies
-
that other representative of the licensee that is the original recipient.
Variation of consent
963BB(5)
If a client has given a consent for the purposes of subsection
(1)
, the financial services licensee or representative may:
(a)
disclose to the client proposed variations to one or more of the matters mentioned in subparagraphs
(1)(c)(i)
to
(v)
; and
(b)
request the client to consent to those variations.
963BB(6)
If:
(a)
the client consents to those variations; and
(b)
paragraphs
(1)(d)
and
(e)
are satisfied in relation to that variation;
A non-monetary benefit given to a financial services licensee, or a representative of a financial services licensee, who provides financial product advice to persons as retail clients is not conflicted remuneration in the circumstances set out in any of the following paragraphs: (a) the benefit is given to the licensee or representative solely in relation to a general insurance product; (b) each of the following is satisfied:
(i) the benefit is of less than an amount prescribed;
(c) the benefit satisfies each of the following:
(ii) identical or similar benefits are not given on a frequent or regular basis;
(i) the benefit has a genuine education or training purpose;
(ii) the benefit is relevant to the carrying on of a financial services business;
(d) the benefit satisfies each of the following:
(iii) the benefit complies with regulations made for the purposes of this subparagraph;
(i) the benefit is the provision of information technology software or support;
(ii) the benefit is related to the provision of financial product advice to persons as retail clients in relation to the financial products issued or sold by the benefit provider;
(iii) the benefit complies with regulations made for the purposes of this subparagraph;
(e) (Repealed) (f) the benefit is a prescribed benefit or is given in prescribed circumstances.
963C(2)
The regulations may prescribe circumstances in which, despite subsection (1) , all or part of a benefit is to be treated as conflicted remuneration.
963C(3)
This section applies despite section 963A and any regulations made for the purposes of section 963AA .
(Repealed by No 67 of 2024, s 3, Sch 1[91] (effective 10 July 2024).) Subdivision C - Ban on conflicted remuneration
A financial services licensee must not accept conflicted remuneration.
Note: This subsection is a civil penalty provision (see section 1317E ).
963E(2)
A financial services licensee contravenes this section if:
(a) a representative, other than an authorised representative, of the licensee accepts conflicted remuneration; and
(b) the licensee is the, or a, responsible licensee in relation to the contravention.
Note: This subsection is a civil penalty provision (see section 1317E ).
A financial services licensee must take reasonable steps to ensure that representatives of the licensee do not accept conflicted remuneration.
Note: This section is a civil penalty provision (see section 1317E ).
An authorised representative of a financial services licensee must not accept conflicted remuneration.
Note: This subsection is a civil penalty provision (see section 1317E ).
963G(2)
Subsection (1) does not apply if:
(a) the licensee had provided the authorised representative with information about the nature of the benefit to be accepted by the authorised representative; and
(b) at the time the authorised representative accepted the benefit, the representative was not aware that the benefit was conflicted remuneration because the representative was acting in reliance on that information; and
(c) the representative ' s reliance on that information was reasonable.
A representative, other than an authorised representative, of a financial services licensee must not accept conflicted remuneration unless it is in circumstances for which an employer of the licensee or representative is liable under section 963J .
Note: A representative who contravenes this section may be subject to a banning order (see section 920A ).
An employer of a financial services licensee, or a representative of a financial services licensee, must not give the licensee or representative conflicted remuneration for work carried out, or to be carried out, by the licensee or representative as an employee of the employer.
Note: This section is a civil penalty provision (see section 1317E ).
An issuer or seller of a financial product must not give a financial services licensee, or a representative of a financial services licensee, conflicted remuneration.
Note: This section is a civil penalty provision (see section 1317E ).
[ CCH Note 1: S 963K will be amended by No 67 of 2024, s 3, Sch 1[97] and [ 98], by inserting " (1) " before " An " , substituting " subsection " for " section " in the note (effective 9 July 2025).]
[ CCH Note 2: S 963K(2) will be inserted by No 67 of 2024, s 3, Sch 1[99] (effective 9 July 2025). S 963K(2) will read:
Exception for insurance products
963K(2)
In determining whether an issuer or seller of a financial product contravenes subsection (1) , disregard section 963BB (which is about informed consent for certain insurance commissions).]
It is presumed for the purposes of this Division that a benefit of one of the following kinds is conflicted remuneration, unless the contrary is proved:
(a) a benefit access to which, or the value of which, is wholly or partly dependent on the total value of financial products of a particular class, or particular classes:
(i) recommended by a financial services licensee, or a representative of a financial services licensee, to retail clients, or a class of retail clients; or
(ii) acquired by retail clients, or a class of retail clients, to whom a financial services licensee, or a representative of a financial services licensee, provides financial product advice;
(b) a benefit access to which, or the value of which, is wholly or partly dependent on the number of financial products of a particular class, or particular classes:
(i) recommended by a financial services licensee, or a representative of a financial services licensee, to retail clients, or a class of retail clients; or
(ii) acquired by retail clients, or a class of retail clients, to whom a financial services licensee, or a representative of a financial services licensee, provides financial product advice.
