Grandfathering – ASIC relied on sample-based data
The Australian Securities and Investments Commission (ASIC) has admitted that it only had sample-sized data when it made some of its initial pronouncements on the negative impacts of grandfathered commission arrangements for financial advisers.
In evidence to the Parliamentary Joint Committee on Corporations and Financial Services, ASIC executive, Joanna Bird sought to defend the regulator against suggestions from Queensland Liberal back-bencher, Bert Van Manen that the regulator had no comprehensive idea about the situation before it had begun collecting data as a result of an instruction from the Treasurer, Josh Frydenberg.
Bird said that ASIC had done earlier work where it had looked at grandfathering but that there had been huge variations because the exercises had been “just samples”.
“We thought grandfathered commissions were having a negative impact,” she said.
She said it was therefore wrong to suggest that ASIC had not done any work, but it was now doing that work in an extremely comprehensive manner because the regulator had received a direction under the ASIC Act from the Treasurer.
“But that is not to suggest we had no data prior to that,” Bird said.
Van Manen placed a number of questions on notice to ASIC on the issue of grandfathering including the total amount invested in grandfathered funds, how many advisers would be impacted, the total amount of grandfathered commissions, the total amount of volume bonuses and shelf spaced fees and what consideration had been given to clients who couldn’t be moved because of factors such as exit fees, Capital Gains Tax, insurance etc.
Former Productivity Commission (PC) deputy chair and newly-appointed ASIC deputy chair, Karen Chester told the committee that much more work had been done by the PC which had identified the extent of grandfathered commissions and which had then been used as a resource by the Royal Commissioner, Kenneth Hayne.
Recommended for you
The corporate regulator has cancelled the AFSL of a Perth advice firm, with the firm having previously seen its licence temporarily suspended in 2020.
Having proposed changes earlier this year, ASIC has clarified how it will support licensees with additional relief under the reportable situations regime.
AMP has partnered with BlackRock and research house Lonsec to provide a model portfolio capability on its North platform that offers “portfolio customisation at scale” to advice practices of all sizes.
Money Management rounds up actions ASIC took against advice individuals in the first half for FY25 from exam falsifications to dishonest conduct.
