Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014 (102 of 2014)

Schedule 1  

Corporations Regulations 2001

7   Regulation 7.7A.1

Repeal the regulation, substitute:

7.7A.2 Best interests duty - identifying objectives etc. disclosed

(1) This regulation:

(a) is made for paragraph 961B(5)(a) of the Act; and

(b) prescribes a step (the prescribed step ) in substitution for the step mentioned in paragraph 961B(2)(a) of the Act; and

(c) prescribes the circumstances in which the provider must prove that he or she has taken the prescribed step.

(2) For paragraph (1)(b), the prescribed step is that the provider has identified the objectives, financial situation and needs of the client that are disclosed to the provider by the client.

Note 1: Nothing in section 961B of the Act prevents the provider and a client from agreeing the subject matter of the advice sought by the client.

Note 2: The provider need not inquire into circumstances that would not reasonably be considered as relevant to the subject matter.

(3) For paragraph (1)(c), the provider must prove that he or she has taken the prescribed step if the advice is provided to the client in the period between:

(a) the commencement of the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014; and

(b) the end of 31 December 2015.

Client seeks scaled advice

(4) To avoid doubt, nothing in this regulation prevents the provider and a client from agreeing the subject matter of the advice sought by the client.

Example: A client approaches the provider intending to seek advice on a particular subject matter. As a result of discussion with the provider, the client decides to instead seek advice on a narrower subject matter. The provider and the client then agree the subject matter of the advice sought by the client. The obligations of Division 2 of Part 7.7A of the Act apply to the advice ultimately sought.

7.7A.3 Best interests duty - identifying reasonable objectives etc.

(1) This regulation:

(a) is made for paragraph 961B(5)(b) of the Act; and

(b) prescribes a circumstance in which the provider is not required to prove that he or she has taken the step mentioned in paragraph 961B(2)(g) of the Act.

(2) The provider is not required to prove that he or she has taken the step if the advice is provided to the client in the period between:

(a) the commencement of the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014; and

(b) the end of 31 December 2015.

7.7A.4 Best interests duty - basic banking products etc.

(1) This regulation:

(a) is made for paragraph 961B(5)(b) of the Act; and

(b) prescribes a circumstance in which the provider is not required to prove that he or she has taken the steps mentioned in paragraphs 961B(2)(d), (e) and (f) of the Act in relation to advice that relates to a basic banking product or general insurance product.

(2) The provider is not required to prove that he or she has taken the steps 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.

7.7A.5 Best interests duty - general insurance products

(1) This regulation:

(a) is made for paragraph 961B(5)(b) of the Act; and

(b) prescribes a circumstance in which the provider is not required to prove that he or she has taken the steps mentioned in paragraphs 961B(2)(d), (e) and (f) of the Act.

(2) The provider is not required to prove that he or she has taken the steps to the extent that the subject matter of the advice sought by the client is a general insurance product.

7.7A.6 Best interests duty - basic banking products

For paragraph 961F(e) of the Act, a facility for making non-cash payments (see section 763D of the Act) that is not related to a basic deposit product is a basic banking product .

7.7A.7 Renewal notice

(1) This regulation:

(a) is made for subsection 962K(3) of the Act; and

(b) provides a situation in which subsection 962K(1) of the Act does not apply.

(2) The current fee recipient is not required to give the client a renewal notice in relation to an ongoing fee arrangement if the arrangement is entered into in the period between:

(a) the commencement of the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014; and

(b) the end of 31 December 2015.

7.7A.8 Fee disclosure statement

(1) This regulation:

(a) is made for subsection 962S(2) of the Act; and

(b) provides a situation in which subsection 962S(1) of the Act does not apply.

(2) The current fee recipient is not required to give the client a fee disclosure statement in relation to an ongoing fee arrangement that was entered into before 1 July 2013 during the period between:

(a) the commencement of the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014; and

(b) the end of 31 December 2015.