Following the June 21 hearing of the PJC on Corporations and Financial Services, questions on notice were asked of 10 industry stakeholders, including major advice providers BT Financial Group and Macquarie Group, which were asked how a best interests test may conflict with the commercial interests of an advice licensee.
In its response, BT said while it accepts conflicts of interest “may arise from time to time”, the group has clear protocols and “well-established risk management and governance frameworks” in place to manage them, with advisers free to recommend non-Westpac products and required to place client interests above their own or those of the licensee.
BT also pointed to its in-house research team as being able to guide planners regarding the most appropriate products in a range of situations
Asked to comment on whether its planners are subject to sales targets and the tension this could cause with best interests requirements, BT said while none of its salaried or aligned planners are subject to sales targets, its bank planners have revenue targets and participate in a bonus scheme.
BT told the PJC the bonus scheme is available to Westpac Financial Planning and St George Financial Planning advisers, but all initial and ongoing revenue, and all asset categories or products, are treated equally, with no incentives for recommending an in-house product.
Asked the same set of questions, Macquarie Group gave the PJC a similar answer, saying that while Macquarie advisers are not incentivised to recommend in-house products, they are subject to “performance-related remuneration criteria”. However the group did not expand on what those criteria are. A Macquarie spokesperson told InvestorDaily the group is unable to provide further comment.
The group added that its advisers do not determine the funds or products available on Macquarie’s investment and product menu, which are instead assessed by the group’s “Unlisted Investment Committee”.
