Eight product issuers have grandfathered conflicted remuneration (GCR) arrangements in place since the start of 2021 for 46 products amounting to $24.4 million, according to the corporate regulator’s review on GCRs.
The Australian Securities and Investments Commission’s (ASIC’s) review said the issuers planned to rebate product holders and they had to provide the rebates no later than one year after the date by which they were legally obliged to give the conflicted remuneration to another period.
ASIC said it found most of these arrangements were only terminated towards the end of its review period.
The report found around $760.5 million in grandfathered conflicted remuneration (GCR) was paid by 89 product issuers relation to 1,273 products during its review period of 1 July, 2019, to 31 December, 2020.
Source: ASIC
Though, during ASIC’s review period, product issuers terminated 96% (1,227) of GCR arrangements, but 46 remained.
“Product issuers estimated that $266.7 million was rebated to product holders over the review period, mostly through fee reductions. During the review period, there was no mandatory requirement to rebate to product holders,” ASIC said.
“Financial advisers changed the way they charged clients over the review period. Where appropriate, they moved clients to other fee arrangements – for example, charging an ongoing fee, an hourly rate, a fixed price or an asset-based fee.”
“Overall, the findings of our investigation were very pleasing. Nearly all product issuers ended GCR arrangements before 1 January, 2021.”
Prior to the review period, ASIC also found that 93 product issuers paid at least $816.1 million in GCR to Australian financial services licensees or their representatives in the 2018-19 financial year.
The review also found the top 10 product issuers that paid the largest amount of GCR between 1 July, 2018 to 31 December, 2020, paid a total of $1.196 billion.
AMP’s N.M Superannuation Proprietary Limited paid the most at $266.6 million, followed by Ipac Asset Management ($245.5 million), and Colonial First State Investments ($221.2 million).
N.M Superannuation’s AMP Flexible Lifetime Super prodcut accounted for 10% of the total GCR paid during 1 July, 2018, to 31 December, 2020, amounting to $155.1 million.
