The FPA has responded to comments made by the association’s former chair that adviser commissions should be banned, stating the decision over whether advisers should charge commissions or fees is a decision for the consumer.
“The FPA have principles for managing conflicts of interest, which have been adopted by all members, and cover the behaviour and disclosure relating to remuneration, respective of whether payment is made by fee or commission,” FPA chief executive Jo-Anne Bloch said.
Bloch’s comments are in response to FPA former chair John Hewison’s claims that commissions in the industry must be banned because clients don’t want advice tainted by product bias, conflicts of interest or sales commissions.
The FPA supports consumer choice, with the key principle being that members provide advice that is in the best interest of the client, Bloch said.
“The main issue for the FPA is that consumers are provided with quality advice by professional financial planners, who have the appropriate qualifications and adhere to the proper processes,” she said. “The way a financial planner is remunerated is not what delivers or guarantees quality advice, the professionalism of the financial planner does.”
According to research commissioned by the FPA last year, about 80 per cent of advisers surveyed, a majority being FPA members, said they already offered a choice to clients whether they pay on a fee or commission basis.
ASIC’s stance on remuneration has not changed. ASIC chairman, Tony D’Aloisio spoke about the regulator’s stance on remuneration at the FPA annual conference late last year.
He said in the context of the current legislative framework, ASIC would allow the market to “vote with its feet” on the remuneration models investors prefer.
ASIC would not seek to pick “winner models” but would be active in applying the existing disclosure regime to its limits, D’Aloisio said.
