Outlawing conflicted remuneration is the corporate regulator’s preferred method for dealing with conflicts of interest, rather than disclosure or management, ASIC chair James Shipton has said in the wake of the royal commission.
Speaking at the Australian Council of Superannuation Investors conference in Sydney on Thursday, Mr Shipton said the regulator views removing conflicts of interest as a better course of action than trying to manage them.
“In recent years, the Australian Parliament has banned commissions and other conflicted payments in financial advice. This was a recognition that the best way to deal with some conflicts was not to manage or disclose them, but to remove them altogether,” he said.
“This is an option that ASIC favours in relation to conflicted payments in advice. There can be no ambiguity in this area.”
Mr Shipton cautioned financial services firms to keep this in mind when assessing their own business arrangements.
“I would strongly suggest that all financial firms keep this in mind when considering how to deal with conflicts of interest arising from remuneration structures,” he said.
“We have, for example, in our report on mortgage broker remuneration, highlighted the desirability of removing at least some of the remuneration-related conflicts in this sector.”
Mr Shipton’s comments come at a time when the industry associations have publicly taken differing stances on the future of grandfathered commissions.
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