In a statement released on Thursday, ASIC said it had updated its ‘Regulatory Guide 246: Conflicted and other banned remuneration’ to reflect changes to the law since the royal commission and removal of the commissions carve-out on stamping fees for listed investment companies.
The updated guidance reflected that “the ban on conflicted remuneration for financial product advice applies to all benefits given on or after 1 January 2021”.
“Product issuers are required to provide rebates to clients for all previously grandfathered benefits that they remain legally obliged to pay on or after 1 January 2021,” ASIC said.
Rebate amounts paid to clients should be “just and equitable in the circumstances” and take into account matters such as the amount of conflicted remuneration that would have been payable on a product held by a client, the amount invested by each product holder and the structure of the fees that the product holder has paid for the products.
The guidance noted that product issuers had “some flexibility” and that “the rebate amount provided does not need to precisely match the amount of conflicted remuneration”.
The updated guidance stated that the grandfathered remuneration ban would include benefits that were obliged to be given before 1 January, “e.g. where a product issuer is legally obliged to give an AFS licensee a benefit in December 2020, but does not give the benefit until on or after 1 January 2021”, ASIC said.
The regulator said it would “continue to monitor the industry’s arrangements” in relation to conflicted remuneration following the end of grandfathering, and would “consider taking action where we find misconduct”.
The updated guidance also contained a clarification around life insurance commissions, stating that the law did not prescribe a time frame for repaying commissions under the two-year claw-back provisions introduced through the LIF reforms.
“This is consistent with the guidance previously published on the ASIC website,” the regulator said.
So I have to triple check my FDS to make sure that every last cent is disclosed, but a product provide can rebate what they want.
Seems legit.
If advisers truly spoke with clients and showed them the long term impacts of compounding commissions properly and were ethical to begin with then this would never be happening. I’ve never seen a bunch ‘advisers’ in any industry be so upset over of a fee4service model.
In my opinion those ‘advisers’ are nothing but dressed up salespeople afraid of losing the ripped off client commissions.
what a loser you are mate…. must be a member of the FPA……
You would love the Industry Super model then. Check it out, and when you understand how they charge all members for advice, let me know what you think about their model. I suspect you have no idea?
Not to worry, we charge those clients fees now and in order to comply with regulations, we charge many times north on the old commission level. Happy?
Dont worry, advice fees far exceed commission so no product sales here. Over at Industry Super sales of product are going well – and all charged a fee for a service even if it never ever delivered. Compound that mate.
Do you mean the long term impact of adviser Alpha. I figure I’m worth anywhere between 400 and 600 basis points per annum gross benefit to my clients. You have zero idea of what you are talking about. The public is not well served by any of this – and that is an unmitigated tragedy.
Everyone saw this coming. The product providers were rubbing their hands in glee when they heard they could stop paying trail commissions. They knew they could pocket this themselves instead of giving it back to the clients. Great to see ASIC now give them the green light. So explain to me again who was supposed to benefit from the outcomes of the RC, because I’m pretty sure it wasn’t supposed to be the product providers.
I am just in disbelief at the bullshit this government dishes up. Ethics and consistency don’t rate as highly as political donations, picture opportunities and votes.
CanI go back and charge my. Client an hourly rate for the forgone revenue which is already well below the rate of service. How about they rebate my mortgage broker commission? NO?
Yep so CFS cancel Life Commissions on Individually underwritten policies in Choice Super.
Advisers lose 22% pa (inclGST) flat commission.
Clients get 6.5% pa Reduced Premiums.
[b]CFS pockets 15.5% pa extra premium profit that ASIC has allowed them to steal from Advisers.[/b][b][/b]
Nice work ASIC, total and utter Regulatory Capture Corruption Against Advisers.
And ASIC say its all good. If they aren’t corrupt they are incompetent.
” the rebate amount does not have to precisely match the amount of conflicted remuneration” ???
If it being taken away from the adviser why isn’t the exact amount required to be rebated to the client ??
Now there is going to be some flexibility around the amount which simply means the product provider can retain some of the amount for their own purposes as long as they can claim it is just and equitable.
Now that ASIC have nailed the advisers, they are providing flexibility to the product providers.
Anyone surprised ?
Not surprised. Just not sure, after making the argument that the trail is better in the pocket of the account rather than the adviser, why ASIC now believes that it is not necessary for all the money to be returned to the client? Is ASIC corrupt?
Good old ASIC. Can’t get its own glass house in order but still throwing stones at everybody else!