The Federal Treasury has finally made public the submissions it received around consultations regarding the regulatory settings for ending grandfathering with the documents making clear the degree to which the industry, but particularly industry superannuation funds, believed the regime had to be brought to an end.
However, in line with the position put by the Association of Financial Advisers (AFA) and the Financial Planning Association (FPA) there was significant unanimity on the need for any rebated grandfathered commissions to be directed to clients.
However, annuities specialist, Challenger Limited pointed to the technical difficulties in achieving clients received the rebates, particularly the manner in which “a one-off payment would crystallise the taxation and social security implications of redirecting commission payments to customers”.
It said that the intention of the policy proposal was for customers to receive the benefit of previously grandfathered commission payments and that it supported the proposal, but wanted to “ensure that customers do not suffer unintended detriment when the proposal is implemented”.
“It will be important for consumers that treatment of any redirected commission payments does not alter, or adversely impact their eligibility for existing benefits,” it said. “Many of our annuity customers are retirees who may be eligible for certain social security benefits, such as a part pension, health care card or other assistance.”
One of the loudest dissenting voices in the submissions was that of Industry Super Australia (ISA) which wanted an immediate end to grandfathered arrangements and argued that arguments around customer rebates were flawed.
