Treasurer Josh Frydenberg has indicated that the federal government’s crackdown on conflicted remuneration in the financial planning sector will be harsher than the measures recommended by the Hayne royal commission. Rather than simply banning grandfathered trailing commissions, a bill to be introduced in coming days will also include a scheme to rebate clients for any forgone remuneration after the ban takes effect in 2021. But superannuation industry executives have expressed some reservations about the rebate scheme. From The Australian:
The Treasurer yesterday flagged he would introduce legislation this week banning grandfathered conflicted remuneration paid to advisers.
Mr Frydenberg said the government would be going “further” than Mr Hayne’s recommendations by setting up a mechanism to rebate clients for any forgone remuneration when the payments are banned at the start of 2021…
“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,” Mr Frydenberg said.
Eva Scheerlinck, chief executive of the Australian Institute of Superannuation Trustees, said… “the simplest solution (which) puts members’ interests front and centre is for a complete ban on the payment of conflicted remuneration through immediate rebates directly into the accounts of clients,” Ms Scheerlinck said.
Industry Super Australia deputy chief Matt Linden said a rebate scheme needed “appropriate safeguards” to protect consumers.
Good to see. The only way to truly align advisers’ interests with clients is to remove all financial incentives associated with recommending products.