What does conflicted remuneration mean?

What does conflicted remuneration mean?

A:

The abridged version of the definition provided in Australian law (Corporations Act s.963A) is that;

Conflicted remuneration means any benefit given to a representative of a financial services licensee (where) the benefit:

(a)  could reasonably be expected to influence the choice of financial product recommended to clients; or

(b) could reasonably be expected to influence the advice given to clients by the representative.

 

The conflict occurs when the remuneration incentive encourages behaviour that puts the interests of the financial services provider ahead of the interests of the client, e.g. in a situation where a customer wants to borrow money to purchase a new car but the banker has an incentive to sell credit cards with a revolving credit facility as opposed to cheaper forms of credit such as secured personal loans represents a potential conflict between the banker’s and the customer’s  financial of interests.

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