ASIC refuses tailored approach to remuneration disclosure


Amid all the discussion about transparency around planner remuneration, the Australian Securities and Investments Commission (ASIC) has refused to allow a planning firm to tailor the manner in which it reveals to clients the bonus opportunities available to its planners.
ASIC's refusal has been revealed in its latest "Overview of decisions on relief applications" with the regulator indicating that it was important for consumers to plainly understand how their advisers were remunerated.
It said the firm had requested a determination that describing the bonus opportunity offered to its authorised representatives as a dollar amount or as a percentage of a known amount (the adviser's salary) would impose an unreasonable burden on the firm and its authorised representatives to disclose confidential salary information.
Instead, the planning firm wanted to be allowed to disclose the advisers' potential bonuses as a description of the method of calculating the remuneration, including worked dollar examples.
We considered that it would not assist consumers to understand how their adviser is remunerated. ASIC said granting the determination would have allowed the firm to disclose the advisers' potential bonuses as a description of the method of calculating the remuneration, including worked dollar examples.
"We considered that it would not assist consumers to understand how their adviser is remunerated," the regulator said.
Discussing the reasons it had refused the application, ASIC said it believed the Parliament "intended the current requirement to be a high standard, prioritising the need for optimal disclosure from a consumer comprehension viewpoint over practicability for providing entities".
"…while we accept there is commercial benefit in keeping remuneration information confidential, we need to weigh that commercial benefit against the regulatory detriment of less than optimal disclosure," it said.
Recommended for you
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
New Zealand’s financial regulator is following the footsteps of its Tasman neighbours and proposing to conduct a review on improving the accessibility of financial advice and advice business models.