Super fund holders will be left vulnerable to raids on their accounts by financial advisers should a government proposal to allow grandfathered commissions to continue.
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry recommended that grandfathering arrangements for conflicted remuneration in relation to financial advice provided to clients should be removed as soon as possible.
And yet the proposal to rebate grandfathered commissions to clients would effectively nullify one of the key recommendations of Kenneth Hayne’s royal commission, says Industry Super Australia (ISA) – a move contrary to the Government’s repeated assurances it will uphold all 76 key recommendations.
According to ISA, the Government’s legislative proposals “basically provide an exemption to the blanket prohibition by allowing a rebate/monetary benefit scheme to be set up (as well as record keeping obligations)”.
ISA chief Bernie Dean slammed the proposal and, in an ISA submission, has called on the provisions for conflicted remuneration to be repealed as soon as possible – in line with Commissioner Hayne’s recommendation.
“Let’s not forget that grandfathered commissions remove money from consumers’ accounts without their express consent. This is akin to stealing money,” said Mr Dean.
“This is money that would otherwise have been maintained, in a consumer’s account, and instead was siphoned off to pay financial advisers for nothing.
“To claim administrative inconvenience as an excuse to try to water down what should be a blanket ban on grandfathered commissions, is astounding given the disgraceful conduct that was exposed during the royal commission.”
According to Mr Dean, this is not the first time the retail fund sector tried to coerce the Government into an arrangement to permanently allow grandfathered commissions, which the sector previously did when it tried to subvert the Future of Financial Advice legislation overhaul.
“While some parts of the super sector will fight tooth and nail to keep grandfathered conflicted remuneration provisions – at the expense of consumers – our position is clear,” he said.
“We do not support a watering down of the blanket prohibition on grandfathered commissions. Any attempt to provide exemptions for conflicted remuneration will only erode consumer protections and leave consumers worse off.”
Are you still paying for fees and advice you received in the past? Do you think the Government should repeal grandfathered conflicted remuneration as soon as possible?