Two letters sent by ANZ OnePath to its superannuation fund members in February and the end of May have revealed a significant toughening up of language around how those members could end grandfathered commissions.
In the first letter, dated February, ANZ OnePath suggested that member contact their financial adviser or write to ANZ OnePath if they wanted to end commissions while in the second letter dated in May members are being informed they can adviser OnePath directly and that “you are not required to notify your financial adviser in order for us to cease paying commission”.
A number of advisers affected by the ANZ OnePath letters have suggested that the toughening up of the language between the two pieces of correspondence reflect the involvement of the Australian Securities and Investments Commission (ASIC).
A copy of the February letter obtained by Money Management reveals that the reference to grandfathered commissions is as follows:
“We may currently pay commissions to a financial adviser in relation to your product. The trustee is reviewing payment of commissions to financial advisers. Contact your financial adviser, or write to us, if you want us to cease paying commissions. If you are uncertain whether to pay commission in relation to your product please contact us.”
The second letter dated in May states:
“We are writing to remind you to consider the adviser payment arrangements in relation to you account.
Recently, the Financial Services Royal Commission recommended that ‘grandfathered’ commissions currently paid to financial advisers in relation to superannuation and pension products, cease being paid. Although this recommendation is yet to be legislated, it is expected to be.
In anticipation of this change, the trustee of your super fund, OnePath Custodians Pty Limited, has been reviewing the payment of adviser commissions.
Currently, we are paying your financial adviser commission in relation to your OneAnser Personal Super.
What do you need to do?
You can advise us directly to cease paying future commission immediately in relation to your account. You are not required to notify your financial adviser in order for us to cease paying commission.”
Elsewhere, the ANZ OnePath letter suggests that members will “generally benefit from reduced product fees once commission payments cease”, adding “Where you have an ongoing relationship with your adviser, we recommend that you speak to them regarding your arrangements”.
Comments
This is a very precarious situation for advisers where any agreements previously in place are slowly being overturned due to the hysteria surrounding the Royal Commission which has tarred all financial planners. I have been informed by a reliable source that the screws are being turned by ASIC against ANZ's wishes. Here we have a regulator using its power to disenfranchise small business. There wasn't much of an outcry when servicing commissions were banned for employer sponsored superannuation accounts which was the elephant in the room. Does anybody know Josh Friedenberg personally as he is the architect for these changes? Speak to him. You might be able to talk some sense into him. I have sent him an email requesting an audience but I haven't had any success
Advisers currently have a contractual and legal right to receive these payments.
FOFA did not include the banning of these payments based on the 2011 Australian Government Solicitors legal advice to Bill Shorten because it did not apply to "existing contractual rights of an adviser to receive ongoing product commissions".
The contractual rights have not been cancelled or replaced and yet here we have the product providers clearly seeking to influence advisers clients to cancel grandfathered commission payments.
One would have to accept this is now a breach of existing contract and outside the current legislation.
Product providers making statements to clients that " You WILL generally benefit from reduced product fees once commission payments cease" without any supporting evidence is manifestly negligent and misleading.
Advisers are now being informed that ASIC are overseeing the structure and wording of communication being sent and are involved in the final approval of these before being sent.
Advisers are also receiving reports that ASIC have been grossly dissatisfied with the very minimal number of clients electing to turn off commissions following correspondence already being sent and have enforced further aggressive correspondence to be sent in a bid to achieve increased results.
This is a case of the regulator playing the role of both legislator and regulator even before any legislation to alter the status of grandfathered commission payments has been determined.
So is this a case where the product providers are being forced to breach existing contractual arrangements by the regulator ?
The relationship between product providers and advisers is crumbling to nothing and is being destroyed.
The clients who are receiving this form of correspondence and who are satisfied with their adviser and receiving service are confused.
There are now no boundaries as to what it seems the regulator and the product providers are prepared to go to in order to potentially disadvantage client's positions and to dismantle adviser's remuneration rights under current legislation.
If I received an email that began with "We are writing to remind you to consider the adviser payment arrangements in relation to you account", and mentioning "OneAnser Personal Super", I'd assume it was a phishing attempt from a third world country...
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