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Grandfathered Commissions Investigations

August 21, 2019

 

During the hearings into responsible lending earlier this week, the Australian Securities Investment Commission (ASIC) promised further guidance on the topic of grandfathered remuneration for the financial advice industry.

 

Then, a few days later, the corporate regulator indicated they were investigating the transition process to ensure there won’t be any challenges.

 

This comes six months after the Government opened consultation on draft legislation committing to the end of grandfathering by 2021.

 

Around the same time, ASIC was asked to find out how many in the industry were voluntarily putting an end to paying grandfathered commissions.

 

According the Treasury release at the end of last month:

 

The Government's reform will benefit retail clients, as they will receive higher quality advice and stop paying higher fees to fund grandfathered conflicted remuneration. Commissioner Hayne made it very clear in the Royal Commission Final Report that this grandfathering shouldn't continue.

 

Recommendation 2.4 is also listed as ‘in progress’ in the Government’s implementation roadmap, published earlier this week.

This was part of a series of messages from the Government that reiterated their commitment to meeting the 76 recommendations from the Royal Commission into Financial Services’ final report.

 

The investigations will include both quantitative and qualitative surveys aimed entities that have paid grandfathered conflicted remuneration. The results will then be reported to the Treasurer at the end of June in 2021.

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