The Corporations Amendment Regulation 2012 (No.8) has exempted benefits given by a platform operator, under any arrangement entered into before 1 July 2013 (or an earlier opt-in day) from the ban on conflicted remuneration. All benefits given under any arrangement entered into on or after that will be subject to the ban.

Division 4 of Part 7.7A of the Corporations Act 2001 (the Act) provides for a ban on conflicted remuneration.

Conflicted remuneration is defined by section 963A of the Act as any benefit given to a financial services licensee (or a representative of a licensee) that, because of the nature of the benefit or the circumstances in which it is given, could reasonably be expected to influence the choice of financial product recommended, or the financial product advice given, to retail clients by the licensee or representative.

Licensees and representatives must not accept conflicted remuneration, and employers and product issuers must not give it.

Transitional provisions are set out in Subsection 1528(1) of the Act which provides that, subject to subsection 1528(2), the obligations in Division 4 of Part 7.7A do not apply to benefits given to a licensee or representative if:

• the benefit is given under an arrangement entered into before the application day; and
• the benefit is not given by a platform operator.

Regulation 7.7A.16 implements the same grandfathering arrangements for benefits given by a platform operator as are already in place for benefits given by persons other than platform operators under section 1528 of the Act.

Regulation 7.7A.16(2) provides that Division 4 of Part 7.7A does not apply to a benefit given by a platform operator under an arrangement entered into before “the application day”. This means that payments made by platform operators under arrangements entered into before 1 July 2013 (or an earlier opt-in day) may continue to be paid after that day, even if the payment is conflicted remuneration.

A platform operator is defined in section 1526 as a financial services licensee or ‘RSE licensee’ that offers to be the provider of a custodial arrangement. ‘Custodial arrangement’ is defined in the existing section 1012IA of the Corporations Act; broadly, it is an arrangement where the client may instruct the platform to acquire certain financial products, and the products are then either held on trust for the client, or the client retains some interest in the product. Under this definition, it is taken to include arrangements where the client may direct the platform to follow an investment strategy of the kind mentioned in the SIS Act.