Advisers across the ditch have been told they do not need to declare commission payments to clients under the Future of Financial Advice (FOFA) industry reforms.
While the FOFA reforms oblige advisers to issue new and existing clients with a fee disclosure statement, the Australian Securities and Investments Commission (ASIC) said commission payment were not deemed to constitute an ongoing fee, so were exempt.
The exemption only applies to commission arrangements in place ahead of the July 1 FOFA implementation, as the ASIC note states: “Commissions are generally banned under the conflicted remuneration provisions. . . unless they are grandfathered arrangements.”
The Australian approach differs from New Zealand’s two-tier regulations, where AFAs are required to provide a breakdown of their remuneration, including the percentage that comes from commission.
ASIC also outlined details advisers’ must include in their statement, including the amount of fees paid by the client in the previous 12 months, the services the client was entitled to over that period and the services the client received.
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