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.
“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.