Government could restrain grandfathering concession
The Government appears to be reconsidering its approach to the grandfathering of commissions, according to King & Wood Mallesons special counsel Michael Mathieson.
"Under the existing law all you've got to do is identify or be able to say that the benefit's given under a pre-existing arrangement. If the answer is ‘yes', then it's grandfathered," said Mathieson.
But there is evidence in Australian Securities and Investments Commission (ASIC) Consultation Paper 189 of a move back to the effect of the original draft regulation, he said.
"The original regulation referred to a benefit [ie, commission] not being grandfathered if it related to an investment in a new financial product," said Mathieson.
"In ASIC's Consultation Paper 189 we've got a statement which would try to bring about the same outcome, but through a consultation paper and a regulatory guide rather than through the law," he said.
Minister for Financial Services Bill Shorten's office revealed at the start of the month that they are reconsidering the issue of grandfathering, Mathieson said.
"The consultation is not public, but it's reasonable to speculate that it's the same issue: putting constraints around the scope of the [grandfathering] concession," he said.
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