ASIC adviser fee model report finds results "pleasing"
/An Australian Securities and Investments Commission (ASIC) report into transitioning from conflicted remuneration looked into how financial advisers are charging clients and found advisers had moved to new models.
The report, Ending Grandfathered Conflicted Remuneration, covers an 18-month period from late December 2020 where most advisers moved clients to other fee arrangements, such as ongoing fees, hourly rates or a fixed price/asset-based fee.
The industry has ended the payment of grandfathered conflicted remuneration ahead of the legal requirement or passed previously grandfathered benefits on to product holders. ASIC said it was pleased, with almost all product issuers ending the conflicted remuneration prior to 1 January 2021.
ASIC’s summary of its investigation include:
Before the review period (FY18-19), 93 product issuers paid $816.1 million in conflicted remuneration for 1,323 products and around 2.5 million clients
Eighty-nine product issuers paid $760.5 million in relation to 1,273 products during this period, with this number reflecting most arrangements ended towards the review period cut-off date
During this period, product issuers terminated 96 per cent of these conflicted arrangements (1,227 products), but did not fully terminate 4 per cent of arrangements (46 products)
For conflicted arrangements terminated in the review period, product issuers took steps to rebate clients in relation to 755 products
Product issuers estimate that $266.7 million in rebates have been issued to customers during the review period, mostly through fee reductions
