Govt urged to treat advice commissions like franking credits
If the Government were to apply the same logic to life/risk and grandfathered commissions that it applied to refundable franking credits, then it would opt for their retention, according to financial services business broker, Paul Tynan.
Speaking to Money Management, Tynan said that the similarity between the franking credits debate and that applying to life/risk and grandfathered commissions was that they both involved retrospectivity.
Further, he said that just as retirees had factored refundable franking credits into their income, life/risk advisers had factored in commission-based remuneration and this was a factor in the valuation of their businesses.
“Will the new Coalition Government apply the same principle and review grandfathered commissions because it is also clearly based on the retrospective nature of the changing product design,” Tynan asked.
“The commission in these products has no connection with the ongoing servicing of clients and was developed ‘in product’ because the consumer could not afford or would not pay for the advice."
Tynan’s comments followed on from his earlier assertions that Canberra policy-makers had been unduly influenced by self-interest groups with the result that the advice debate had become hijacked with no heed being paid to consumers, their needs and affordability.
Recommended for you
Government has introduced a bill to Parliament to legislate the first stream of the QAR reforms.
ASIC now has a 1:1 ratio when it comes to court success in the enforcement of crypto activities and more action is expected as Treasury seeks to introduce a regulatory framework.
A leading governance body has hit out at “specialist interest groups proposing ad hoc law reform” when it comes to reforms of financial services legislation and believes an independent body is needed.
The release of ALRC’s final report into financial services legislation has highlighted financial advice as a “significant” focus as it seeks to reduce costs and help advisers understand their obligations, alongside the Quality of Advice Review.
