ASIC releases updated remuneration guidance

In a statement released on Thursday, ASIC said it had updated its 'Regulatory Guide 246: Conflicted and other banned remuneration' to reflect changes to the law since the royal commission and removal of the commissions carve-out on stamping fees for listed investment companies.

The updated guidance reflected that "the ban on conflicted remuneration for financial product advice applies to all benefits given on or after 1 January 2021".

"Product issuers are required to provide rebates to clients for all previously grandfathered benefits that they remain legally obliged to pay on or after 1 January 2021," ASIC said.

Rebate amounts paid to clients should be "just and equitable in the circumstances" and take into account matters such as the amount of conflicted remuneration that would have been payable on a product held by a client, the amount invested by each product holder and the structure of the fees that the product holder has paid for the products.

The guidance noted that product issuers had "some flexibility" and that "the rebate amount provided does not need to precisely match the amount of conflicted remuneration".

The updated guidance stated that the grandfathered remuneration ban would include benefits that were obliged to be given before 1 January, "e.g. where a product issuer is legally obliged to give an AFS licensee a benefit in December 2020, but does not give the benefit until on or after 1 January 2021", ASIC said.

The regulator said it would "continue to monitor the industry's arrangements" in relation to conflicted remuneration following the end of grandfathering, and would "consider taking action where we find misconduct".

The updated guidance also contained a clarification around life insurance commissions, stating that the law did not prescribe a time frame for repaying commissions under the two-year claw-back provisions introduced through the LIF reforms.

"This is consistent with the guidance previously published on the ASIC website," the regulator said.