Australia to ban trail commission

From July 2020, the Australian government will ban trail commission and look at banning other forms of upfront commission. In three years' time, the Australian government will assess moving to a fee-for-service model for mortgage advisers. It will also look at banning clawbacks, Treasurer Josh Frydenberg (pictured), said.

The support for Kenneth Hayne's recommendations comes after the QC revealed his final report into misconduct in the banking, superannuation and financial services industries.

The report was highly critical of the remuneration relationship between banks and mortgage advisers. Hayne hit out at trail commission, calling it "money for nothing". The report claims commission paid out by lenders to mortgage advisers is a conflict of interest, and borrowers should pay a fee to their adviser or bank for their mortgage. 

The Australian Treasury has given the trail ban the green light, but will consider the potential effects of an outright ban on all commission. Frydenberg has suggested an outright ban on all commission would play into the hands of the banks. As a result, the government will look into the feasibility of such a move before making a decision.