Product providers should rebate grandfathered commissions says FPA

Financial services product providers should be responsible for rebating grandfathered commissions to clients who should get the full dollar amount, according to the Financial Planning Association (FPA).

In a submission filed with Treasury’s Financial Services Reform Implementation Taskforce, the FPA also urged that rebating should be a temporary arrangement that reduces over time.

The submission said the FPA had consistently supported the rebating of commissions to clients as a precondition of phasing out grandfathered commissions on non-risk products.

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“The task of managing the rebating process should rest with product providers and clients should receive the full dollar amount of a commission as a rebate,” it said. “Rebating should ideally be a temporary arrangement that reduces over time as clients move from legacy products that are subject to grandfathering arrangements.”

The FPA said that to promote the process, the Government should continue to examine opportunities to remove barriers that prevent clients from moving from legacy products to more modern fit-for-purpose products.

“In particular, the FPA reiterates its suggestion for the Government to consider issues related to clients losing insurance coverage, losing beneficial Centrelink treatments and potential adverse tax consequences that might prevent them from moving from a legacy product, even where there are more appropriate products available,” the FPA submission said.

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I tried to arrange this recently for a client who had an existing IP policy with AMP. AMP flatly declined to rebate the trail to the client, even though we had turned it off.

Cultural change in the organisation still has a long way to go!

I suspect AMP should start to see themselves as an Industry Fund. Ever tried to have the Intra Fund fee rebated to the client in an Industry Fund?

Given the 20 years I was a member of the FPA and saw their only achievement being the ability to witness a stat dec... I doubt this submission will get any legs as well. A Failed entity with little to say that is not conflict free and in fact actually does more harm than good. Stick to running conferences.

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