AFA claims victory on disclosure
The Association of Financial Advisers (AFA) is claiming a “partial victory” on the issue of commission disclosure as outlined in the Financial Services Reform Bill (CLERP6).
The Association of Financial Advisers (AFA) is claiming a “partial victory” on the issue of commission disclosure as outlined in the Financial Services Reform Bill (CLERP6).
AFA president John Hibberd says recently released commentary on the Bill out-lines the apparent relaxation of disclosure requirements for advisers. Hibberd ar-gues this relaxation is a result of the lobbying efforts of the AFA and the National Insurance Brokers Association (NIBA).
“Commission now needs to be disclosed at the point of sale, but the disclosure takes out back office costs. I’m not sure this is exactly what the Government means, but this is our interpretation of the statement,” he says.
According to recently released commentary on the Bill, “where financial service providers and product issuers enter into an arrangement that the service provider will perform ‘back office’ functions on behalf of the issuer and the payment for performing these functions is included in the commission paid in respect of indi-vidual products, then this component of the commission does not need to be dis-closed”. (section 6.69)
However, while Hibberd is buoyed by what he sees as “a good compromise”, he says his group still sees “no point” in insurance advisers disclosing commissions for risk products.
“I think our reply to the legislation will remain consistent. Australia is out of step with global commission disclosure requirements, apart from England.”
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