The Royal Commission interim report suggests that it [the Royal Commission] does not have a good understanding of financial advice, according to the Association of Financial Advisers (AFA).
In doing so, the AFA has said it cannot see any justification for the Royal Commission recommending a review of grandfathered commissions, let alone the removal of life insurance commissions.
As well, the AFA has signalled it will be making further submissions to the Royal Commission outlining the flaws in in the interim report’s position on grandfathered commissions.
In a message to members signed by AFA chief executive, Phil Kewin, the organisation said that having reviewed the financial advice section of the interim report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry it was concerned that the AFA’s submissions had not been acknowledged.
“They [the Royal Commission] have specifically focussed attention on issues related to adviser remuneration, including such important issues as life insurance commissions, ongoing adviser service fees and grandfathered commissions,” it said.
“While we understand the myriad of complexities and issues with adviser service fees and grandfathered commissions we cannot see any justification for a review, let alone removal of life insurance commissions.”
“We will have more to say in our submission with respect to the flaws in the interim report’s position on grandfathered commissions. We will be working hard to ensure that the level of understanding of these issues is improved and that any recommendations in the final report are based upon a real understanding of the issues and the implications for ensuring the best outcome for clients.”
The AFA has asked members to read key sections of the Royal Commission interim report to inform the organisation’s response, particularly questions around the continuing of life insurance commissions, the direct sale of life insurance and approved product lists (APLs).