The Association of Financial Advisers (AFA) has issued a statement formally objecting to the Australian Labor Party (ALP)’s plan to ban grandfathered commissions on investment and superannuation products by the end of 2019.
The AFA chief executive Phil Kewin said his organisation believed that such a move would hand yet another victory to the big end of town at the expense of small financial advice businesses and their clients.
“Attempting to turn off grandfathered commissions in such a short time frame will only serve to benefit institutions who will be able to hold onto them, with no compulsion to pass any benefit on to consumers,” he said. “Many clients currently receiving advice services for these payments will lose access to them, without any reduction in their fees.”
“If the concern is that some advisers are receiving grandfathered commissions without providing a service, then there are other options to address this issue, without negatively impacting those clients who are in grandfathered commission paying products and are happily receiving services and advice from their financial adviser,” Kewin said
Mr Kewin said the argument that grandfathered commissions have continued for too long is not reflected in the facts claiming that “there were zero cases of inappropriate financial advice as a result of grandfathered commissions during the Banking Royal Commission hearings and research by Investment Trends indicates that grandfathered commissions have declined from over 30 per cent of advice practice income in 2010 to just nine per cent in 2018.”