Stamping fees consultation kicks off

Treasury has announced a four-week consultation into "stamping fees" paid by fund managers to advisers and brokers for exchange-listed funds, as public scrutiny into the practice mounts.

The Future of financial Advice (FoFA) reforms in 2013 put an end to commissions that financial advisers could collect from putting clients into investment products such as unlisted trusts.

However, the new legislation permitted advisers to continue collecting commissions on stock exchange-listed investment products - an exemption that is frequently termed as a "loophole".

In the intervening six years, ASX-listed investment products have swelled their assets rapidly. Exchange traded products (ETPs) has over $60 billion in total market cap at end of last year, with over 52% growth in the last year alone. Meanwhile LICs and LITs have grown to over $53 billion, after growing almost 30% in the 12 months to December 2019.

The consultation, which was announced by Treasurer Josh Frydenberg yesterday, will consider the merits of this exemption granted to stock exchange-listed investment products.

"Public consultation will allow the government to make an informed decision on whether to retain, remove or modify the stamping fee exemption in order to ensure that the interests of investors are protected and capital markets remain efficient and globally competitive," Treasury said in a statement.

Treasury is asking all interested parties to email their submissions to a dedicated email over the next four weeks.

Last year, Magellan front-ran the scrutiny into stamping fees when it chose to skip paying commissions to brokers and advisers while raising for a LIT that replicates the strategy of the Magellan High Conviction Fund.

Magellan, at the time said, would not appoint a broker syndicate for the raise. It will also cover the IPO costs through MFG.

"We are addressing potential concerns regarding conflicted remuneration by proceeding without appointing a broker syndicate or paying any fees or commissions to any brokers or advisers to handle the offer," MFG chair and chief investment officer Hamish Douglass said in ASX filings.

Read more: ExchangeTreasuryASXLITMFGMagellan HighFuture of financial AdviceHamish DouglassIPOTreasurer Josh Frydenberg
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