The case for life insurance and previously grandfathered investment trail commissions will again be put to policymakers in Canberra with gusto, following the establishment of a populist alternative to the Joint Associations Working Group.

The Association of Independently Owned Financial Professionals and Finance Brokers Association of Australia have inked a “political and commercial strategic alliance”.

Its establishment is a response to JAWG which was set up to present a united front to government during the Quality of Advice Review consultation process and which AIOFP executive director Peter Johnston described as a “dismal failure” in a note to stakeholders on Tuesday. The JAWG consists of the Financial Advice Association, Boutique Financial Planners, SMSF Association, The Advisers Association, Licensee Leadership Forum, Financial Services Council, Stockbrokers and Investment Advisers Association Chartered Accountants ANZ, CPA Australia, Institute of Public Accountants and FINSIA.

FBAA managing director Peter White tells Professional Planner he has no beef with the JAWG, saying that is a matter for the advice profession, but adds he is attracted to the AIOFP alliance because he wants to cultivate a “deeper, stronger footprint” across financial services.

He says there is plenty of “alignment” between his organisation and the AIOFP, which have both presented themselves as anti-establishment groups representing privately owned and smaller providers and have not been afraid to give an occasional “upper cut” to other stakeholders.

“Often the small businessperson gets left out,” White says, pointing to the similar worldview of the two allies.

Keeping counsel

While they are yet to finalise a combined policy platform, the associations are expected to make joint submissions to public inquiries and private representations to MPs in Canberra, alongside a commercial referral arrangement. They will operate under the banner of the “Independent Financial Counsel” and hope to attract more industry bodies to their coalition.

Asked whether the business name was misspelt, Johnston says the term “counsel” was intentional as the alliance would hope to serve as a quasi-advisory body to government.

As for the protected and controversial term “independent”, Johnston suggested the successful registration of the business name with ASIC on Monday was a sign that regulator had no qualms with it. Under Greg Medcraft’s tenure as chair, ASIC previously cracked down on misuse of the terms ‘independent’, ‘independently-owned’, ‘non-institutional’ and ‘non-aligned’.

Johnston describes the FBAA as a “legendary” industry body, praising its role in the successful campaign against the Hayne royal commission recommendation to outlaw the conflicted payments.

“They lobbied to save commissions,” he says of his new ally. “That’s what we want to do in the risk industry – and not only maintain them but actually put them back to pre-LIF conditions because the current [cap on upfront commissions] at 60 per cent is just not working.”

Curbing or eliminating the ASIC levy and overall regulatory compliance burden is also likely to be a point on which the two associations agree. Going further, he says the association, aided by the new alliance, may resurrect its campaign to bring back investment product commissions previously grandfathered under FoFA but overturned by the previous Coalition government.

“If there was an opportunity [to make the case for returning grandfathered commission revenue] we would definitely have a go at it because we think we have legal grounds for it,” he says.

Johnston admits previous attempts to prosecute the case for reinstating grandfathered commissions failed to gain sufficient support from the broader advice profession, but suspects sentiment may have shifted in its favour. “Advisers are hurting,” he says.

He draws the line at ongoing commissions from recommending investment products in financial advice, saying such a policy would not be supported.

Diverse dalliance

Though the “counsel” has ambitions to grow and add more members from across the financial services industry, existing JAWG members disputed their project could be considered a failure.

Financial Services Council CEO Blake Briggs says JAWG has already successfully worked together to advocate for reforms to make financial advice more affordable and accessible to consumers, and to reduce regulatory costs for financial advisers.

“A unified industry has been key to securing Government support for significant reform, and the FSC is proud of the collaborative role we have played with other advice associations,” Briggs says.

“The diversity of JAWG has been its strength, and we are confident that financial advisers and their clients will be the ultimate beneficiaries of the group’s hard work over recent years.”

Stockbrokers and Investment Advisers Association CEO Judith Fox says the establishment of a rival group could backfire in terms of the industry’s standing in Canberra.

“While I appreciate they say [they] want to provide a united voice, they’re actually repeating the fragmentation that didn’t benefit the advice profession in the first place and it sets up that conflict model again as if we’re against each other when actually we’re all really trying to get the same outcomes,” Fox says.

