Banks urged to show leniency on grandfathering loans

The end of grandfathering will be devastating for some advisers, particularly those who in good faith borrowed money to kick start or grow their client base, according to the Association of Financial Advisers (AFA).

In a communication to members the AFA chief executive, Phil Kewin has expressed the association’s disappointment at what he described as a lack of due process around grandfathering and the simplified narrative that it had few implications beyond stopping payments to advisers who weren’t servicing their clients.

What is more, Kewin has urged that banks which have loaned money to advisers using grandfathered commissions as security to be “flexible and understanding” with advisers who are impacted.

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“If their [the bank’s] due diligence didn’t identify a future issue with grandfathered remuneration, then the small business adviser would likewise be challenged in anticipating this outcome,” Kewin said. “Indeed, the ABA [Australian Bankers Association] was one of the parties calling for a ban on grandfathering in their Royal Commission submission.”

Kewin has also warned that product providers who cease paying grandfathered commissions ahead of the Government’s end-date should be made to prove they have passed on the full benefit to the client.

“This does not mean ‘where practicable’, or ‘generally’, it means all commissions, volume and shelf space payments. Ceasing these payments must be to the benefit of the client. Otherwise, why are we doing this?” he said.

“To say that we are disappointed in the process, or more lack of due process, on this issue is an understatement. We recognise Grandfathering does not impact all advisers and indeed many see it as a blight on our industry that needs to be removed. We also recognise that banning grandfathered conflicted remuneration will remove another of the layers of opaqueness that fuels negative perceptions of financial advice,” the AFA communication said.

However, the outcome will be devastating for some advisers, particularly those, who in good faith borrowed money to kick start or grow their client base, and now will not have time to review their clients whilst trying to maintain an income to repay a loan on an asset that now has no value.”

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Absolute disaster for many good businesses. I really feel for my colleagues.

Banks should not show any leniency to financial planners under any circumstances. Banks recall your loans now it is the only sensible thing to do. Better to get some funds instead of nothing as the financial planner assets are reducing exposing the bank and your shareholders to loss. Act now. Show the same compassion and empathy financial planners showed their clients NOTHING!!! As a bank shareholder it would be negligent for banks not to recall loans and recoup losses minimising loss thus reducing my shares value. I encourage all bank shareholders to bring up in agms that no leniency should be shown to an industry in terminal decline. Better to get 10% of $1 then 80% of nothing. Sorry financial planners you stole from my super I will not let you steal from my shares as well. You made thousands of people homeless and having to dumpster dive because of your greed. About time you experience what you subjected your client too. The sooner financial planners are brought to account and made nto experience what they did to their clients. Enjoy financial planners!! When your house is at mortgagee in possession sale I will be able to buy at a bargain price. Thank you financial planners I look forward to making money off your assets. It is the circle of life . Thank you financial planners I will be able to retire well

pretty sure planners have been to held to account. There was this little thing called the royal commission and constant media attention. I think of any industry with bad ends...the financial services industry has been held to account EXCEPT for the Bank Execs who continue to rake in million dollar salary haven't even been demoted. This is where your anger should be directed at. If you have been wronged by an adviser surely it has been remediated. Perhaps you want more than you deserve, OR it simpy wasnt the Adviser fault e.g performance of the share market.
No adviser is losing their house btw, Advisers have had 5+ years to know that changes were happening.

Bear why do you blame bank advisers. Only bank advisers work in their clients best interest. Only bank advisers are professional and provide quality advice outcomes.

I said Bank Execs. Eg executives. Didn’t mention bank advisers at all.

Quite besides your poor grasp of the English language ‘Payback’, you have some serious psychological issues to deal with. And by the way, the vast majority of financial advisers will be just fine going forward, so it looks like you’ll have to wait a little longer to buy your first property.

Did you wake up on the wrong side of the bed 2020?
I believe you are mistaken
You must be feeling the pressure from your bankers breathing down your back going to for-close on you at any moment. You may make the criticism about my english but at least I am not going to loose my house and livelihood due to blatant greed and self interest at the expense of your clients interest and investments. It is planners like you whom encouraged and promoted double gearing so you could get your fees and commission. I hope the banks show no leniency to you and your cohorts. It is planners like you whom destroyed the reputation of financial planners. Great job 2020. I gather you choose the name 2020 as this will be the year the bank will for-close on you and you and your family will be homeless and dumpster diving. See there is payback for your crimes to your unfortunate victims your clients. You should refund the advice fees you charged without providing service. Pure and simple you are a thief. You deserve what you get. What area are you located so I can check bankruptcy notices and mortgagee sales. Who knows I might even buy your house

Yet another delusional, incoherent rant from 'Payback', not to mention remarkably thin-skinned. Clearly, you know nothing about me, my practice, or the industry you're attacking. So please, for your own good, seek some help. In the meantime, try reading a book every now and then, and leave the comment section to the grown-ups. Thanks.

