The FPA has hit out at the federal opposition’s failed attempt to pass amendments preventing so-called “dodgy advisers” for earning stamping fees on the sale of listed investment trusts and listed investment companies, saying the fees are more commonly paid to stockbrokers and should not be used to malign the financial planning profession.
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.
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