The Morrison government has indicated it will ban conflicted remuneration, including stamping fees – an upfront one-off commission paid to financial services licensees for their role in capital raising associated with IPOs for newly listed investment trusts (LITs) and LICs – from 1 July.
“Extending the ban on conflicted remuneration to LICs will address risks associated with the potential mis-selling of these products to retail consumers, improve competitive neutrality in the funds management industry and provide long-term certainty so that this segment of Australia’s capital markets can continue to operate effectively and provide investors with opportunities to diversify their investments,” Treasurer Josh Frydenberg said.
The decision has been hailed as a breakthrough in the political deadlock around the FASEA extension legislation, which has been held up in Parliament for weeks.
“(The) announcement also removes any impediment to passing the much-needed Treasury Laws Amendment (2019 Measures No.3) Bill 2019, which will grant financial planners an extension to complete new education requirements,” said FPA CEO Dante De Gori. “Our members are calling on the Senate to pass the bill at the next parliamentary sitting on 10 June.”
Many advisers have been waiting on confirmation that the FASEA exam deadline will be extended, giving them more time to focus on helping clients navigate an economic downturn and the intricacies of government programs like the early release super scheme.
“A further delay from Senate will add even greater uncertainty to financial planners, who are expected to help 2.7 million Australians seeking financial advice over the next three months in response to major changes in their employment, their investments and their prospects for retirement,” Mr De Gori said.
The AIOFP also welcomed the changes.
“We are pleased that sanity has prevailed,” said Peter Johnston, executive director of the AIOFP. “Both sides of politics have settled their differences placing consumers and [advisers’] best interests first. The advice industry should thank FSU’s Nathan Rees for dealing with both sides to find a satisfactory outcome that should lead to the passage of the legislation next month.”
