In-house platform deals make waters murkier

If volume rebates are banned by the Government, dealer groups will simply replace them with their own platforms and products, complete with financial incentives for their advisers that might not be disclosed to the consumer, according to the director of Dealer Group Advisers, Andrew Wheeler.

That would create a situation in which the Government would be forced to constantly ban new product fee structures designed to replace lost volume bonuses, he said.

Advisers are currently required to disclose to their clients any rebates or benefits they receive over a certain amount. If dealer groups create their own platforms and products to replace lost value from volume rebates, investors will not be able to see any cost advantages the adviser receives and will not be able to negotiate their fees as a result, Wheeler said.

This would also result in less choice for the consumer, as they would not be able to compare the costs and volume benefits of different investment products and advice structures of different advisers, he said.

Wheeler suggested that any volume rebates from product manufacturers be disclosed to clients, and it was then up to clients to decide what action was necessary.

"If they've got choice and they've got disclosure, why try and go the next step and say to ban volume rebates? The flipside is that if you don't have to disclose the [money] but you've got it in five or six other ways, [the client] will never know about it," he said.

Banning volume rebates would also benefit product manufacturers, as they would be able to keep any rebates for themselves, without necessarily lowering the cost of their products, he said.