With the exception of Mercer all the major retail superannuation funds are still paying substantial amounts of commission to financial planners, according to the opening assessment of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Outlining the direction in which the Royal Commission will head over its next two weeks of hearings, counsel assisting, Michael Hodge QC made clear that the grandfathering of commissions would be a continuing issue of focus and this was then evidenced in his questioning of former NAB/MLC executive, Paul Carter.
Hodge noted that five years after the implementation of the Future of Financial Advice (FoFA) legislation the trustees of retail superannuation funds were still permitting the payment of grandfathered commission to financial advisers.
He also suggested that the payment of those commissions was causing members to be kept in a fund and that this raised questions about the structural arrangements of funds and whether they were sufficient to monitor the advice being provided to members and paid for out of superannuation assets.
Hodge said that the Royal Commissioner, Kenneth Hayne “may very well wonder how the payment of commission to financial advisers could be in the best interests of members of superannuation funds”.
“You may also wonder how the payment of commission satisfies the sole purpose test,” he said.