The Corporations Act 2001 includes provisions that ban conflicted remuneration and certain other remuneration in relation to financial advice provided to retail clients.

Currently conflicted remuneration and other banned remuneration may be paid if the benefit is paid under a grandfathered arrangement entered into before the application day specified in the Act (generally 1 July 2013).

Treasury has released Exposure Draft Legislation which removes the grandfathering arrangements for conflicted remuneration and other banned remuneration from 1 January 2021. It also enables the regulations to provide for a scheme under which amounts that would otherwise have been paid as conflicted remuneration are rebated to affected consumers.

UPDATE July 2019: The Government has announced that it intends to introduce and pass the Treasury Laws Amendment (Ending Grandfathered Conflicted Remuneration) Bill before the end of 2019. 

UPDATE: Australian Securities and Investments Commission (Investigation into Grandfathered Conflicted Remuneration for Financial Advice) Direction 2019 directs ASIC to investigate the extent to which persons who are giving or accepting grandfathered conflicted remuneration in relation to financial advice are changing their arrangements to end the payment of grandfathered conflicted remuneration.

The Financial Services Royal Commission recommended that the grandfathering arrangements for conflicted remuneration in relation to financial advice provided to retail clients should be removed as soon as is reasonably practicable (see recommendation 2.4).