As Australia announced reforms to its financial services sector aimed at giving more protection to retail investors, moves to deal with the issue voluntarily are under way in this country.Across the Tasman, moves announced yesterday include a ban on commi
As Australia announced reforms to its financial services sector aimed at giving more protection to retail investors, moves to deal with the issue voluntarily are under way in this country.
Across the Tasman, moves announced yesterday include a ban on commissions and payments to advisers based on their levels of sales. Most of the reforms are scheduled for implementation from July 1, 2012.
In this country, commissions paid by financial institutions to investment advisers for promoting their products are to be abolished voluntarily.
Investment Savings and Insurance Association chief executive Vance Arkinstall said that, under a new regime, investment houses, banks and superannuation funds would stop paying commissions on any investment product.
A date for when the new policy takes effect is still to be set, but there would be a period of about 18 months to allow companies to amend their systems.
Instead of a commission being deducted from customers' investments, often without their full knowledge, investors would negotiate a fee directly with their adviser.
The industry recognised that the government would regulate commissions if a voluntary regime was not introduced, Mr Arkinstall said.
The moves announced in Australia yesterday followed a parliamentary inquiry into financial services called last year after several high-profile corporate collapses, Financial Services Minister Chris Bowen said.
"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," Mr Bowen said in a statement.
Among the key provisions of the reforms are a ban on "conflicted remuneration structures including commissions and volume-based payments" and a statutory requirement for advisers to act in their clients' best interests.
The powers of the Australian Securities and Investments Commission (ASIC) to act against unscrupulous operators will be strengthened and a compensation scheme will be introduced.
Mr Bowen said access to good quality financial advice was an essential part of planning for the future, especially for Australia's ageing population, and said the government was keen to increase the availability of simple, low-cost financial advice.
He said past "mis-selling of financial products" had resulted in high-profile corporate collapses.