On the contrary 2020. I know you and your practices very well. I know of a rival practice remedying your sub standard cut and paste advice devoid of any rationale. It is laughable you advise I should read a book now and again when you should do your Kaplan CPD instead of paying people on airtasker to do your cpd. No wonder you have no technical competence. Once you are at least 10% technically competent then you might have some credibility. I agree I need help to stop dodgy planners like you from preying on the innocent public. With comments you have made and the name you use 2020 I would be surprised if you make it to 2020. I think you should seek the services of a mental health professional about you delusion that you are a good financial planner when your conduct, client outcomes and misinformation portray an arrogant clueless and uneducated person who very likely did not even get a passing grade in the school certificate yet has access to peoples hard earned savings. I am sure if you are audted by ASIC you will need to remediate your poor suffering clients. I am glad you are not my financial planner

Complete lunatic.

What is this tripe? Get a life payback you horrible troll of a person hiding behind your little keyboard. People like you can only type hate, which usually points to a very unhappy person, I bet you cant function in the real world. Go spread your hate somewhere else.

Hang on it is hypocritical to call me a troll when you are to scared to use your own name. I earn more in a day then you earn in a month and are a professional unlike a financial planner like you aspiring to be a financial professional. You are just a wannabe. I guess you use the name Hang on as you are just hanging on away from your creditors as your clients desert you in droves.
I do function in the real world and make a tangible difference to my customers and my community. What is your contribution apart from charging fees for non existent reviews and your cut and paste soa templates.
You can not hide behind your sub standard advice by hiding behind disclaimers. The royal commission really opened the Australian public's eyes to conduct of financial frauds like you. I pity your customers. I may be thin skinned but I have integrity something you will never have. I look forward to the future when we are free of retirement investment outcome destroyers like you. I am trying to protect the consumer against dodgy financial planners like you. I am hardly consumed with hatred but concern for my fellow Australians. I make a difference not hide behind insults calling people trolls amongst other things. I feel sorry for good financial planners like Amon if you are representing financial planning. Even mortgage brokers can lobby effectively unlike you planners whom pay fpa to represent you and achieve nothing for their members but live it up at its members expense. People like you Hang on are the problem in the industry and the sooner you are a legacy the financial planning industry may get a chance to be professional. Do your industry a favor and your clients and quit. Everyone would be better off

Payback, I have been in the industry for over 20 years, I have a double major in economics and finance. I have 150 to 200 clients that I work for, and that I earn a decent living by doing so. I do not advertise, I work on referrals if you know what that means, you know people don't refer business on unless they trust you. I am very active in my community and am valued as part of my community through many volunteer roles such as coaching sports and doing pro bono work for those that are sick or cant afford advice. Money of course isn't everything, I could earn a lot more if I worked more hours, but I like to spend time with my family. Payback, you need to take a step back, I bet 100% you are a frustrated accountant. Its ok, you will lose your tax returns, but you can always wash dishes for the rest of your life, and you will always have this all this hate for people that you can rely on to keep you motivated. This is my last reply to you as I am too busy doing my bridging subjects and cant waste any more time with your hate filled rants. Take care

I think your name says it all "Payback". It sounds to me like you had a bad experience with an adviser in the past. You have my sympathy for that. However you think that it's OK to wreak revenge on other perfectly innocent advisers who have always done the right thing by their clients. You think it's OK to punish advisers who entered the industry well after your unfortunate incident. You think its fine to indiscriminately punish a group of people based purely on their demographic characteristics, rather than the behaviour of individuals.

This indiscriminate "payback" mentality is unfortunately driving many of the zealots in our regulators and "consumer associations". It is destroying the lives of innocent people and is ultimately doing consumers more harm than good. It has no place in a civilised society.

Anon you are correct. I was defrauded by a financial planner a substantial amount of money
What do you propose to protect the consumer?
I have no doubt you are a good planner and passionate about industry but what can be done to protect the consumer from the dodgy planners out there?
How can I have any confidence in financial planners will do the right thing?
It is unfortunate good planners like you Anon are being unfairly painted with the same brush as the dodgy planners like 2020. I want to believe things can change and my faith will be restored in financial planning.
Please advise what can be done?

What action did you try to get the matter remediated Payback. You seem very angry, it’s doesnt sound like you would have let it go. What was the outcome? There are heaps of avenues to get compensated for fraud, firstly complain to the organisation is writing.

