The Association of Independent Financial Professionals (AIOFP) has made a submission calling for the banning of grandfathered commissions to be pushed back by two years to help advisers through the on-going COVID-19 crisis. The proposed new date for the banning of grandfathered commissions would be 1 January 2023.
The ban is a recommendation made last year by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The AIOFP also requested that the Australian Securities and Investments Commission (ASIC) “stop its current activity of encouraging manufacturers to terminate grandfathered revenue before the legislated 1 January 2021″, reported Financial Standard.
The association has previously accused ASIC of prompting institutions to turn off grandfathered commissions early, even when a High Court challenge of the grandfathered commissions ban was on the cards.
AIOFP said in the submission said that several changes being implemented in the financial sector have led “thousands of experienced advisers leaving the industry and threatened the existence of thousands of small business owners and their mostly women employees and their families”.
The submission added, “Unless the federal government extends concessions to the advice industry like they have done to other sectors, small business and consumers will significantly suffer in the short to medium term, and tax payers in the long term.”
A law was enacted last year which mandates the grandfathering of conflicted remuneration paid to financial advisers to be banned by 1 January 2021.
The Royal Commission’s report released last year suggests that grandfathered commissions on all financial products should be scrapped and that commissions relating to life insurance, which are not currently included in the ban on conflicted remuneration – should be reduced and eventually completely eliminated on the back of a review in 2022.