The Association of Financial Advisers (AFA) has pointed to a key conflict between the Government’s proposed date for ending grandfathered commissions and the deadline for completing the Financial Adviser Standards and Ethics Authority (FASEA) exam.
In a communication to members on the implications flowing from the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry the AFA said a recommendation to ban grandfathered commissions had become inevitable despite the arguments of the industry.
However, the communication signed off by AFA chief executive, Phil Kewin pointed to the likelihood of significant problems with respect to the purchase of books of clients based on grandfathered commissions and has sought feedback from members on precisely how big the problem might.
“We are very conscious that a number of members will have recently purchased businesses and client books that included grandfathered commission clients and as a result they will be particularly disadvantaged by this proposal,” it said
“We seek information from you to assist us in our advocacy on this issue. We believe that this 1 January 2021 timeframe is problematic, particularly in the context that the end of 2020 is also the deadline for advisers to pass the FASEA exam,” the AFA communication said.
“The Royal Commission report has disputed the issue of this being a breach of the constitution, through the acquisition of property rights on other than just terms, which is an issue that we will address as part of the consultation,” the AFA said.
On the question of life/risk commissions, the AFA noted the Government’s view that the Life Insurance Famework (LIF) changes should be allowed to play out and that the Australian Securities and Investments Commission should consider further reductions in the caps at that time.
“We will have more to say about that a little later,” it said.