POWERED BY MOMENTUM MEDIA
Super commissions need removal, says industry
While the financial services industry has thrown support behind the amendments to the Future of Financial Advice (FOFA) legislation - which were tabled in Parliament yesterday - many are still concerned about the exemption for general advice from the ban on conflicted remuneration.
The Government has tightened the exemption for general advice, but the SMSF Professionals’ Association of Australia (SPAA) and the Financial Planning Association (FPA) are still urging for its removal.
SPAA chief executive officer Andrea Slattery said the best consumer outcomes are achieved independently from links with product remuneration that can incentivise the sale of products over the provision of objective, quality advice.
”The best approach, in our opinion, is an environment where an adviser’s remuneration is aligned with providing high quality advice without the influence of commissions,” she said.
“SPAA understands a key motivation of the Government’s amendments to remuneration of general advice was to increase access to general advice by lowering the cost of this advice,” Slattery added.
“However, improved availability to general advice does not equate to consumers receiving financial advice that is appropriate, adequate or will assist them in making improved financial decisions.”
The FPA has also called for the removal of the ability to reintroduce superannuation and investment commissions on general advice altogether.
“This change, however, does draw a firm line between the polar opposites of product sales and appropriate financial advice,” said FPA chief executive officer Mark Rantall.
The industry has, however, broadly welcomed the changes to FOFA.
The Financial Services Council (FSC) said the Government had fulfilled its mandate to make advice more accessible and affordable to Australians, whilst maintaining consumer protections.
“Technical amendments in the legislation will now allow consumers to get the advice they can afford and want,” said FSC chief executive John Brogden.
“It also brings clarity and certainty to the advice community, particularly in relation to scalable advice and the best interest duty.”
Much support was thrown behind the amendments to the best interests duty, with the FSC pointing to new legal advice it had obtained which states the amendments would not reduce consumer protection.
Similarly, SPAA has supported the changes to the best interests duty, stating the existing legislation had the potential to be too broad in its application, which could create uncertainty and cause a high compliance burden for financial planners.
“SPAA does not agree with the criticism that the changes to the best interests duty have inherently weakened how it works,” SPAA chief executive officer Andrea Slattery said.
“In our opinion, the general requirement to act in the best interests of the client in relation to advice still remains.”
AUTHOR
Staff Writer
Money Management staff writers are writers who contribute to the website from time to time. If you would like to discuss the content contained within this article please contact us.
Recommended for you
Super funds had a “tremendous month” in November, according to new data.
Australia faces a decade of deficits, with the sum of deficits over the next four years expected to overshoot forecasts by $21.8 billion.
APRA has raised an alarm about gaps in how superannuation trustees are managing the risks associated with unlisted assets, after releasing the findings of its latest review.
Compared to how funds were allocated to March this year, industry super funds have slightly decreased their allocation to infrastructure in the six months to September – dropping from 11 per cent to 10.6 per cent, according to the latest APRA data.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.73 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
30.15 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.71 3 y p.a(%)
