The new ASIC project will analyse data on the extent and aspects of allowable conflicted remuneration such as grandfathered commissions and conflicted remuneration allowed by the Future of Financial Advice (FOFA) reforms, according to its Corporate Plan 2018-22.
Another new project on ASIC’s agenda will revolve around compliance with the fee disclosure statement (FDS) and opt-in arrangements.
It will test industry compliance with the FDS and renewal notice obligations, including reviewing samples of documentation provided to clients by licensees.
Further, ASIC said it would look into the quality of advice in superannuation. In particular, it will examine how it could improve conflicts of interest management for advice provided to existing retail and industry super fund members.
The project will cover advice channels such as advisers employed by or authorised by the fund (or a related entity) and advisers with a referral arrangement with the fund.
ASIC will also be reviewing samples of advice provided, including relating to fund consolidation and intra-fund advice, which is advice where the cost is borne by all fund members.
“ASIC expects financial sector firms to adopt a culture of professionalism from the very top of the organisation right through to the frontline in order to win back community trust,” said ASIC chair James Shipton.
“Equally, it is important for ASIC to demonstrate professional values and to be held to account.”
ASIC will set the example by refusing the $120,000,000 it revived each year from the banks, on the basis that conflicted payments produce conflicted decision makers, and conflicted decisions.
No other way for ASIC to demonstrate professional values and be held to account.
The misguided assumption and accusation that an adviser receiving remuneration in the form of grandfathered commission automatically does not provide appropriate advice and service to those clients relevant to their objectives and needs at a reasonable if not inexpensive cost to the client is incorrect and misleading.
This perception is being pushed relentlessly by factions that have a conflicted agenda to benefit their own position.Many of these are advisers and planners who operate fee for service practices and many of whom have spent a large portion of their careers receiving commissions before they ” saw the light ” and became ” Born Again Advisers ” ….you know them…..people who cant stop talking about how good their system is and how righteous they now are compared to others.
It is incorrect for ASIC to refer to ” conflicted remuneration” as all remuneration from commission is not conflicted. This is just a convenient term for the purpose of demonising.
ASIC will never be able to put a stop or even charge the Industry Super Funds for such grandfathered commissions, which they make towards the Trade Unions who then in turn donate it to Labor Party as donations for elections. ASIC was one of the bodies that failed in all the powers of supervision of the Financial Services Industry over the years, hence we have this Royal Commission — former Treasurer Peter Costello has mentioned this.
Funny , just looked at an old “commission only client” that I have had for 15 years . Cost to drive to their home initially – Nil , cost of fact find meeting each and ever year -Nil , cost of writing a compliant SOA – Nil , cost of implementation- Nil , cost for ongoing reviews each year at their home – 0.3% p.a super trail commission only throughout. Put that on your Radar !!!!!
Their perfect world is to have one tax payer funded body investigating another taxpayer funded body and all getting bonuses for catching each other out. The tax payer funded pool is quickly shrinking….look at the auto manufacturing employees….all gone.
Question: if commissions are seen as conflicted remuneration, does this mean the review will start looking at the exemption on life insurance commissions? Does anyone know?
I now hope they get rid of them and remove grandfathered commissions. I’m happy for ASIC to give 12-24 months notice. I don’t think an advisers ethics or quality is linked to how they charge but purely from the eyes of the outsider….It smells, it is tied with a fee for no service, is perceived whether right or wrongly to be linked with some underhanded, deceptive fee charging. Our clients of course think much differently, but promotion of our services and being in this position is a failure of advisers by putting our trust into groups like the FPA which has failed due to their association with the big end of town. I’ve adapted, invested, and made changes to my business model and whilst it’s removal won’t be painless it’s needed. I just hope the FPA falls over as well.
“Equally, it is important for ASIC to demonstrate professional values and to be held to account”.
Who will be the judge of that I wonder? Please explain your bonus structure.