But not all volume-related payments distort advice. And a blanket ban on all volume-related payments will sacrifice the benefits of scale that deliver savings currently enjoyed by consumers. We propose that the following volume-related payments that can and do distort advice be banned: • preferential payments which increase a product’s accessibility or visibility on a platform or approved product list; • adviser remuneration schemes which are based solely on sales volume and which are biased towards the placement of business in a specific product and platform; and • volume-related payments from funds managers directly to licencees or advisers. But other payments that provide the benefits of scale need to be maintained. In the debate about remuneration it has been suggested that asset-based fees are the same as commissions.

This is wrong. An asset-based fee provides a mechanism for consumers to pay for advice out of their investment balance, rather than up-front out of their bank account. Critically, the fee must be disclosed in dollars and not simply as a percentage. Asset-based fees differ from commissions in three key respects. First, an asset-based fee is determined between a financial adviser and their client. Second, it can be turned off by the client at any time. Third, the consumer is free to negotiate an alternative means of paying for the advice which is not asset-based. With some important refinements, the FoFA reforms can meet their objectives of improving trust and credibility in financial advice and ensure advice is not put beyond the reach of those who need it most.