Second FOFA tranche hard on soft dollar
The second tranche of the Government's Future of Financial Advice legislation has revealed a ban on volume-based shelf-space fees and has sought to limit the ability of dealer groups and product manufacturers to conduct "professional development" conferences offshore.
The legislative outline also clearly spells out the nature of what it regards as "conflicted remuneration", with a specific carve-out with respect to bank employees selling banking products and with respect to general insurance.
The legislative outline, released by the Treasury today, states that it will ban the receipt by platform operators of volume-based benefits to the extent such incentives are a means of product issuers and fund managers "purchasing" shelf space.
However it said the bill would not seek to ban fund managers lowering their fees to platform operators where such discounts or rebates represented a reasonable value for scale.
Looking at the question of soft dollar remuneration and conferences and professional development, the legislative outline makes clear that professional development must be conducted in Australia and New Zealand and that 75 per cent of the time must be spent on professional development.
As expected, the second tranche makes clear the terms of the ban on asset-based fees in geared funds.
AUTHOR
Mike Taylor
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