Legislation banning the payment of grandfathered conflicted remuneration, including commissions, to financial advisers is set to be introduced by the federal government on 1 August, with the aim to end all such provisions by the start of 2021.
A statement released by the government today said: “One of the key recommendations of the royal commission was to end the payment of grandfathered conflicted remuneration to financial advisers.
“The government’s reform will benefit retail clients as they will receive higher-quality advice and stop paying higher fees to fund grandfathered conflicted remuneration.”
It noted the Treasury Laws Amendment (Ending Grandfathered Conflicted Remuneration) Bill 2019 would implement the government’s plan to end the grandfathering of conflicted remuneration by 1 January 2021.
“We are also going further, by including in the bill a power to make regulations to establish a scheme that will provide that those people paying conflicted remuneration rebate clients for any remuneration that would be paid after 1 January 2021,” it added.
It stated it had commissioned the Australian Securities and Investments Commission to monitor actions taken by product issuers to ensure they were also working towards ending grandfathered conflicted remuneration.
“The government is taking action on all 76 recommendations contained in the final report of the royal commission and will continue to take the necessary steps to restore trust in Australia’s financial system,” it said.
In April, the SMSF Association threw its support behind the removal of grandfathered remuneration related to financial advice.
Commissioner Kenneth Hayne called for grandfathered remuneration to be repealed as soon as possible in the financial services royal commission’s final report earlier this year.