Industry superannuation fund body, Industry Fund Services (IFS) has acknowledged some of its financial advisers have been in receipt of conflicted remuneration.
Initial submissions released by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which is related to Industry Super Australia (ISA), has revealed that IFS identified “conflicted remuneration by advisers” as falling below community standards and expectations.
It reported to the Royal Commission that individual performance plans for two advisers appeared to include funds under management targets for the Industry Fund Portfolio Service, an investment product issued by IFS.
“Both advisers provided advice to retail clients in relation to the IFPS,” the submission said. “IFS investigated the matter and confirmed that the structure of the performance plan was covered by grandfathering arrangements and consequently was not a breach of the prohibition on receiving conflicted remuneration but did fall below community standards and expectations.”
However, the same submission said that IFS had not identified consequences for consumers and that it had restructured its advice business “to ensure that persons involved in the business development functions of IFS, were not also involved in the provision of personal advice to retail clients”.
It said it had also amended the performance measures of the two advisers to remove product sales targets.
The submission said the conduct of the advisers was also monitored through the Advice Governance and Risk Committee.
The submission also itemised two cases of IFS financial planners providing advice on the establishment or closure of self-managed superannuation funds “which was outside the scope of their authorisation by IFS”.
It said the financial planners had been counselled and provided with training and guidance.