EXCLUSIVE There will be no second chances for a growing group of financial advisers heading to the High Court in a bid to save grandfathered commissions.
The rescue attempt is being made by a cohort of advisers who together make up the Advice Regulation Challenge (ARC), which has been established by a number of industry leaders, including AIOFP executive director Peter Johnston, to form a united stand against what he describes as “the collective punishment of the advice community for broader problems in the financial services sector”.
The ARC is being funded by advisers and chaired by barrister Arwed Turon, with Melbourne Securities Corporation serving as trustee.
The group is heading to the High Court, where it will be represented by lawyers Corrs Chambers Westgarth and constitutional barrister Peter Kulevski who will argue that proposals to ban grandfathered revenue are unconstitutional.
However, unlike other court systems in Australia, the High Court does not permit appeals; its judgement is final.
“We only have one opportunity in the High Court to challenge this issue and must resist those who have an ulterior motive to our success,” Mr Johnston said.
“We must do whatever we can to ensure we have the best chance of success, doing nothing is not an option. It is clear that the entire industry needs to put aside any political differences and support ARC. We have assembled the very best legal team for the challenge but we need your financial and political assistance to ensure success.”
Central to the ARC’s agenda is the belief that the current government and past governments have failed to liaise with and properly understand the financial advice sector and the thousands of Australians it employs.
“With a new government looming it is time for advisers to make a stand and send a clear message to Canberra that we will not tolerate our past unfair treatment,” Mr Johnston said.
“We are also planning a social media and public marketing campaign to educate politicians and consumers on the positive role advisers have and correct the negative political spin we have endured.”
The move comes amid pressure for the advice sector to professionalise and reform, driven largely by the royal commission hearings last year and the recommendations in Hayne’s final report.
This week, the CFA Institute published a report on the financial advice industry recommending that grandfathered commissions be banned immediately.
“Conﬂicted remuneration has been at the heart of many of the issues raised before the Hayne royal commission,” the group said.
“We strongly believe that the grandfathering of commissions allowed under the Future of Financial Advice legislation should be outlawed either immediately or with a short sunset period to allow firms to adjust. Hayne’s recommendation 2.4 is that it be outlawed ‘as soon as reasonably practicable’, and we call for this to happen within the next 12 months.”
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