Grandfathering phase out tussle continues

Colonial First State has confirmed it is aiming for mid-year implementation of the phase out of grandfathered remuneration, much to the ire of the Association of Independently Owned Financial Professionals (AIOFP).

A CFS spokesperson confirmed to Financial Standard the business is planning to phase out grandfathered remuneration throughout 2020 to ensure compliance with the government's 1 January 2020 deadline.

"We are aiming for mid-year implementation, but a date hasn't been confirmed yet," the spokesperson said.

AIOFP executive director Peter Johnston is of the opinion that product providers are responding to pressure from the regulator to wind up grandfathered commission before the deadline.

The AIOFP has previously accused ASIC of using "intimidation tactics" in an effort to wind up grandfathered remuneration early.

"CFS's position is similar to other manufacturers who are conscious of what ASIC are doing under instructions from the government and feel they must cooperate or face consequences," Johnston said.

He said ASIC's new intervention powers are allowing the regulator to apply pressure on the issue.

"Unfortunately these new welcomed intervention powers ASIC now has were not available 40 years ago to prevent the $50 billion of product failure that has been unfairly blamed on the advice community," Johnston said.

The AIOFP is mounting a High Court challenge against the banning of grandfathered remuneration.

"We think it is too heavy handed to be shutting down grandfathered revenue over 12 months out from the legislated date and want to remind everyone that if we have victory in the High Court it will be retrospectively reinstated," Johnston said.

"It will be interesting to see who will be paying for the cost of reinstatement if we win. "

The AIOFP has employed Corrs Chambers Westgarth in its High Court challenge and is currently fundraising for the cost of the case.

It is expected that the group would need between $1 million and $2 million to take its case to the High Court.

Read more: AIOFPASICHigh CourtCFSColonial First StatePeter JohnstonCorrs Chambers Westgarth
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