Shadow assistant treasurer Stephen Jones criticised the Coalition on Thursday for its refusal to vote for Labor amendments that in his words “would have seen an end to commissions being paid to financial advisers for selling dodgy listed investment products to mum and dad investors”.
Mr Jones described stamping fees for LICs and LITs as “a legal loophole” that had been “inserted by the Coalition” as part of its rollback of FoFa in 2014.
However, FPA chief executive Dante De Gori told ifa that while the FPA was supportive of removing the fees, they were primarily paid to stockbrokers rather than financial planners, with most advisers now receiving just a fraction of their income from commission-based payments.
“FPA members voted in 2009 to approve the FPA remuneration policy, which required members to move to client directed remuneration models from 2012,” Mr De Gori said.
“Remuneration from commissions on investment products has been trending down for FPA members for many years and now accounts for less than 7 per cent of our members’ remuneration. We are confident this will be close to zero by the end of the year.”
In his statement, Mr Jones referred to ASIC research revealing listed investment products had delivered an average loss of more than 6 per cent to investors, saying the Coalition was “covering for dodgy advisers” by dragging its feet on eliminating stamping fees.
Mr De Gori agreed that “questions need to be asked about the failure of consumer protection mechanisms if these conflicted incentives are leading to poor consumer outcomes”, but said it was sensible to take a measured approach to the elimination of the fees.
“While we would support the removal of these conflicted payments from the financial advice process, we also support the need for appropriate transition time frames,” he said.
The comments come following Treasury’s industry consultation process around the merits of and potential conflicts raised by the current stamping fee exemption for listed investment products, which was announced last month and is open for submissions until 20 February.
A spokesperson for the FPA confirmed the association would be making a submission to the consultation.
If you read the latest AFCA Datacube results, you will see that it is the Industry Funds that are now receiving the most complaints. Time to review all of their “dodgy” intra-fund “advice”, that all of their members are paying for (but few receive advice for ie fees for no service). https://data.afca.org.au/. The days of beating up on retail funds are nearly over.
I find it fascinating that under Parliamentary privilege, Politicians can just through out comments like “dodgy financial planners”….hypocrisy at the lowest level, and yet you allow the likes of IFM who manage money for Industry Super funds to pay a bonus to an “unnamed Director” of $12 Million??? Imagine if a financial planning practice tried to pay bonuses today, oh that’s right we can’t?? Too risky as being caught under conflicts of interest because there is a chance that the bonus may relate to the amount of fees you charge a client and whether there is value for the client?? The FPA should change its name to VFPA…Voluntary Financial Planning Association and seek Government grants because we will be working for nothing soon.
“insanity is doing the same thing over and over again and expecting different results” No truer is that saying, when it comes to the FPA.
Yet it’s quite acceptable for the FPA to receive conflicted remuneration/ stamping fees from firms dragged before the Royal Commission called the Professional Partner Program (PPP). Very hypocritical for the FPA to get payments from say CBA in return for an excel spreadsheet of advisers names and one large membership cheque plus an annual cheque in excess of $100K for the PPP. The FPA days are behind them because Treasury are fully aware as to whom the FPA represent. Is the strategy for the FPA to keep doing the same thing year after year and expecting the same result? The FPA dosen’t know whether it represents AMP or AMP advisers it’s lost in the woods are members need to wake up.
God this industry sucks, I’m sure charging money in exchange for financial services will be called a conflict of interest soon. Clients will have to pay me in cigarettes like they do in prison!
Don’t be crazy – cigarettes are worth too much to go blowing them on financial advice
Isn’t the term Financial Planner and/or Financial Adviser enshrined in law ?
Supposedly, be good to have a test case , sue S Jones and see what happens.
Ive sent a email to Mr Jones, and I hope everyone else does too, we need to fight back against this , no one else will do it for us
It is and Stockbrokers can easily be registered with ASIC today, and with the FASEA exemption, (that so many people are happy with) can do so for another 6 years and keep calling themselves Financial Planners. So Labor are quite correct up, at least up until the exam period ceases at calling brokers planners. Besides many planners are getting fees are recommending LIC’s anyway.
What proof do you have that MANY planners are recommending LICs? I think zero, I do not know any planners that recommend LICs and get stamping fees out of it. We cant even get paid stamping fees with our dealership. Its comments like these that really irk people, many planners indeed.
You haven’t walked past you’re local stockbroking firm and seen the “financial advice” sign on the front widow and the Audi out the back?