Yeah.. sure they will.. they are ethical and trustworthy and never undermined planners

You are a sad individual "payback"

You are right Pete
I am sad how financial planning industry could be so rotten and driven in self interest.
As I said in my comments to Anon how will you restore my faith and confidence in an industry that has not cared about the consumer. Please advise how I can have faith in financial planners ever again.
What is the answer? Bank financial planners, industry super planners, independents, ai, robo-advice or do it yourself

This is a deliberate and manufactured strategy to dismantle the current advice industry.
It is a cleansing process driven by a Liberal Govt who has no consideration whatsoever for small business.
I have never once seen Josh Frydenberg acknowledge the incredible impact the relentless pursuit of financial services is having on small business and the people involved....not once.
When the farmers are in the middle of the worst drought in decades and are suffering tremendously, the Govt steps in like a white knight and Scott Morrison gets all " rural " looking and appears in the outback or on a property to look like he cares.
Well, a drought is not of the farmers doing Scott and neither is the relentless raft of unfair legislative attack and targeted persecution of financial services small business.
But we all know that supporting the farmers is politically popular and looks good.
Isn't it a contradiction that many of those farmers also often rely on quality advice and care from their local financial services professionals in relation to their financial security and protection and the same Govt is committing many of those small businesses to potentially close.
There is clearly no love whatsoever for those in this industry from a political position.
In fact, there exists a lack of any concern at all almost bordering on disdain.
The strange thing is that when something goes wrong for a client and the financial services business can assist in delivering a efficient insurance claims process and allow that clients business to continue, to allow debt to be paid, to allow medical treatment to be paid for and allow families to be financially independent, it means nothing to the Govt in relation to the valuable service provided.
There is something vitally wrong with politics at present when advisers are being forced to complete courses on ethics in order to prove their worth and moral standing whilst those in Govt with no experience or understanding are happy to condemn businesses to unacceptable levels of stress and pressure.

You’re right, farmers are protected and planners not. One thing, Liberal gov had gone out of it way in past years, ie watering down 2013 reforms, delaying RC. Heaps. Now after the RC they have no option but to go with it. Can’t blame them.

"Payback" it is unfortunate that you have had such a devastating experience and I wish you were the only one, but we all know that there have been those in financial planning that have done the wrong thing. Collectively, all of the good planners out there condemn this behaviour and hope that those who do the wrong thing are found and removed from what is an amazing industry to be part of.
I do not believe financial planning is completely wrotten and like all industries there are those that will always find a way to serve themselves at the expense of others.
As far as protecting consumers, we all have a responsibility to act in the best interest of our clients. This is fine for the vast majority of planners that are in this industry for the right reasons but we do need the help of regulators and common sense legislation that allows us to carry out our work in a clear and efficient manner so that our clients are better infromaed and our advice is not buried in the templated disclosures that we must all include when providing advice. We all have a role to play and we all need the support of government and regulators without the constant vested interets that we see in the current environment.
Wish you all the best for the future Payback.

I echo SB's comments. It is sad that Payback has been so hurt, and I wish hiim/her well in the future. However I am not entirely convinced that "rogues" will be stopped by increased red tape. My guess is "rogues" do not care about others, or red tape, or disclosure. So ASIC continue to fight the wrong battle in trying to protect innocent people. In the past our company has provided 2nd opinions for people. Sometimes we endorse the advice, sometimes we issue warnings, and sometimes we provide an alternative. Of course it costs people money for a 2nd opinion, but as Payback has found out, it is cheap at twice the price to know you are getting good advice..... Personally I will continue to believe ASIC will never eliminate "rogues" so people have to take some alternative action and I believe a 2nd opinion may well be a good step, and cost efficient in the long run. People keep comparing advisers to doctors and lawyers. They provide 2nd opinions reasonably often. What do others think?

RobinBris you are spot on

Thank you SB. Your apology on behalf of financial planning experience is greatly appreciated. Your comments and thoughts make a lot of sense. Your colleagues in Financial Planning could learn a lot from you. Instead of attacking me and vilifying me you gave me empathy and articulated how the industry should be. Financial Planners like you SB are a credit to the industry. Your fellow planners could learn a lot from you. I firmly believe your fellow planners should seek guidance and get a professional like you to lobby on behalf of the financial planning would be 1000% better then your representative body the fpa which has sold you planners down the river while they burn up your fpa membership fees o n their hedonistic delights while planners are being destroyed. Good luck SB If your financial planners want to be relevant they should form a new lobby group with you being the main driver. Good luck. After what you have articulated I will look for a financial planning professional like you. Please tell me where I can find a financial planner like you in NSW

Payback, unfortunately I do not know anyone in NSW that I could personally recommend, but word of mouth is usually the best way. I also echo what RobinBris says about second opinions. I would also suggest shopping around, you are investing in, what should be a lifelong investment. Most people get 3 quotes when renovating a home, there is nothing stopping you doing the same with a financial planner. I wish you the best of luck.

Thanks I will give it a go

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