The fee arrangement between financial advisers and their clients should not become part of government regulation, a veteran adviser has said.
In a submission to the parliamentary joint committee on corporations and financial services, Paramount Wealth Management co-principal Wayne Leggett said the issue regarding commissions is not the payment of commission but how the commission is handled.
The significant factors are whether the benefits of the commission are being received by the adviser, in all forms, fully disclosed in easy-to-understand terms, Leggett said.
Another factor when dealing with commissions is figuring out where the remuneration is deducted from client funds, does the client authorise the payment in writing prior to the provision to the adviser, he said.
Leggett has suggested the inquiry implement measures to prevent any remuneration being paid to an Australian Financial Services Licensee, where the remuneration is deducted from client funds, without the prior written consent of the client.
“This would address the issue of clients paying commission from products, notably superannuation, without neither having authorised the payment nor receiving any form of service for said payment,” he said.
“This one simple measure would go a long way towards eliminating many of the more unsavoury aspects of the current financial services landscape.”
The parliamentary joint committee has so far received more than 80 submissions regarding the financial services industry.
