In an email to AIOFP members, Peter Johnston said that after recent discussions with an “informed government source” there is still room for negotiations since the provisions must still be approved by cabinet and the Senate.
At the same time, Mr Johnston reiterated his concerns over the negotiations between the AFA, the FPA and the FSC and the proposal the industry bodies submitted to Assistant Treasurer Josh Frydenberg.
He told AIOFP members that the proposal put forward was not amended by the minister’s department.
“We have been informed from a reliable source that the Minister’s press release on June 25th outlining the 60 per cent upfront, 10 per cent ongoing and three year clawback provision is precisely what the three institutionally-aligned associations recommended to the Minister,” he wrote in the email.
“This revelation demonstrates that the submission was structured to suit the best interests of Institutions, not the advisers and severely questions the future role of the FPA and AFA to represent the best interests of the advice community with Government and Regulators.”
“The continual refusal by these three institutionally aligned associations to release the ministerial submission and its content to members only strengthens this view and suspicion about their intentions and behaviour.”
The AFA, FSC and FPA have not publicly released their proposal, despite pressure from members and the adviser community.
Mr Johnston also raised concerns that the LIF proposal has ignored the desires of FPA members, particularly with regard to the controversial clawback provisions.
“The FSC can be excused as they are the Institutions’ lobby group and must act in their members’ best interests,” he wrote.
“However, the FPA approach to this matter is confusing at best. By their own admission they sought feedback from over 1,000 advisers with a 70 per cent bias towards a 60 – 80 per cent upfront commission structure, 20 per cent ongoing and a two year claw back period but chose to materially change this structure with a submission to the Minister without including these critical findings from their adviser members.
“To then claim in the submission that they sought adviser members’ views is disappointing and can only give the minister an incorrect perspective of what the adviser community really wants.”
Mr Johnston told AIOFP members that he would be writing to the Minister to saying that the associations’ LIF proposals do not “necessarily represent the views of the majority of advisers”.
These comments come after the FPA and the AFA clarified their positions on the proposals although they are yet to release them to the public.
The Competition and Consumer Act generally requires businesses to act independently of their competitors when making decisions about pricing, which firms they do business with and the terms and conditions of doing business.
Competitors who act collectively in these areas are at risk of breaching the competition provisions of the Act.
It also states that a cartel exists when businesses agree to act together rather than competing with each other. This agreement is designed to drive up the profits of cartel members while maintaining the illusion of competition.
Interesting indeed.
Despite of the response that AFA/FPA were left with no choice, its blindingly obvious that our “negotiators “were just not up to hard headed table-thumping negotiations. Simple as that.
We agreed ( apparently ) to a 3 year clawback without the detail. I thought only people who buy insurance from the Direct floggers bought something they did not understand.
This whole shambles is now to the point where the Banks who cannot run wealth management, have asked the Government to control their costs. The AFA got sucked in thinking that they could have some influence and negotiate a deal. The were done over as was the FPA and now both have most of their members firmly against the policy position that they adopted,which is the usual soft touchy feeling approach of the younger adviser. They have all been duped. Let them see how they get out of this mess. Pretty hard when you did not know you were being done over.
Part 2 – I’ve no doubt the FSC and a few of it’s Institutionally aligned (Greedy Bank Owned) members have been the driver of this ill-conceived Framework. I wonder why they have pushed for a 3-year claw back…could it have anything to do with aligning the claw-back period to the 3-year non-disclosure clause? Hmmm! Seems too coincidental. I’ve no doubt that most reputable Adviser’s believe that 100%+ upfront comms was not appropriate or sustainable. Large upfronts were just another development from within the industry created by the manufacturers to incentivise Adviser’s to move/replace product. Sure their are bad eggs but not enough to warrant these sweeping changes. The bad eggs should have been dealt with more severely but again maybe the institutions wanted to create the problem so Bill Shorten had something to work with.
What about “Take Over Terms”, if that isn’t the manufactures demonstrating cartel like behaviour, then what is? Oddly enough, the mention of “Take Over Term” is nowhere to be seen in the Framework Proposals…not that I’ve seen anyway. I wonder why?…I’d suggest it’s another demonstration of the FSC and the Insto members controlling the process.
It seems to me like the AFA in-particular are working very hard behind the scenes to achieve the best outcome possible for their Adviser Members. From what is understood the Framework Proposals are a Political outcome…not a reasonable one. As it is political and the Media and Consumer Advocates such as “Choice” have created a gross misconceived perception of our great industry, it is now up to all of us to continue to communication the Adviser’s message to senators and in particular MP’s as I understand it is alleged that the Pollies are trying to keep this from reaching the senate. If this is indeed the case, then we need to work hard and fast to ensure MP’s are educated enough about our industry before making a decision that is not reasonable or appropriate.
I urge you all to email your local MP and the Minister for Small Business Mr Billsen in an attempt to educate them on the current rules so they can understand the Adviser’s viewpoint and also what it is we do and the value we create for families. Good luck everyone.