ASIC is using intimidation tactics to get product providers to shut down grandfathered commissions early, according to the Association of Independently Owned Financial Professionals (AIOFP).
Speaking to Financial Standard, AIOFP executive director Peter Johnston claimed the corporate regulator is using its intervention powers to convince product providers to turn off commissions before the January 2021 deadline.
"One of the things the government is doing is they are sending ASIC, using their intervention powers, to get into fund managers without court orders and intimidate those fund managers," Johnston said.
"What the government wants to do is shut down grandfathered revenue. But, we don't believe they can shut down grandfathered revenue under the constitution unless it's under just terms -in other words, with compensation."
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Johnston accused ASIC of using intimidation tactics to get grandfathered commissions turned off early by product providers.
But, he said he is confident that the AIOFP's legal fight will render ASIC's manoeuvres fruitless, saying advice from its legal team at Corrs Chambers Westgarth and its constitutional barrister has been encouraging. "What has happened is the government has been using ASIC to go to product providers and get them to shut the revenue down now instead of in 2021," Johnston said.
"We've had advice that any revenue shut down now by ASIC going around intimidating fund managers will have to be retrospectively paid back."
The AIOFP is currently fund raising for a High Court challenge to the banning of grandfathered commissions.
The bill banning grandfathered commissions on investment and superannuation products was passed by parliament on Monday.
Johnston confirmed that the legal advice the AIOFP has received is that commissions advisers lose in the banning of grandfathered conflicted remuneration would have to be repaid should the High Court challenge succeed.
He has also been advised that any commissions pre-emptively turned off due to ASIC's tactics will have to be repaid too.
"The bottom line is we are getting prepared to take them on, we're confident of winning," Johnston said.
Corrs Chambers Westgarth is also representing the AMP Financial Planners Association in its fight following AMP's decision to alter its Buyer of Last Resort policy.
Johnston said Corrs Chambers Westgarth has indicated to him that the High Court action could assist the AMPFPA in its legal challenge, due to the impact the end of grandfathering will have on BOLR valuations particularly since AMP's policy changed in August.
"BOLR changes are all based on grandfathered commissions being wiped out from the start of 2021," Johnston said.
"If we can get victory in the High Court then we're going to make AMP's life easier."
He indicated that some AMP advisers have gotten behind the High Court action.
Following the passing of the legislation on Monday, Johnston expects the number of advisers supporting the AIOFP's action to double or triple within a matter of weeks.
"There were a lot of people living in denial. They were maybe hoping it wouldn't pass," he said.
"It's not just about grandfathered revenue, it's about saying we will not be bossed around and kicked around."
Johnston would not say specifically how much money the AIOFP has raised to mount its case but said that the group needs between $1 million and $2 million to take its case to the High Court.
He indicated that the AIOFP is roughly halfway towards meeting that goal.
"We are confident," Johnston said of raising the money necessary.
ASIC declined to comment.