FPA member confusion over remuneration paper

Elements of the Financial Planning Association’s Financial Planner Remuneration Consultation Paper are causing significant confusion among its members.

Chief executive Jo-Anne Bloch said the FPA was concerned that a number of members were confused about some elements of the remuneration paper.

“It’s now two weeks into the consultation period and it is timely to provide clarification on some of the misunderstandings and concerns that have arisen.

Bloch added that a number of financial planners have raised wide-ranging concerns over the different types of charging structures and definitions in the paper.

For one thing, she said, the FPA is “not recommending hourly rate fees as the only alternative to commission-based remuneration".

“Asset-based fees and service-based fees agreed by and paid for by the client are also included as a client-directed payment mechanism, which means the FPA’s proposal is not restricted to hourly or time-cost fees only."

Since releasing the paper, there has also been much debate about what constitutes a commission, she said.

“A commission is a payment made by the product provider to the financial planner through their licensee for recommending a product.

“The FPA is recommending a transition away from this to ensure transparency within the financial planning profession and consumer protection.”