AIOFP defends its commissions stance

Product manufacturers should be made to return value of unpaid trailing and grandfathered commissions to consumers via a lower Australian Securities and Investments Commission levy, according to the Association of Independently Owned Financial Professionals (AIOFP).

AIOFP executive director, Peter Johnston has taken issue with suggestions that his organisation is advocating the return of trailing commissions and says that, rather, the AIOFP is “suspicious of product manufacturers not returning” the total value of unpaid commissions to consumers.

In a message to members Johnston has referenced the option of getting grandfathered commissions that are retained by product manufacturers “back to ASIC’s coffers to offset the adviser levy”.

He claimed that if that occurred, it would ultimately be returned back to consumers via lower advice costs.

“The other place it can be used is funding the Compensation Scheme of Last Resort (CSLR), considering the manufacturers product failures are responsible for billions of losses, it seems also a very appropriate place to receive the funds,” Johnston said.

“Where would you rather your past revenue be held? With the Institutions or with ASIC to offset costs that will benefit consumers and your practice?”

“We also think the Risk Advice industry will not recover until the commission structure is returned to the pre LIF structure. The zealots who think risk commission should be banned do not understand human behaviour, the global experience and what has happened to the industry since LIF inception.”