Australian election a win for advisers

Scott Morrison's Liberal Coalition has won the Australian Federal Election, a result which means potential bans on upfront and trail commission will be put on the back burner.

Monday, May 20th 2019, 9:04AM

Incumbent PM Morrison clinched victory in the closely fought election at the weekend, despite recent polls predicting a narrow Labor. The news will be welcomed by advisers, as Labor planned to enforce a stricter policy on adviser remuneration than its political rivals in the wake of the Royal Commission and Hayne Report.

Labor planned to fix upfront commissions at 1.1% and ban trail commission from 2020 as part of its overhaul of the financial services sector. The regulation would have forced Australia's big four into sweeping changes, and would likely have had a knock-on effect to the Aussie-owned New Zealand "big four".

Instead, the Coalition will stick to watered-down plans to review upfront and trail commission in three years' time, a move widely seen as kicking the can down the road in the aftermath of the Royal Commission.

Advisers on both sides of the Tasman will be relieved with the outcome of the election, after the Hayne Report proposed a user-pays model for brokers, and bans on all forms of lender-to-adviser commission.

The Coalition has increasingly softened its stance on adviser commission, after initially backing the Hayne Report's proposals.

The Coalition U-turn came after an intense lobbying effort from Australian adviser trade body, the MFAA. MFAA CEO Mike Felton welcomed the result, and said in a statement: "There is no doubt that this election result is a good one for our industry. This Government has demonstrated over recent years that it is committed to maintaining competition, choice and access to credit for Australian home buyers."

Coalition Treasurer Josh Frydenberg has repeatedly made comments in support of the adviser channel, indicating the government will not seek to enforce harsh regulation on the sector.

While the Coalition has pledged support for the mortgage adviser sector, some changes will be introduced following the election. The newly-elected government, like Labor, wants to bring in a best-interests duty, and ban volume-based commissions.

Tags: regulation