This section covers a person in relation to conflicted remuneration if: (a) the person is legally obliged (disregarding Subdivision C ) to give, on or after 1 January 2021, the conflicted remuneration to another person; and (b) the person is prohibited under that Subdivision from giving the conflicted remuneration to the other person, or the other person is prohibited under that Subdivision from accepting the conflicted remuneration.
963M(2)
This section also covers a person in relation to conflicted remuneration if: (a) regulations made for the purposes of this subsection specify conditions in relation to the conflicted remuneration; and (b) those conditions are met.
963M(3)
Despite subsections (1) and (2) , this section does not cover a person in relation to conflicted remuneration if: (a) regulations made for the purposes of this subsection specify conditions in relation to the conflicted remuneration; and (b) those conditions are met.
The regulations may provide for a scheme under which a person covered by section 963M in relation to conflicted remuneration must, in the circumstances set out in subsection (2) , pay amounts based on that conflicted remuneration, or provide monetary benefits based on that conflicted remuneration, to persons (the product holders ) described in subsection (3) .
963N(2)
The circumstances are as follows: (a) a financial services licensee, or a representative of a financial services licensee:
(i) provided financial product advice to one or more persons as retail clients, in connection with the conflicted remuneration; or
(b) the financial product advice relates to a particular financial product or class of financial products.
(ii) is or was legally obliged to provide financial product advice to one or more persons as retail clients, in connection with the conflicted remuneration; and
963N(3)
A person is a product holder mentioned in subsection (1) if: (a) the person holds the particular financial product mentioned in paragraph (2)(b) , or a financial product in the class mentioned in that paragraph; or (b) another person holds the particular financial product mentioned in that paragraph, or a financial product in the class mentioned in that paragraph, on behalf of the person.
963N(4)
Without limiting the scope of regulations made for the purposes of subsection (1) , those regulations may make different provision in respect of any of the following: (a) different classes of person covered by section 963M ; (b) different classes of financial product; (c) different classes of product holder; (d) different classes of conflicted remuneration; (e) different classes of circumstances in which conflicted remuneration arises.
963N(5)
Without limiting the scope of regulations made for the purposes of subsection (1) , those regulations may provide that a person covered by section 963M need not pay amounts mentioned in subsection (1) , nor provide monetary benefits mentioned in that subsection, to one or more specified classes of product holder.
963N(6)
Without limiting the scope of regulations made for the purposes of subsection (1) , those regulations may provide for any of the following matters: (a) the identification of product holders; (b) the timeframe for making payments or providing monetary benefits; (c) a method or methods of determining amounts of payments, or amounts of monetary benefits; (d) a method or methods of making payments or providing monetary benefits.
[ CCH Note: The next section is s 963P.]
If regulations made for the purposes of subsection 963N(1) require a person covered by section 963M to pay an amount, or provide a monetary benefit, the person must pay the amount or provide the monetary benefit in accordance with those regulations.
Note: This section is a civil penalty provision (see section 1317E ).
This Subdivision applies if:
(a) a financial services licensee or an RSE licensee (the platform operator ) is, or offers to be, the provider of a custodial arrangement; and
(b) a monetary or non-monetary benefit is given, or to be given, by a financial services licensee, RSE licensee or the operator of a notified foreign passport fund (the funds manager ) to the platform operator; and
(c) a financial product to which the custodial arrangement relates is a financial product in which the funds manager deals (the funds manager ' s financial product ).
964(2)
In this Subdivision:
custodial arrangement
has the same meaning as it has in subsection
1012IA(1)
, subject to subsection (3).
provider
has the same meaning as in subsection
1012IA(1)
.
964(3)
The definition of custodial arrangement in subsection 1012IA(1) is to be read as if the reference in that definition to an instruction included a reference to:
(a) a direction of the kind mentioned in paragraph 58(2)(d) or (da) of the Superannuation Industry (Supervision) Act 1993 that will involve the acquisition of a particular financial product, or a financial product of a particular kind; and
(b) a direction of the kind mentioned in subsection 52B(4) of the Superannuation Industry (Supervision) Act 1993 that will involve the acquisition of a particular financial product, or a financial product of a particular kind.
964(4)
A reference to a kind of financial product in subsection (3) has the same meaning in that subsection as it has in the definition of custodial arrangement in subsection 1012IA(1) .
The platform operator must not accept the benefit if it is a volume-based shelf-space fee.
Note: This subsection is a civil penalty provision (see section 1317E ).
