The Federal Government has released the regulations which will underpin ensuring that any benefits of banning grandfathered commissions flow to consumers rather than product manufacturers.
The Treasurer, Josh Frydenberg announced that the regulations would impose obligations on product manufactures to keep records on the amounts to be passed through to clients.
The explanatory statement attaching to the changes states: “Where the conflicted remuneration can be attributed to a particular client (for example, if the financial adviser received a commission for selling a financial product to that client), the covered person must provide a cash rebate to the affected retail client on a dollar-for-dollar basis”.
“Where the conflicted remuneration can only be attributed to a client group, the covered person must divide that conflicted remuneration between the affected retail clients in a just and equitable way,” it said. “The covered person may provide a cash rebate, or they may provide a monetary benefit (for example, a reduction in fees). The amount of the cash rebate or monetary benefit must be an amount that is just and equitable in the circumstances.”