The Association of Financial Advisers (AFA) has called for a three-year transition period for advisers to assist clients affected by the ending of grandfathered commissions.
The AFA made the call after the Ending Grandfathered Conflicted Remuneration Bill 2019 passed through the House of Representatives yesterday.
AFA chief executive Philip Kewin said: “We are deeply disappointed at the lack of analysis on the impacts of this reform and the lack of communication and guidance for impacted clients and advisers. At this stage there will be many thousands of cases where a sensible solution is simply not available.”
In a media release, Kewin noted three years would be sufficient time for advisers to find solutions for affected clients and called on the federal government and Australian Securities and Investments Commission (ASIC) to provide guidance for advisers whose clients had been hit by the move.
“We particularly call on ASIC to consider all options to simplify the advice requirements for advisers so that they can help as many of these clients as possible before the deadline,” he said.
The AFA also called on product providers to work towards the 1 January 2021 deadline for ending grandfathered commissions, rather than turning off such provisions sooner.
“In many cases, turning off grandfathering before the legislated date will only serve to stop advisers being paid, the benefit may not be passed onto the client and the ongoing servicing will be left to the institution providing the product,” Kewin noted.
He highlighted the AFA’s concern that the legislation would have a great impact on advisers who were reliant on grandfathered commission clients.
“Some of these advisers have a significant level of debt that is secured by grandfathered commission clients,” he said.
“We call on the banks to treat these financial advisers with respect and allow them time to adjust their business models so that they are viable in the longer term. We also call on the government to carefully monitor the implementation of this part of the reform.”