Answered step-by-stepProvide some general discussion as to why in Australia, financial...
Provide some general discussion as to why in Australia, financial advisory
regulators were so keen to ban the acceptance of financial product commissions
by financial advisers / advisory firms, payable on client investments. Note that
these legislative changes were ultimately passed as part of the FOFA reforms in
Australia,
REFERENCE:
In April 2010, the Minister for Financial Services,
announced the Government's response to the inquiry. A
range of reforms (collectively forming part of the
subsequent FOFA - Future of Financial Advice reforms)
were recommended including:
- banning commissions for financial planners giving
advice on retail investment products including
superannuation, managed investments and margin
loans
- introduction of a statutory fiduciary duty so that
financial advisers must act in the best interests of their
clients, and
- increasing the powers of the corporate regulator
Two-thirds of the advice in the shadow shopping study
involved the recommendation or continuation of
in-house products or products associated with the advice
group.
• It is noted that with the passing of the FOFA legislation
in 2013 many of the issues highlighted in the shadow
shopping survey such as reliance on advisers reliance on
commissions and the use of in-house products have been
addressed.
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