Phil Anderson, Association of Financial Advisers (AFA) general manager policy and professionalism, defended the industry’s response to the Royal Commission, saying that comparisons to the pushback by mortgage brokers were not as significant as it seemed.
“We get a lot of people contacting us and asking ‘why can’t you do what the mortgage brokers did, run a marketing campaign and an advertising campaign that convinces them to change what he’s [Hayne] recommended’,” Anderson said at the AFA Roadshow in Sydney.
One of the Royal Commission recommendations from Commissioner Kenneth Hayne was that trail commissions on new loans should cease from a certain point.
The government originally set a 1 July, 2020, date and the decision would later be deferred for a three-year period under pressure of the campaign.
“The mortgage brokers ran a very effective campaign, a lot of advertising on TV and billboards, and worked both sides of politics to get change,” Anderson said.
“It was a big win, but it was based on a very strong argument: ‘this will hand competitive advantage back to the banks and disadvantage the Australian community’.”
Anderson said that wasn’t the end of the story and the reality was mortgage brokers had not escaped the wrath of the Royal Commission.
“They have a best interest journey that starts on 1 July, 2020, which was legislated late last year,” Anderson said.
“Financial advisers have a safe harbour, you have seven steps and if you follow them you are protected, mortgage brokers don’t have that.”
“Mortgage brokers don’t have a safe harbour, they don’t have any guidance yet, they have a new best interest duty that starts on the first of July and many of them have no idea how they’re going to comply with it.”