Michael Bailey: So a straight shelf-space fee wouldn’t pass the test? A pay-to-play kind of deal?

Minister Bowen: Well, it would need to be flat, and not volumebased in any sense.

Garry Weaven: How could that possibly be? For example, not volume-based, but if you don’t pay it, you’re not on the shelf? Well, that’s volume-based.

Minister Bowen: Well, again, there needs to be a little bit more work about the finer details, but the principle that I’m applying is that if it incentivises sales, then it would not be allowed.

Don Russell: What about individuals working within a company where the incentive is not related to any product, it’s really just a reward for being energetic? It’s a reward for not being slothful. What’s the thinking behind that? Because a lot of businesses – the act of providing advice, where you actually have to go out and find clients, it does require an energy, so a lot of businesses are based around rewarding energy, in that sense. But the best indicator of energy is just the number of new clients. And as long as that isn’t skewed to any particular product, it’s just the more clients, the bigger your return. What’s the thinking about that?

Minister Bowen: Again, that was a tricky area in terms of just how to deal with that. You couldn’t have a situation where you ban commissions to non-employees, but allow volume-based bonuses for in-house employees. You couldn’t allow that. So it does apply to inhouse employees. In terms of other payments, that’s something which I think comes into the realm of the professional advisory committee. That would deal with soft dollars. So soft dollars – I’ve expressed the continuum of soft dollars as a pen with your product’s name written on it, which you give to advisers, ranging to a conference in the Bahamas at the end of the year. Now, they’re the range of soft dollar activities, which the professional advisory committee will need to work with ASIC in just determining what’s in and what’s out. And in terms of remuneration of in-house employees, I think there’s a good bit of work to be done there, just in terms of seeing that right balance.

Garry Weaven: If it is the common thing to have professional best interest advisers only recommend your product if you pay a fee to someone to get on the shelf, industry funds will have to look very hard at paying that fee. So the cost per member will go up. So just keep that in mind, because this is a once-in-a-lifetime chance to get this right. And everyone’s going to say, “Well, that’s the rules. They’re the rules, and we’re going to compete by the rules”.