Hayne slams fees for no service in RC interim report

Royal Commission fees for no service fees interim report

28 September 2018
| By Anastasia Santoreneos |
image
image
expand image

The Royal Commission interim report has shone a light on the poor culture of licensees, with Hayne specifically making an example of fees-for-no-service.

Hayne said one simple conclusion could be made: the root cause of the fees for no service conduct was greed by licensees and advisers.

The Commissioner pointed to the Australian Securities and Investments Commission’s 2016 report on fees for no service, which singled out the big four banks and AMP as culprits for what Hayne said was “obviously wrong”.

And, while Hayne acknowledged it was advisers who stood to gain a financial advantage by making an ongoing service arrangement, he put the onus back on the licensee, which he said “did nothing to prevent advisers having more customers on their books than they could monitor or advise manually".

The problem won’t be solved by regulation, according to the Commissioner, rather it’s a matter for the client and the adviser to decide what, if any, services will be provided after the provision of initial advice.

“But it is consistent with the policies that underpinned the FoFA (Future of Financial Advice) reforms to consider first, how long a contract for future services can be made and second, what responsibility any entity asking for payment of fees for future services should have for verifying that the client has authorised the payment,” he said.

Hayne suggested that the adviser and client should have to renegotiate an ongoing service arrangement annually, and where clients have invested funds through platforms, the investment entity should not deduct amounts that are to be paid to the licensee or adviser without the express authority from the client. 

 

 

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

Interesting. Would be good to know the details of the StrategyOne deal....

4 days 4 hours ago

It’s astonishing to see the FAAA now pushing for more advisers by courting "career changers" and international recruits,...

3 weeks 2 days ago

increased professionalism within the industry - shouldn't that say, FAR register almost halving in the last 24 months he...

4 weeks 1 day ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

2 weeks 4 days ago

A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments ...

3 days 3 hours ago

Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million....

2 days 5 hours ago