Suncorp's head of dealerships, Simon Harris, told InvestorDaily the bank warmly welcomed the announcement of the federal government’s amendments to the FOFA legislation, allowing the return of a “free trade” environment to the financial planning market.
“We have been delighted to hear the progress from the [Assistant Treasurer] and we will be involved in the consultation process through our work with the [Association of Financial Advisers] and [Financial Services Council],” Mr Harris said.
“[FOFA’S] grandfathering [provisions have] put a significant halt to recruitment over the past 12 months.”
Mr Harris revealed that “between 25 and 50” advice firms had expressed strong interest in joining the bank’s financial advice channels, Guardian Advice and Suncorp Financial Planning, but due to the uncertainty around grandfathered revenue, the firms were all “unable to move across”.
The news comes as Suncorp embarks on a new rewards program for its financial advisers whereby aligned financial planners who are “building professional sustainable” practices will be offered incentives by the dealer group executives, including lower professional indemnity (PI) insurance premiums.
“What we know from experience is that those advisers that have higher levels of education, are members of professional associations with codes of conduct, and have achieved the highest compliance audit have less claims than others and therefore their PI premiums should be less,” Mr Harris said.
Suncorp will endeavour to negotiate with respective PI insurance issuers to facilitate lower premiums for selected advisers.
However, Mr Harris said that where a negotiation cannot be concluded successfully, Suncorp would be willing to provide a “subsidy” whereby the bank will incur the additional costs of the PI insurance itself and pass on lower premiums to advisers in this fashion.
The bank will “risk rate” financial advisers to determine the appropriate level of PI premiums, Mr Harris added.
