Radar Results has called for ministerial intervention on the issue of potential anti-competitiveness in the financial advice market engendered by the Treasury’s grandfathering provisions under FOFA, lodging a submission.
Radar Results said it has been given legal advice indicating that grandfathered commission “can in fact be moved between licensees” – despite warnings from stakeholders such as the Association of Financial Advisers recommending advisers stay put in the current climate. The submission expressed concern about the impact on practice values if advisers are discouraged from moving between licensees.
“Licensees generally are not in the business of buying a financial planning business from their [authorised representatives], unless they have to because of some condition in the AR's agreement, such as the exercising of a buyer of last resort (BOLR) option," said Radar Results principal John Birt.
“It's now more attractive to have your own AFSL [Australian financial services licence] because you can move the clients and commissions to another licensee, as long as they have abided by the deadline of 30 June,” Mr Birt added, estimating that as many as 3,000 financial planners may be affected by the regulations as they stand.
“It would be nice to have some announcement by the government on this matter, which they had promised prior to the election,” Radar Results stated.
“[We expect] an announcement from Treasury within a few weeks that will resolve this matter once and for all.”
The submission follows comments by Minter Ellison partners Richard Batten and Christopher Brown, who wrote in this month’s ifa magazine (sister publication of InvestorDaily) that grandfathering is allowed to continue so long as an existing agreement is not deemed to become a “new arrangement”.
It is possible under the current guidance for an adviser to move licensees without triggering a grandfathering event, although this also raises questions over anti-avoidance provisions, according to Minter Ellison.
Mr Batten also told InvestorDaily in August that there are options for advisers to move between licensees without triggering a grandfathering event.
