Consultative end to commissions

The advocates of banning commissions immediately and outright in the financial planning industry have been left disappointed by the findings of the Parliamentary Joint Committee on Corporations and Financial Services.

Instead of moving for a rapid shut-down of the commissions system, the Ripoll Inquiry has recommended a graduated approach with ongoing consultation between Government and industry.

The committee’s report makes clear the weight and importance it attributed to the fees versus commissions debate but has made clear it believes the ability to find the appropriate mechanisms for the removal of the existing regime lies in the hands of the industry.

Dealing with planner remuneration, the report notes “remuneration structures that are incompatible with a financial adviser’s proposed fiduciary duty should be removed”.

However, in doing so, it acknowledges “some in the industry have already indicated a willingness to move away from commission-based remuneration practices”.

“The committee welcomes this and recommends that government consult with and support industry in effecting this transition,” the report said.

The committee’s report has already earned the ire of the Industry Funds Network which last night reiterated its call for the Government to “prohibit commissions and any other forms of conflicted remuneration paid to financial planners”.

It said this call was in line with the proposals advanced by the regulator, the Australian Securities and Investment Commission (ASIC).