The banking industry wants to dismantle the legislative framework that allows financial advisers to receive grandfathered commissions and end fees for no service across the industry, ABA chief Anna Bligh said in Sydney this morning.
To this end, the ABA is seeking new legislative changes to the Future of Financial Advice (FoFA) reforms.
It is also overhauling its banking code of practice to stop banks from charging fees to deceased client, as it moves towards ending fees for no service across the industry.
"In addition to these changes the industry is supporting legislation to remove grandfathering provisions in relation to financial advice," Bligh said delivering ABA's response to Commissioner Kenneth Hayne's interim report.
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"This is another important piece in the puzzle of ensuring there are no conflicts for advisers," she said.
The ABA's response comes 12 days after Commissioner Hayne released the Royal Commission's interim report. In a media conference that afternoon, Bligh called it the "bank's day of shame."
Fees for no service
ASIC numbers shows advice customers will receive more than $1 billion in refunds for fees for no service, Bligh said.
"This announcement will put beyond the shadow of a doubt that this practice has no place in Australia's banking industry."
Bligh said Aussie banks will proactively contact customers to confirm what advice is required and only charge fees for services that are provided in an attempt to end fees for no service across the industry.
"Once notified of a customer's death, banks will proactively identify fees that are for products and services that can no longer be provided in the circumstances, stop charging those fees and refund any paid," a statement from the ABA said.
"When someone loses a loved one, they need support and compassion as they finalise their loved one's financial affairs. Charging ongoing advice fees to dead people is clearly unacceptable," she said.