964A(2)
Subject to subsection (3), the benefit is presumed to be a volume-based shelf-space fee if the benefit, or the value of benefit, is wholly or partly dependent on the total number or value of the funds manager ' s financial products of a particular class, or particular classes, to which the custodial arrangement relates.
964A(3)
If it is proved that all or part of the benefit is of a kind specified in one of the following paragraphs then, to the extent that the benefit is of that kind, it is not presumed to be a volume-based shelf space fee:
(a) a reasonable fee for a service provided to the funds manager by the platform operator or another person;
(b) a discount on an amount payable, or a rebate of an amount paid, to the funds manager by the platform operator, the value of which does not exceed an amount that may reasonably be attributed to efficiencies gained by the funds manager because of the number or value of financial products in relation to which the funds manager provides services to the platform operator, or through the platform operator to another person.
This Subdivision applies where a financial services licensee, or a representative of a financial services licensee, provides financial product advice (the advice ) to a person (the client ) as a retail client.
If a financial services licensee is acting as an authorised representative of another financial services licensee in relation to the advice, this Subdivision applies to the first licensee in relation to the advice in that licensee ' s capacity as an authorised representative (rather than in the capacity of licensee).
The financial services licensee must not charge an asset-based fee on a borrowed amount used or to be used to acquire financial products by or on behalf of the client.
Note: This subsection is a civil penalty provision (see section 1317E ).
964D(2)
A financial services licensee contravenes this section if:
(a) a representative, other than an authorised representative, of the licensee charges an asset-based fee on a borrowed amount used or to be used to acquire financial products by or on behalf of the client; and
(b) the licensee is the, or a, responsible licensee in relation to the contravention.
Note: This subsection is a civil penalty provision (see section 1317E ).
Exceptions
964D(3)
Subsections (1) and (2) do not apply in relation to a borrowed amount if it is not reasonably apparent that the amount has been borrowed.
964D(4)
The regulations may provide that subsections (1) and (2) do not apply in prescribed circumstances.
Duty to make reasonable inquiries
964D(5)
Nothing in this section affects the duty of the financial services licensee, or the representative of the financial services licensee, under section 961B to make reasonable inquiries to obtain complete and accurate information.
The authorised representative of the financial services licensee must not charge an asset-based fee on a borrowed amount used or to be used to acquire financial products by or on behalf of the client.
Note: This subsection is a civil penalty provision (see section 1317E ).
Exceptions
964E(2)
Subsection (1) does not apply in relation to a borrowed amount if it is not reasonably apparent that the amount has been borrowed.
964E(3)
The regulations may provide that subsection (1) does not apply in prescribed circumstances.
Duty to make reasonable inquiries
964E(4)
Nothing in this section affects the duty of the authorised representative under section 961B to make reasonable inquiries to obtain complete and accurate information.
A fee for providing financial product advice to a person as a retail client is an asset-based fee to the extent that it is dependent upon the amount of funds used or to be used to acquire financial products by or on behalf of the person.
In this Subdivision:
borrowed
means borrowed in any form, whether secured or unsecured, including through:
(a) a credit facility within the meaning of the regulations; and
(b) a margin lending facility.
964G(2)
To avoid doubt, an amount is no longer borrowed to the extent that it has been repaid.
For the purposes of this Division, something is reasonably apparent if it would be apparent to a person with a reasonable level of expertise in the subject matter of the advice that has been sought by the client, were that person exercising care and objectively assessing the information given to the financial services licensee, or the representative of the financial services licensee, by the client.
Subject to subsection (2), a person must not, either alone or together with one or more other persons, enter into, begin to carry out or carry out a scheme if:
(a) it would be concluded that the person, or any of the persons, who entered into, began to carry out or carried out the scheme or any part of the scheme did so for the sole purpose or for a purpose (that is not incidental) of avoiding the application of any provision of this Part in relation to any person or persons (whether or not a person or persons who entered into, began to carry out or carried out the scheme or any part of the scheme); and
(b) the scheme or the part of the scheme has achieved, or apart from this section, would achieve, that purpose.
Note: This section is a civil penalty provision (see section 1317E ).
965(2)
Subsection (1) does not apply to a scheme to the extent that the operation of the subsection would result in an acquisition of property (within the meaning of paragraph 51(xxxi) of the Constitution) from a person otherwise than on just terms (within the meaning of that paragraph of the Constitution).
(Repealed by No 76 of 2023, s 3, Sch 2[484] (effective 20 October 2023).) SECTION 967 967 BEST INTERESTS OBLIGATIONS AND REMUNERATION PROVISIONS TO APPLY DURING TRANSITION PERIOD
(Repealed by No 76 of 2023, s 3, Sch 2[484] (effective 20 October 2023).) SECTION 968 968 NOTICE TO CLIENTS IN TRANSITION PERIOD
(Repealed by No 76 of 2023, s 3, Sch 2[484] (effective 20 October 2023).)