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Assistant Treasurer Senator Cormann has announced the government’s Future of Financial Advice (FOFA) law changes, confirming the coalition will explicitly ban all commissions for the sale of financial products.
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All commissions banned
20 June 2014
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The announcement reiterates the Abbott government’s longstanding position that Labor’s FOFA reforms went too far.
Senator Cormann said the coalition’s stance would “strike the right balance between appropriate levels of consumer protection and ensuring the availability, accessibility and affordability of high-quality financial advice”.
In releasing his response, he said amendments to the best interests duty will remain as previously proposed by the government, hitting out at the “inaccurate assertion that we were somehow abolishing or significantly watering down the best interests duty for financial advisers”.
The minister also lashed out at the “equally inaccurate assertion that we are reintroducing commissions for financial advisers”.
“The government has supported the ban on commissions and conflicted remuneration for financial advisers since it was first legislated. At no point has the government sought to reintroduce commissions or conflicted remuneration for financial advisers,” Senator Cormann said.
The government will introduce additional clarity on the general advice exemption to the conflicted remuneration rules - as recommended by the Senate Economics Committee report – to dispel concerns that the amended FOFA allows an avenue for banks or other advice provision parent companies to sneakily reintroduce commission payments.
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“The government is moving to put this absolutely beyond doubt by prescribing that any payment related to the provision of general advice cannot be an upfront or a trailing commission,” announced Senator Cormann.
“To put absolutely beyond doubt how serious the government is about not permitting commissions in these circumstances, we also intend to put in place regulation-making powers that may prescribe circumstances in which all or part of a benefit is to be treated as conflicted remuneration,” Senator Cormann concluded.
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