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
The super fund announced that Gregory has been appointed to its executive leadership team, taking on the fresh role of chief advice officer.
The deputy governor has warned that, as super funds’ overseas assets grow and liquidity risks rise, they will need to expand their FX hedge books to manage currency exposure effectively.
Super funds have built on early financial year momentum, as growth funds deliver strong results driven by equities and resilient bonds.
The super fund has announced that Mark Rider will step down from his position of chief investment officer (CIO) after deciding to “semi-retire” from full-time work.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
76.97 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
76.46 3 y p.a(%)
3
UBS Solactive Global Pure Gold Miners UCITS ETF Dis USD
51.13 3 y p.a(%)
4
Global X GlobalX FANG+ ETF
45.15 3 y p.a(%)
5
Select Baker steel Gold Institutional
43.78 3 y p.a(%)
