'Inappropriate' incentives contentious
While financial advisers would be required under the new rule to meet uniform disclosure requirements, financial advice representatives will work under a framework set out by the providers they work for.
The Financial Services Legislation Amendment Bill providers must not give any representatives an inappropriate payment or other incentive. That will cover things such as commissions, sales targets, bonuses and soft commissions.
In its submission, Fisher Funds said the phrase was too wide and subjective. “Taken to the extreme, no adviser would give any advice without an incentive of some kind, and therefore any misconduct could be said to have been induced by the incentive,” the fund manager wrote.
“In addition, the same incentive could encourage different individuals differently. While we are opposed to exclusively target/volume based commissions, we are supportive of incentives that integrate quality measures based on advice and service offered together with some targets.”
Click the button below to subscribe and will have free unlimited access for a limited time to full article and all other articles on the site.
You will also be able to comment on articles on Good Returns.
