ASIC Deputy Chair Daniel Crennan

Licensees and representatives of licensees known by the securities regulator to have received so-called “conflicted” grandfathered remuneration received notices on Thursday to provide data for an ASIC review.

The review was mandated by Treasurer Josh Frydenberg in February this year following Hayne’s royal commission final recommendations; the data gathering component of the review was kicked off this week.

ASIC’s review of the advice industry’s transition towards ending grandfathered remuneration will have a quantitative and qualitative component – ASIC notices have requested entities provide data relating to their payment of grandfathered commissions, a second qualitative component will be based on more in depth consultations. At the start of August, the government introduced legislation to ban grandfathered commissions following a transition period to the end of 2020.

News of ASIC’s review follows the government’s roadmap for implementing of Hayne’s recommendations, which put the removal of grandfathered commissions at the top of its list of priorities for reform.

In addition to the removal of grandfathered commissions, ASIC will prioritise legislation addressing annual review and payment for financial advice, disclosure of independence, reference checking and licensee obligations to report concerns and misconduct of their representatives, the government’s roadmap highlights.

Daniel Crennan, ASIC’s deputy chairman and head of enforcement, has been talking openly about the regulator’s enforcement mandate and intentions to accelerate court-based enforcement matters.

Licensees and reps asked to respond to the review will be asked to provide data on the payback and caseation of grandfathered commissions for the 12-month period from July 2018 to 30 June 2019 as well as on a quarterly basis for the review period from July to the end of September, 2019, ASIC has disclosed.

ASIC will analyse the information from both qualitative and quantitative reviews and report to the Treasurer by 30 June 2021 at which point a report will also be released publicly, ASIC confirmed.

The regulator – empowered by the government’s mandate to implement all of Haye’s royal commission findings and a new injection of capital allocation from the 2019/20 budget – noted that it had long advocated an end to grandfathering of so called conflicted remuneration.

Smith is head of content and managing editor of Professional Planner and Investment Magazine.
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