The royal commission has heard that Colonial First State changed its account fee arrangements to allow it to hold on to commissions owed to advisers.
Counsel assisting the royal commission Michael Hodge questioned Colonial First State (CFS) executive general manager Linda Elkins on Tuesday about the firm’s post-FOFA commission arrangements.
Mr Hodge said CFS superannuation members were placed in non-commission paying accounts but charged the same as commission-paying products – with CFS pocketing the additional money.
The issue was raised with CFS by an adviser who traditionally rebated his commissions back to clients, emails tabled at the commission showed.
CFS’s response was that these accounts were commission-free and as such “commission is retained”.
“Are you aware that there have been some issues raised by financial advisers about the description of products as commission-free when, in fact, Colonial is retaining the trail commission?” asked Mr Hodge.
“I am aware there has been advisers raise the issue with us. I’m not sure about the link to commission-free,” Ms Elkins replied.
An email from CFS tabled by Mr Hodge read: “Thank you for contacting Colonial First State adviser services with your inquiry. The accounts are commission free accounts. Therefore, commission is retained.”
Ms Elkins acknowledged the issue is “not yet resolved” but added that it is under review.
“Presumably, one way to resolve it would be to say we’re not going to have trailing commission any more on these products?” asked Mr Hodge.
“Yes, that would be one way – well, we would still need to lower the fee obviously to take that out, yes,” Ms Elkins replied.
The hearings continue this morning, with Ms Elkins continuing to give evidence.
You can follow all of the action on a live blog hosted at ifa sister title, InvestorDaily: https://www.investordaily.com.au/superannuation/43410-royal-commission-superannuation-hearings
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