Consumers will once again be left vulnerable to raids on their super accounts by financial advisers if a government proposal to allow grandfathered conflicted remuneration to continue goes ahead.
Industry Super Australia has strongly opposed the move in its submission to the Exposure Draft Treasury Laws Amendment (Ending Grandfathered Conflicted Remuneration) Regulations 2019.
Despite a clear recommendation by the Royal Commission that grandfathering arrangements should cease, the Government’s draft regulations effectively give an exemption for financial institutions to continue provisions for conflicted remuneration by allowing a rebate or monetary benefit scheme to be established.
Industry Super Australia Chief Executive Bernie Dean slammed the proposal and called on the provisions for conflicted remuneration to be repealed as soon as possible – in line with Commissioner Hayne’s recommendation.
“Let’s not forget that grandfathered commissions remove money from consumers’ accounts without their express consent. This is akin to stealing money,” Mr Dean said.
“This is money that would otherwise have been maintained, in a consumer’s account, and instead was siphoned off to pay financial advisers for nothing.
“To claim administrative inconvenience as an excuse to try and water down what should be a blanket ban on grandfathered commissions, is astounding given the disgraceful conduct that was exposed during the Royal Commission.”
Mr Dean said this was not the first time the retail fund sector had tried to persuade the Government – previously through the FoFA legislation – to put in place a backdoor arrangement that would have seen grandfathered commissions allowed into perpetuity.
“While some parts of the super sector will fight tooth and nail to keep grandfathered conflicted remuneration provisions – at the expense of consumers – our position is clear.
“We do not support a watering down of the blanket prohibition on grandfathered commissions. Any attempt to provide exemptions for conflicted remuneration will only erode consumer protections and leave consumers worse off.”