Financial advisers in Australia will soon have to stop receiving grandfathered commission, where they continue to generate fees from advice given under old client agreements.
On 1 August 2019, The Treasury Laws Amendment (Ending Grandfathered Conflicted Remuneration) Bill 2019 will be introduced by the government, which will prohibit this type of charge from 1 January 2021.
Under the changes, firms that continue to apply grandfathered commissions after the deadline will be forced to refund their clients.
Improving industry standards
“Grandfathered conflicted remuneration can entrench clients in older products even when newer, better and more affordable products are available on the market,” said treasurer Josh Frydenberg.
“One of the key recommendations of the Royal Commission was to end the payment of grandfathered conflicted remuneration to financial advisers.”
He said the result would be clients receiving higher quality advice.
The government has also tasked the Australian Securities and Investments Commission (Asic) to oversee the implementation of the bill.