ASIC places grandfathered commissions on radar

The corporate regulator has announced it will investigate conflicted payments in the advice industry as part of a wider medium-term plan to maintain trust and integrity in the financial system.

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.

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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 places grandfathered commissions on radar
James Shipton, ASIC
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Adrian Flores

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].

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