Most left commissions ban till last minute: ASIC

Research from the corporate regulator into the phasing out of grandfathered commissions reveals most advisers in receipt of commissions continued to accept payments right up until the 1 January, 2021 deadline.

In February 2019 ASIC was charged with investigating to what extent those giving or receiving grandfathered commissions were changing their arrangements and passing on the benefits of the change.

In FY2018/19 a total of 93 product issuers paid $816.1 million in grandfathered commission connected to 1,323 products and over 2.5 million client accounts, ASIC reports.

Leading up to the ban this figure was only trimmed to 89 product issuers paying $760.5 million in grandfathered commissions, relating to 1,273 products.

“This amount is reflective of the fact that most arrangements were only terminated towards the end of the review period,” ASIC states.

“Over the course of the review period, product issuers fully terminated GCR arrangements for 1,227 products (representing 96 per cent of GCR arrangements),” ASIC continued. “Nearly all of these arrangements (1,185 products) were terminated during 2020, with the majority (837 products) terminated in the December quarter.”

The regulator notes that advisers changed the way they charge for services as a result of the shift away from grandfathered commissions: “Where appropriate, they moved clients to other fee arrangements – for example, charging an ongoing fee, an hourly rate, a fixed price or an asset-based fee,” ASIC stated.