Conflicts deadline sparks dealer action
AXA and MLC, two of Australia’s largest dealer groups, have made changes to their adviser remuneration policies following the release of the Financial Planning Association’s (FPA) Principles on Conflicts of Interest.
The FPA will be meeting within weeks to finalise the principles, which were released in draft form to members in May. A final version is expected to be published in early 2006.
MLC head of financial planning Matt Lawler said that a buyer of last resort (BOLR) agreement, which offers higher multiples where planners sell greater volumes of MLC products, is under examination.
“We’re prepared to review BOLR and actually remove the issue of bias,” he said.
However, he added that they would need to seek legal advice as historically BOLR arrangements have been confirmed in written contracts.
Lawler added that worse practices than BOLR continue to exist in the industry that are “more prevalent and much more prone to influence advisers”.
These include “equity schemes, institutions buying into adviser practices on the basis that they will write a certain amount of product, and equity ownership in the platform based on selling a certain amount of product”, he said.
AXA Financial Advice Network general manager Andrew Waddell said the organisation would also have to make a number of changes to reflect the new principles.
“It won’t be possible to have biased licensee terms or BOLR and, as it currently stands, we do. So should the principles be adopted, we’ll need to change those.”
Asgard Wealth Solutions chief executive Geoff Lloyd said while the group had proper disclosure practices in place, preferential payments from the platform to the dealer group would be removed.
“It’s an opportune time for us to redesign the current remuneration model within Securitor, like how Securitor gets paid by all providers, not just by Asgard, and then how it will on-pay.”
Meanwhile, the Federal Opposition and Australian Consumers’ Association, while welcoming the code, have again called for the abolition of trail commissions.
For more industry opinion on the conflict principles turn to page 18 of MM Nov17, 2005.
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