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Parliament bans financial advisers’ grandfathered remuneration

  • October 16 2019
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Parliament bans financial advisers’ grandfathered remuneration

The government has passed new laws through Parliament that will soon end the payment of grandfathered conflicted remuneration to financial advisers.

Parliament house

Parliament bans financial advisers’ grandfathered remuneration

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  • October 16 2019
  • Share

The government has passed new laws through Parliament that will soon end the payment of grandfathered conflicted remuneration to financial advisers.

Parliament house

Under the legislation passed through Parliament on Monday, 14 October, grandfathered conflicted remuneration will be banned from 1 January 2021 and product issuers who continue to use such remuneration strategies will be required to rebate such costs to consumers.

The Treasury Laws Amendment (Ending Grandfathered Conflicted Remuneration) Bill 2019 is in response to a recommendation from the final report of the Hayne royal commission, which demanded ending the remuneration technique.

As part of the change, the government has also directed ASIC to monitor and report on the extent to which product issuers are acting to end the grandfathering of conflicted remuneration in the period between 1 July 2019 and 1 January 2021.

The legislation was first tabled in Parliament at the end of July 2019

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The Association of Financial Advisers (AFA) has previously said the grandfathering ban leaves advised clients at risk of being worse off, subject to additional expense and/or losing access to their financial adviser

“We are deeply disappointed at the lack of analysis on the impacts of this reform and the lack of communication and guidance for impacted clients and advisers. At this stage, there will be many thousands of cases where a sensible solution is simply not available,” AFA chief executive Philip Kewin said.

However, the Financial Services Council welcomed the legislation, with chief executive Sally Loane saying the FSC has been consistent in its support for ending grandfathered conflicted payments.

“It is encouraging to see the government acting promptly on the royal commission implementation roadmap and delivering on Recommendation 2.4, which is expected to benefit Australian consumers,” Ms Loane said.

“This is consistent with the FSC position of enhancing confidence in a strong, sustainable financial services sector, that serves Australians with integrity.”

 

Parliament bans financial advisers’ grandfathered remuneration
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About the author

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Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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