FPA weighs in on CHOICE switch campaign
The Financial Planning Association (FPA) has criticised CHOICE’s partnership with the Big Bank Switch campaign, calling it hypocritical.
The criticism centres on the apparent double-standard of CHOICE receiving referral fees, and not disclosing the full details, after it was critical of the planning industry’s lack of transparency.
“We believe this campaign is hypocritical of previous arguments made by CHOICE against commission payments to financial advisers,” FPA chief executive Mark Rantall said.
“CHOICE has argued over many years for the banning of commissions and supported the [Industry Super Network’s] position on getting rid of ongoing and asset based fees for providers of financial advice, however it is apparent that the Big Bank Switch campaign does just that,” he said.
“CHOICE has admitted to receiving a referral fee from this campaign, whilst at the same time continuing to be one of the most vocal opponents of commissions paid to financial planners. CHOICE is displaying double standards on payments to those providing financial advice.”
CHOICE director campaigns and communications Christopher Zinn told Money Management that he had expected criticism from the planning industry, but CHOICE’s argument had always been against poorly-disclosed commissions and volume-based payments.
He said it is hard to understand how the referral fees CHOICE stands to receive are comparable to the trailing commissions received by financial planners.
“We’ve structured this in a way that removes conflicts of interest. We haven’t released all the details because the registration process is ongoing until August 14 and then the negotiations will take place,” he said. After that date full details would be announced,” he said.
“CHOICE could not be more conscious of the allegations of a conflict of interest and appreciates why the FPA put out a release talking about apparent double standards. We intend to demonstrate why there is no conflict but unfortunately can’t do that yet.”
He added that the referral fees will be used to fund the current campaign and any fees received above that will be used in future campaigns to benefit consumers.
“There is no comparison in this case to financial advice because CHOICE is just a referrer,” he said.
But Rantall told Money Management that having consumers pay commissions, and with referral fees going back to CHOICE, it was no different to the financial planning case.
“We would call on CHOICE to fully disclose what they are receiving and where the money is going and to not accept commissions or referral payments. They should have their readers opt-in every year, the same as they’re calling for from financial planning, and close this massive double standard,” he said.
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