AMP Limited has offered its support to a transition away from grandfathered commissions in the face of what it describes “community sentiment” around the issue.
However, AMP has told the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry that legislative measures to remove grandfathered commissions risk extinguishing the property rights of existing contracts and, accordingly, AMP would not support such a legislative measure.
“However, in light of community sentiment surrounding grandfathered commissions, AMP supports transition away from grandfathered commissions in a manner and timeframe agreed with the industry together with appropriate legislative reform,” AMP said in submission filed with the Royal Commission.
It said that reform should include:
- Government and regulatory facilitation for scoped advice; and
- Government support for the removal of impediments to the transition for members, for example capital gains tax relief.
“Such legislative measures would aid in the transition to contemporary products without grandfathered commissions, if it is in members’ best interests to do so,” the AMP submission said.
It said that it supported increased and transparent disclosure and reminders of grandfathered commissions in members’ annual statements throughout the transition period.
A reasonable transition period is required to provide sufficient time for industry participants to implement required changes, including to business models, systems, disclosure documents, advice and communications to members, to minimise unintended consequences for customers, financial advisers and the community in general.