The financial planning industry rather than the Government should be responsible for determining the way in which planners are paid, according to the peak accounting body, CPA Australia.
The CPA Australia view is contained in a submission to the Parliamentary Inquiry into agribusiness managed investment schemes (MIS) and the reference to planner remuneration represents the first of its key recommendations.
It said “generally it is not the role of government to set markets, therefore, financial planner remuneration must be left as a matter for industry to determine within current legislative and regulatory parameters”.
Referring directly to commissions, fees and other remuneration paid to marketers, distributors, related entities and sellers of MIS to investors, the submission said the issue of fees and other remuneration was a constant and often negative focus for the financial services industry.
“We acknowledge that upfront commissions have been a traditional feature of agribusiness MIS products,” it said. “These commissions have been the cause of much debate and concern, potentially influencing or even driving the motivations of advisers who recommend whether a person should invest or not invest in such products.”
Stressing that CPA Australia had been a long-time advocate of fee-for-service arrangements, the submission said by separating how a fee is determined and how a fee is paid, transparency was ensured and significantly reduced the potential for perceived conflicts of interest.
The submission noted that the Financial Planning Association and the Investment and Financial Services Association were “finally showing some signs of following the accounting profession’s lead” with regard to fee-for-service but added that “the issue has quite some way to go before it is resolved or reaches its conclusion”.
