Equally concerning is the limited nature of the draft charter, which doesn’t apply to all financial products. If there is widespread acknowledgment that commissions are an unnecessary evil, then why limit their removal to super products? The move by both IFSA and the FPA to put commissions under scrutiny follows intense pressure from the not-for-profit superannuation sector, in particular Industry Super Funds. Over more than a decade IFS and, in more recent times, Industry Super Network have waged a very public campaign through the enormously-successful Compare-The-Pair advertisements and other media campaigns.
More recently, the collapse of Storm Financial as well as several managed investments schemes that paid generous commissions to financial advisers, has seen consumer groups like Choice join the opposition to this insidious practice. The Government also has commissions in its sights, having made no secret of its desire to reduce costs for super fund members. The outgoing Minister for Superannuation and Corporate Law, Senator Nick Sherry, has long been a key proponent for reform and he leaves the industry having instigated several important reviews and inquiries in this area.
It is widely hoped among those in the not-for-profit sector that the Cooper Review, in particular, will deliver on its promise to “ruffle feathers” and recommend sweeping regulatory – and possibly legislative changes – affecting the commissions paid on retail super funds. For when it comes to sales commissions, feathers will need to fly. While IFSA’s draft charter is a welcome step in the right direction, it is unlikely to bring about significant change without robust regulatory backing and a government that is willing to push both the retail fund industry and the financial planners that serve it a lot further along the reform path than they are currently prepared to travel.
then will members of retail super funds be confident that any financial advice
they receive truly serves their best interests. ON ANOTHER NOTE AIST
would like to acknowledge the work of Senator Nick Sherry. In the time he was
responsible for superannuation he instigated a number of important reviews and
reforms in the superannuation industry. Senator Sherry has been promoted to
Assistant Treasurer and will not be lost to the superannuation industry, as he takes
charge of the Henry Review which has wide-ranging implications for the
superannuation industry. We wish him well in his new role and look forward to a
continued relationship with him and his office.