MLC has taken another step towards eliminating conflicts of interest from its financial planning business, by changing its Buyer of Last Resort (BOLR) valuation methodolofy.

From October 1 MLC will change the basis of its new BOLR contracts to a market valuation, eliminating a bias towards in-house products. MLC’s current formula involves a multiple based on how much business a firm has with MLC. Under the new system MLC will select a short list of three independent valuers through a tender process. From this list, the adviser will choose the firm they want to value their business. The change only affects all new BOLR contracts written after October 1 and existing BOLR contracts will be grandfathered. MLC first announced it was reviewing its BOLR program in March, after the Financial Planning Association (FPA) released its Principles for Managing Conflicts of Interest. Matt Lawler, regional general manager for MLC Financial Planning and Third Party, said the valuation change was aimed at creating a more transparent system for clients. “Eliminating the bias for in-house products is in line with the FPA’s Conflict of Interest Principles and is the right thing to do for customers as it helps ensure the advice they receive will not be influenced by financial incentives linked to in-house product sales,” he said. MLC consulted with its licensees and advisers in the lead up to the policy change. Mark Rantall, managing director of MLC subsidiary Godfrey Pembroke, was involved in the consultation process and said planners supported the change and the move towards greater transparency for clients. “Clients have a right to know what they are paying for and who they are paying,” Rantall said. Rantall said BOLR was rarely used, as it’s a “hot market” for financial planning practices right now, with demand outstripping supply. But he said BOLR provisions give clients peace of mind about the continuity of a financial planning firm, regardless of who is in charge. The BOLR change is the latest move by MLC towards greater transparency, including moving Godfrey Pembroke to a fee for service model for new business from October. Conflicts of interest is a hot topic at the moment, after AMP Financial Planning was last week slammed by the Australian Securities and Investments Commission (ASIC) for having inadequate conflicts of interest provisions and failing to provide proper advice about super switching.

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