Westpac has unilaterally moved to end grandfathering with respect to its financial advice businesses.
The business announced that customers of BT Financial Advice operating through the Westpac, St George, Bank of Melbourne and BankSA networks (BT Financial Advisers) would benefit from the removal of grandfathered payments attributable to their BT products.
In an announcement released today, the bank said it was working towards the changes taking effect from 1 October 2018 to allow sufficient time for implementation across more than 12 different IT systems, two platforms and many products.
The announcement said BT would honour its contractual obligations to external financial advisers who are currently receiving grandfathered payments in respect of a BT financial product.
“However, should they request the removal of grandfathered payments, we will assist them to make similar changes,” it said.
The announcement acknowledged that five years on from the Future of Financial Advice (FOFA) changes, more than 140,000 BT Advised customer accounts were still subject to grandfathered payments.
“We have considered this position from both a customer and a stakeholder perspective and decided that it is the right time to draw a line under these past arrangements and eliminate them as far as we are contractually able,” BT Financial Group chief executive, Brad Cooper said.
“Our announcement today builds on prior decisions to stop BT Financial Advisers receiving any benefit from stamping fees (despite being permitted under FoFA), ensuring that all BT Financial Advice ongoing advice customers receive an opt-in notice (not just those who joined after the FoFA reforms commenced as required by FoFA) and giving customers the opportunity to openly provide and review feedback through BT Adviser View.”
Comments
I wonder if BT will pass on this "cost saving" to their customers or if they will simply pocket it themselves?
they must ...plus start pressuring Fund manager fees to come down..the untouchables.. Super providers have all the control..there are hundreds of Fund managers. Dont use them unless they are cheap..
Back on the BT platform, they could not compete with any reasonable priced super/inv product...back in the day when I analysed them anyway. For example a badged Count BT wrap platform could not complete, like for like with any super fund on the market...but every accountant still slammed it into a SMSF for 'control and freedom of choice'! Yay!
Ironic, considering BT force external advisers to keep grandfathered commissions with their Wrap Essentials product. Unlike other operators, they refuse to give us the option to rebate the commission to clients and replace with fees. I have been battling with BT on this for ten years and they refuse to budge. So it makes me sick to see them grandstanding on this issue. My clients are stuck in the product (due to capital gains tax and grandfathered pensions). What a joke.
Yes, it parallels with some of the grandstanding by industry doyens who happened to make their millions from still highly priced and legacy fee products, some of these people are in charge of financial literacy for the country and on boards of major financial institutions, but I'm not bitter......
It says it all that they beat their chests saying grandfathering will be removed, but absolutely no comment on how this benefits the client. I guarantee that not one cent will be passed back to the client and BT/Westpac will reap another windfall at the expense of advisers.
It applies to the BT platforms which fees are high but not outrageous...ironically, it doesnt to external, which means badged versions which are ridiculously high when it comes to their BT Wrap platform. I really wonder if white labelling is more distructive than vertical intergration....
good point, badging and fee sharing is growing again and less transparent in many cases than vertical integration, hence they must separate product from advice.
Steve Blizard writes: If the Fed Govt was prepared to review all of their various grandfathering tax & Centrelink arrangements,
and provide full tax amnesties to move out of grandfathered products, it would be a lot easier. Under ASIC law,
it can be against the client's best interest to move out of some of these products, due to Centrelink or tax impacts.
And in many cases, these clients can be paying lower service fees under grandfathering, than under the new system.
What a bunch of hypocrites. Product manufacturers like BT that own AFSL's actually prop up and subsidies the licensee. All this is done because the underlying licensee then artificially creates a home team bias in favour of the Product. Whether that's restricting email communications, preventing BDM's from visiting advisers, or requesting payment to be on the AFSL. Stopping these grandfathered payments really solves nothing as ultimately it's just transaction going around, from BT to the AFSL and back via product fees. The real conflict is at this Product & licensee level and won't be solved until product and advice is separate.
The banks are an utter disgrace.
At the first opportunity following the Royal Commission, they appear to be attempting to regain some sort of respect by firstly the CBA /Colonial First State righteously cancelling all adviser remuneration to Dover advisers prior to the actual cancellation date of the AFSL and secondly here we have Westpac grandstanding as though they're concern is with their clients!!.....
The banks are in a massive damage control/ public relations exercise and they don't care on any level who they hurt, destroy or disadvantage in the name of trying to be seen as a concerned corporate citizen to try and regain trust and respect.
They are ruthless, entirely profit driven and corrupt and nothing will be enough to save the damage they have created for financial services.
....and where is ASIC heading right at this very moment to pursue and have these corporations charged that have openly admitted to breaking the law following the RC????.........all we hear is silence because Malcolm Turnbull is too scared and weak to push any further with a process he originally was avoiding in addition to providing the banks themselves with an opportunity to frame the terms of reference for the RC !!!
How can you have a RC into the banking sector and ask the banking sector to suggest the terms of reference...conflict of interest.
If Bill Shorten is owned by the Unions, then surely you would have to accept that Turnbull, Morrison and O'Dwyer are owned by the banks.
Kelly O'Dwyer has repeatedly always stated that any changes to financial services regulation must be driven by the best interest of the client and consumer first and foremost, however she never actually explains how any of her statements will actually achieve this as it is simply political spin.
Well said.
And... has anyone analysed the true economic cost and benefit of grandfathered fee arrangements, or is it purely the excessively legalistic, academically theoretical, bureaucratically ideological, and politicians detachment from reality the reason behind this sanctimoneous, "Holier than thou" [obviously economically beneficial to the institutions...] headline and money grab?
Turning off is part of the issue, refunding the underlying commissions of the inbuilt fees of older products will be true benefit to the client. If it is just retained by the fund manager then no real benefit to the clients at all
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