FPA/IFSA announce soft dollar stand

Two of the industry’s largest associations have pre-empted Government and regulators by outlawing several methods of alternative remuneration, and will now seek to reach an agreement on how rebates, commissions and conflicts of interest in the industry are dealt with.

As of August 2, members of both the Financial Planning Association (FPA) and the Investment and Financial Services Association (IFSA) will be banned from accepting or offering a range of soft dollar remuneration methods including free travel and accommodation to conferences that are ‘volume sales’ related, free computers and/or office accommodation, free business tools such as commercially available software and cash or gifts of any sort over the value of $300.

The combined initiative follows the FPA and IFSA finalising the draft Industry Code of Practice on Alternative Forms of Remuneration in the Wealth Management Industry they sent to members back in December 2003.

“Effective disclosure of soft dollar benefits to people and companies which provide financial advice can ensure that consumers will be in a better position to decide whether or not to rely on that advice,” IFSA chief executive officer Richard Gilbert says.

The next stage of pro-activity is in the area of rebates, with both FPA and IFSA members having been requested to comment by August 9 on a draft proposal released at the beginning of the month.

As for other areas of soft dollar benefits, such as entertainment over $300 and certain education conferences, these must now be disclosed in a public register.

Despite the new rules being effective as of next Monday, FPA and IFSA members will be given until January 1, 2005, to move to full compliance.

“Compliance with the Code, and with the Rebates Guideline once adopted, will be monitored and any complaints against FPA members fully investigated. Where breaches are upheld, details will be published on the FPA web site,” FPA chief executive Kerrie Kelly says.