TOTAL BAN ON COMMISSION
A BAN ON COMMISSIONS
2010-04-26 Last night the MINISTER For Financial Services Mr Chris Bowen announced a total ban on commissions to take effect from July 2012.
Legislation will be drafted to ban advisers accepting commissions including volume-based payments in relation to investment products these include Managed investments, Superannuation funds, and margin loans. This announcement follows last year’s Ripoll enquiry into financial services.
The reforms recommend the introduction of a statutory fiduciary duty for advisers; this will have the PI insurance company’s actuaries looking over their rate tables closely and compliance officers considering different definitions of what fiduciary means.
While Bowen confirms that the Ban would not be retrospective, going forward advisers will only be able permitted to charge a flat fee, hourly rate or a fee on ungeared assets under management.
In addition advisers will have to provide their clients with an annual notice to include the option to terminate the adviser’s service.
“These reforms will see Australian investors receive financial advice that is in their best interest rather than being directed to purchase a product as a result of incentives or commissions offered to the financial adviser “Bowen said.
To reinforce this he went on to say “Customers and clients when they are seeing a financial planner deserve to know that a financial planner is acting in their best interests and when you have commissions that is simply impossible”
So we now have a line in the sand and a date July 2012, yes this still has to be passed thru legislation,
There will be vigorous lobbying and an election between now and then.Life Risk commission has not been baned at this stage.
But what have you considered as your strategy in your business going foward,will you decide to become the price maker?
To help you make the transition to fees we have developed a 16 part video training series called the price of advice see www.thepriceofadvice.com
In addition we have developed a complete resource for transitioning to fees a site under development called Fees4service more on this soon
meanwhile please click here to access the Governments paper on “The Future of Financial advice Reform”
