Working party takes hard line on soft dollar

By Lucie Beaman

An industryworking party into soft dollar payments has called for the removal of a number of common forms of inducements in its recommendations announced last week.

The working party reviewed 22 common practices that could cause possible bias, and has called for eight of these to be banned outright from the industry.

The group, established by Associated Planners Financial Services (APFS) late last year, was represented by a number of industry players, including BT Financial Group, Credit Suisse Asset Management, Challenger Financial Services Group, MLC, Zurich Financial Services and adviser group Guest McLeod.

Blacklisted activities include adviser groups charging fees for product manufacturers to appear on recommendation lists, payment by fund managers for offshore conferences, as well as volume bonuses on product sales and cash incentives.

“It’s not appropriate to demand funds from fund managers to be on recommended lists. Recommended lists need to be based on research of products,” APFS general manager Andrew Creaser says.

Other activities ruled to be unacceptable include the provision of free or subsidised office space, computer hardware, product bias dealer splits and buyer of last resort offers which include product bias conditions.

The working party has also outlined a number of practices it deems acceptable, however, only in an environment of full disclosure — and has suggested volume bonuses on platform sales, platform equity, and shelf space on platforms can all be tolerated in this circumstance.