October 16, 2018
Efforts by Australia’s banks to end grandfathered payments and trail commission for financial advisers will not include life insurance commissions.
The representative body for the banks, the Australian Banking Association (ABA) announced it would seek legislative changes to the Future of Financial Advice (FoFA) reforms to remove provisions that allowed grandfathered payments and trail commissions in financial advice.
However, Riskinfo has confirmed with the ABA that these changes would not extend to life insurance commissions.
In response to questions regarding the extent of the changes, the ABA stated they would not include life insurance commissions which were a matter for the Financial Services Council.
ABA Chief Executive, Anna Bligh said the removal of the grandfathering provisions in the FoFA legislation was “…another important piece in the puzzle of ensuring there are no conflicts for advisers”.
The ABA proposed the legislative change alongside an announcement it would change the Banking Code of Practice to end the charging of ‘fees for no service’ by “…proactively contacting customers to confirm what advice is required and only charging for what is provided”.
Both announcements were made in response to issues raised in the Interim Report of the Financial Services Royal Commission and Bligh said, “It has always been unacceptable for any organisation to charge fees without providing a service”.
“This announcement will put beyond the shadow of a doubt that this practice has no place in Australia’s banking industry,” she added.