Grandfathering must be fair to financial planners and in clients’ best interest
FPA responds to Treasury amendments to grandfathering regulations and ASIC guidance on conflicted remuneration.
The Financial Planning Association (FPA) Chief Executive Officer Mark Rantall has welcomed the Federal Government’s draft amendments to key conflicted remuneration measures as a ‘common sense compromise’ between the intentions of FoFA and the practical implications of Australian investors and the financial planners – largely small business operators – who serve them.
These proposed regulations will enable financial planners to provide financial advice and recommendations on switching investments and products within a platform with certainty to their clients.
Mr Rantall has further welcomed the delayed start date. His comments relate to today’s announced amendments to the conflicted remuneration ‘grandfathering’ provisions contained within the Future of Financial Advice (FoFA) regulations, due to be enforced from July 1, 2013.
The provisions allowed for certain retrospective payments to be treated separately to new rules which ban conflicted remuneration to advisers from product providers and administrative platforms.
“The FPA has taken a strong lead since 2009 in banning conflicted remuneration. So our first principle is to support a level playing field and ensure the best interest test is being met for all consumers,” he said.
“We believe the transition period to 1 July 2014 for all licensees/dealer groups is in order to allow an orderly and appropriate transition to the new rules. This sensible arrangement would allow all financial planning businesses to transition and re-structure in a manner which does not adversely impact their clients nor their business,” Mr Rantall said.
The FPA welcomed the ASIC amendments made to the guidance on conflicted remuneration.
“We believe the guidance on conflicted remuneration is a step in the right direction, specifically in relation to the principle approach taken to the performance bonus arrangements for employed financial planners,” concluded Rantall.