The Government will reject calls to ban commissions for financial advisers as long as advisers continue to properly disclose their remuneration, Federal MP Chris Pearce said.
The Parliamentary Secretary to the Treasurer told the Investment and Financial Services Association yesterday that commissions are here to stay.
“I think the law is clear enough whether an adviser is paid on the basis of commission or fee for service,” he said.
“As I see it, there is a place for commissions, so long as the adviser being paid the commission makes full and proper disclosure to the investor that this is how she or he is to be paid.
“When you get down to it, the most important factor is that there is, and is seen to be, a correlation between the value of advice and the amount paid for it, whether payment is upfront or through commissions over time,” he said.
Pearce said calls for banning commissions are still being made despite evidence that fees have come down despite increased demand for financial advice.
“There are some others in politics, and those in the broader community, who from time to time intimate that commissions should be banned.even though most advisers being paid a commission are doing their best to comply with the law,” he said.
Peace said the financial services industry needs to tackle the commission debate to avoid Government intervention.
“It is therefore a challenge that industry needs to work through if it does not wish to see such calls for regulation acted upon,” he said.
Pearce said the Government is also backing the merger of the seven ASIC-regulated external disputes resolution schemes across the mortgage broking, financial services, banking and credit sectors into one single body.
The boards of the schemes are currently considering a merger.
