Stockbrokers blame advisers for FSI claims

Alongside the FSI recommendation regarding upfront risk commissions, the inquiry also suggested that ASIC conduct a formal review into whether “grid commissions” in the stockbroking industry should be considered “conflicted remuneration” under the FOFA legislation.

A footnote to the recommendation suggests that the enforceable undertakings entered into by Macquarie Equities in 2013 and UBS Wealth Management in 2011 serve as justification for the FSI’s suggestion.

However, the Stockbrokers Association of Australia yesterday issued a statement to reject the premise of the recommendation and point the finger at UBS and Macquarie advisers, not brokers.

“The [SAA] understood those two cases as having related to the financial planning and wealth management businesses of those two firms, and compliance by financial advisers within those firms with obligations regarding retail financial advice,” the statement said.

“We would not have thought those cases should be characterised as stockbroking cases.”

In addition, the statement argues the stockbroking sector has a comparatively clean compliance record, with the level of FOS complaints against stockbrokers “very low”.

“Existing arrangements for stockbroker remuneration do not present any risk of being conflicted remuneration,” the statement contended.

“[We are] aware that the FOFA exemption granted in respect to remuneration is to be reviewed at a future time … however, there have been no incidents that the association is aware of that would suggest that there is any urgent reason to bring this review forward.”