Alongside the FSI recommendation regarding upfront risk commissions, the inquiry also suggested that ASIC conduct a formal review into whether “grid commissions” in the stockbroking industry should be considered “conflicted remuneration” under the FOFA legislation.
A footnote to the recommendation suggests that the enforceable undertakings entered into by Macquarie Equities in 2013 and UBS Wealth Management in 2011 serve as justification for the FSI’s suggestion.
However, the Stockbrokers Association of Australia yesterday issued a statement to reject the premise of the recommendation and point the finger at UBS and Macquarie advisers, not brokers.
“The [SAA] understood those two cases as having related to the financial planning and wealth management businesses of those two firms, and compliance by financial advisers within those firms with obligations regarding retail financial advice,” the statement said.
“We would not have thought those cases should be characterised as stockbroking cases.”
In addition, the statement argues the stockbroking sector has a comparatively clean compliance record, with the level of FOS complaints against stockbrokers “very low”.
“Existing arrangements for stockbroker remuneration do not present any risk of being conflicted remuneration,” the statement contended.
“[We are] aware that the FOFA exemption granted in respect to remuneration is to be reviewed at a future time … however, there have been no incidents that the association is aware of that would suggest that there is any urgent reason to bring this review forward.”
I think the IFA editor needs to have a bit of a look at the sensational headline on this article. A bit inflamatory and far fetched to head it up with ‘stockbrokers blame advisersfor FSI claims’ the article clearly states that the SAA is pointing the finger at a couple of dealer groups, not stockbrokers pointing the finger at advisers. Come on Aleks Vickovich, work with us, not against us!!! Perhaps Aleks can clarify to us how he can justify the headline, given the contradictory content? Looking forward to your response Aleks.
I own both a financial planning practice, and a stockbroking practice. I find it difficult to understand how commissions can be banned for financial advisers yet brokerage is acceptable for brokers? Dont get me wrong, I am not advocating change, legislation has changed to a point that many dealer groups will not allow representative financial advisers to charge brokerage on share trades as it is deemed to be conflicted remueneration. Wow, Im confused, perhaps I need to disclose a mental conflict?