Release of grandfathering submissions reveals positioning

11 December 2019

The Federal Treasury has finally made public the submissions it received around consultations regarding the regulatory settings for ending grandfathering with the documents making clear the degree to which the industry, but particularly industry superannuation funds, believed the regime had to be brought to an end.

However, in line with the position put by the Association of Financial Advisers (AFA) and the Financial Planning Association (FPA) there was significant unanimity on the need for any rebated grandfathered commissions to be directed to clients.

However, annuities specialist, Challenger Limited pointed to the technical difficulties in achieving clients received the rebates, particularly the manner in which “a one-off payment would crystallise the taxation and social security implications of redirecting commission payments to customers”.

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It said that the intention of the policy proposal was for customers to receive the benefit of previously grandfathered commission payments and that it supported the proposal, but wanted to “ensure that customers do not suffer unintended detriment when the proposal is implemented”.

“It will be important for consumers that treatment of any redirected commission payments does not alter, or adversely impact their eligibility for existing benefits,” it said. “Many of our annuity customers are retirees who may be eligible for certain social security benefits, such as a part pension, health care card or other assistance.”

One of the loudest dissenting voices in the submissions was that of Industry Super Australia (ISA) which wanted an immediate end to grandfathered arrangements and argued that arguments around customer rebates were flawed.




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What a surprise...the Union Funds were the key players who wanted an end to Grandfathered commissions,
but they say nothing about their ongoing Intra-Fund advice racket, that ASIC's Shipton has said in Hansard helps pay for personal advice. What an absolute joke.

They can't be serious.
How is it that many businesses relied on the 2013 legislation that changed hands after 2013 based upon the grandfathering of commissions that applied up until that date, will now see many financial planning practices left in a financial bind, because of an Industry fund agenda.
The fact that almost 4,000 advisers have left the industry this year and reportedly 16 suicides does not suggest to anyone that there is little opposition to the ending of grandfathering commissions.
If I understand FASEA's interpretation of conflicted remuneration, that also applies to life insurance commission payments @ 1 January 2020.
Will there be a large bunch of orphan clients now on the books of most existing life companies ?

"One of the loudest dissenting voices in the submissions was that of Industry Super Australia (ISA) which wanted an immediate end to grandfathered arrangements and argued that arguments around customer rebates were flawed". And yet Industry Super Funds are allowed to charge every member a fee whether they get advice or not. LETS JUST HAVE ONE RULE FOR EVERYONE...

Expect a bill to clean this all up, eventually. Now it's in the Hansard, as an admission for all to see, the Govt cannot allow such a ridiculous travesty to continue long term. It's an embarrassment to Jane Hume that she hasn't acted sooner.

oh yes..there will be unintended consequences... You will Pay More

How about all those commissions the Industry funds receive from the group insurance providers? Are these actually refunded to members on an individual basis? Or do the funds find themselves into sponsorship agreements with sporting clubs.

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