ASIC to review end of grandfathering

ASIC will review the progress of transition away from grandfathered conflicted remuneration arrangements for financial advisers.

Announced today, the review follows the government's commitment to end the practice by January 2021.

ASIC said it will review the steps already taken by the industry to end grandfathering and conflicted remuneration, right up to the 2021 deadline.

The regulator will report on anything holding up the transition away from grandfathered remuneration.

The review will be both quantitative and qualitative.

The quantitative review will see entities known to pay grandfathered commissions under the regulators spotlight.

Those entities will be required to provide ASIC with data from July 2018 to June 2019 and on a quarterly basis for the review period.

The qualitative review will involve a smaller sample of entities that pay and receive grandfathered remuneration. ASIC said this group will have more "detailed engagement and analysis" with the regulator during the review.

At the end of July, the government introduced legislation to ban grandfathered commissions for financial advisers.

Treasurer Josh Frydenberg and assistant minister for superannuation, financial services and financial technology Jane Hume released a joint statement clarifying the government's plans to end grandfathered commissions.

"To ensure that the benefits of industry renegotiating current arrangements toremove grandfathered conflicted remuneration ahead of 1 January 2021 flow through to clients, the government has commissioned ASIC to monitor and report on the extent to which product issuers are acting to end the grandfathering of conflicted remuneration," the joint statement said.

When commissions were banned under the Future of Financial Advice reforms in 2013, trail commissions on existing investments were exempt.

The Royal Commission recommended an end to the payments as soon as practicable.

Read more: ASICFuture of Financial AdviceJane HumeRoyal CommissionTreasurer Josh Frydenberg
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