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.
Comments
Actually Mike, this is not what Mr Hayne said at all. What he said is that he believes there has been 'fees for no service' and most of yesterday afternoon and this morning has been about taking fees within a super fund that were ostensibly for advice but there was no adviser assigned to provide the service.
Nice headline but try listening and reading the blog and you would improve the value of your articles
Disagree, its clear NAB kept the grandfathered commissions as they deduced that without them, advisers would move clients elsewhere. That shows advisers are persuaded to retail grandfathered commissions where possible... Lets be honest, we all know that's because you don't need to actually service clients to keep getting paid and NAB knew that too.
Harsh truth.
Given there was no adviser involved receiving commissions and NAB was retaining the fees themselves - in their belief that 'General Advice' was available - the mention of advisers moving clients is a smoke screen.
If an adviser does move a client, the client has to agree to it and would have met an adviser to sign off on that. Any fees charged would be for a service they wanted.
Additionally commissions were removed from Superannuation products in 2013 which advisers were very supportive of. Advisers have nothing to do with the current discussions at the RC but Fee for no Service is an issue that needs to be addressed.
The words were drawn directly from the transcript PaulF. Nice try but no cigar
Yes Mike, so you took one line and ignored the whole dialogue beyond that?
This royal commission just highlights the corruption in our society. Performance by industry funds contains franking credits as income that no one questions. Payments to unions which no one questions. In case of UniSuper payments to universities which no one questions. The cost of infrastructure investments in PDS’s which no one questions. Wake up Australia the government are just taxing you through your retirement savings. Commissioner you look tired please retire. You have no idea on what you are dealing with.
Hear hear!!
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