“JAWG has been engaging incredibly productively with government and the Treasury on the Quality of Advice Review and other issues. We still strongly support JAWG because it has brought together that united voice and it’s not helpful to have that fragmentation.”

Financial Advice Association CEO Sarah Abood says there’s a misconception the purpose of JAWG is for all the members to agree on every issue. “That’s not the case,” she says.

“The group exists for us to share our viewpoints to help each other. If we find that we do have positions that are aligned, it certainly increases the likelihood those positions will be successful.”

Despite the push from the new joint alliance to bring back grandfathered commissions, Abood says any such changes are not on the FAAA’s agenda.

SMSF Association CEO Peter Burgess, one of the joint chairs of JAWG, says it’s not accurate to say the joint group has achieved nothing.

“We’ve made a number of joint submissions to government, we’ve met collectively with the minister and Treasury and regulators to highlight issues, and so forth,” Burgess says.

“But it’s not a formally constituted group. The idea was to bring together, as I said, as many of these associations with [ASIC Financial Adviser Register] members to talk about issues and debate issues. There have been times when we haven’t been able to agree, which means we haven’t been able to collectively do a submission. But nevertheless, we’ve still benefited from the discussions and hearing different points of views. I think that’s a really important point.”

2 comments on “Grandfathered commissions back on agenda as anti-JAWG alliance forms”
    Wayne Leggett

    “Uppercut” is an interesting choice of word, suggesting that the person using it is looking for a fight. Perhaps, instead of adopting a belligerent mindset, working with the group that represents a collective of associations representing almost the entire financial services industry would prove a more productive use of energy and effort.

    Jeremy Wright

    If there is one lesson that should have been learned from the last 10 years of countless investigations, the Royal Commission and the rise of more and more and more Regulation, is that unless a proper analysis of cause and effect is not the number ONE priority, then we will continue to be led down the same path that created the rise of more red tape that does nothing more than satisfy Lawyers and compliance entities who have entrenched themselves in every facet of our lives, from the bottom to the top, which has not enriched our lives, it has been a noose around all our necks and has created a bottleneck around the entire Australian economy.

    One example of how this insidious and idiotic process is taking away common sense, was this morning on the news where the Queensland premier made a decision which he will run past the Legal fraternity to see if the Childrens court can be opened up more so people can see what is going on behind closed doors, as a reaction and solution to the youth crime pandemic that has led to murders, robberies and break-ins by teenage gangs roaming the streets with impunity due to the revolving door mentality of the Judicial system that continues to let these thugs out of detention so they can go straight out and do it all again.

    The fact that the Boss of Queensland had to ask permission from Lawyers before a common sense solution could be enacted, is a sign of the times, though as is usually the case with Politicians, the problem is not going to be solved by partially opening a door to the inside workings of the childrens court, as these teenage thugs don’t care. They will continue to terrorise people until they are stopped.

    This brings me back to what I have been saying for 10 years.

    If you want to fix a problem, then the first thing that needs to be done, is to recognise the extent of the problem, then make common sense, plain English changes to bring about a positive outcome, with the proviso that the cure is not going to cause more pain than the problem itself.

    The first President of the United States, George Washington, fought the British, survived and won the war, yet when he got a cough, he had the best available medical experts to cure him, which involved withdrawing copious blood and inserting mercury to draw out the poisons in his system.

    After a week of this professional help, he dismissed his “experts” and died.

    What was the common denominator that still holds true today?

    The cure was worse than the treatment, because no-one who made the decisions, had the capacity to truly understand what the real problem was and what appropriate measures should have been taken.

    The reason why all Western democracies are going backwards, is because the Legal eagles have weaseled their ways into positions of power by being the voice behind the screen that directs what can be said and done from their Ivory towers, with the Politicians, plus many Management teams in Corporate Australia, bowing to their Wizard of Oz legal masters who know little and care less, except for their ability on how to control the dialogue in their favour.

    It is a good thing for open dialogue and differing opinions, though it all counts for nothing, if there is no accountability in the questions and answers.

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