The Australian government has announced plans to introduce UK-style reforms aimed at banning financial advisers from obtaining commissions from product providers.
Australia mimics RDR with commission ban for advisers
By Iain Martin | 16:33:24 | 26 April 2010
The Australian government has announced plans to introduce RDR-style reforms which will ban financial advisers from taking commission from providers.
Australian financial advisers will be banned from being paid through provider commission or volume-based sales deals from 1 July 2012. The shake-up will also mean that Australian firms must adopt ‘adviser charging’ and cannot charge percentage-based fees on geared investments or products.
The reforms mirror changes proposed by the Financial Services Authority in its ongoing retail distribution review (RDR). But Australian minister for financial services Chris Bowen went beyond the RDR in proposing that advisers should have a statutory fiduciary duty to act in the best interest of clients.
‘Australia is facing the challenge of an ageing population. Access to quality advice remains an important part of planning for the future,’ said Chris Bowen MP. ‘These reforms will see Australian investors receive financial advice that is in their best interests, rather than being directed to products as a result of incentives or commissions offered to the financial adviser.’
Bowen said the Australian government would work to expand the availability of simple advice to low income families, who could not afford to pay fees for a financial adviser. The reform package comes in response to a report from the Australian parliament, which examined a series of high profile collapses including Storm Financial, Opes Prime and West Point.
The Australian government also plans to beef up the powers of its regulator the Australian Securities and Investments Committee and will look into setting up a consumer compensation scheme.