The Australian Securities and Investments Commission (ASIC) has issued a class order providing limited relief to insurance brokers regarding their ability to pay money into a trust account under section 981B of the Corporations Act.

The order allows other money, paid in a single sum together with client monies, to be paid into a trust account established and maintained under section 981B of the Act by a licensee who is a broker.

Section 981B generally permits only client monies (which are connected with a financial service provided to, or a financial product held by, the client) to be paid into a section 981B account.

It does not allow non-client monies, such as remuneration payable to the broker, or monies not connected with a financial service or the client’s financial product, to be paid into these accounts.

The Class order modifies paragraph 981B(1)(b) to allow payment into an insurance broker’s section 981B account of mixed payments (i.e. a single payment of client monies and non-client monies). But brokers will be required to pay any non-client money out of the account within five business days.

ASIC says it has provided relief in a bid to reduce the commercial inconvenience to insurance brokers and their clients of requiring separate payments of client money and broker remuneration, while “essentially maintaining the protection over client money afforded by the trust account regime”.