Financial planning rebates and commissions

The Financial Planning Association of Australia (FPA) and the Investment and Financial Services Association (IFSA) have jointly released a finance industry guide on rebates and related payments. The Guide sets out standard definitions and summarises all of the rebate practices and disclosure requirements at different stages of the advisory and sales process. The guide takes effect from 1 January 2005 and compliance by FPA members will be proactively enforced after 1 July 2005. Alleged breaches by FPA members will be investigated and handled under the FPA’s disciplinary scheme.

The key principles underlying the Guide are:

Consumers should know what discounts they are receiving when paying for advice and/or investments, and which service they relate to. The Guide specifies that only discounts that are passed through to the consumer should be called "rebates".

Consumers need to be made aware of the revenue received by their adviser and the licensee when the adviser recommends a platform or product. The Guide says that any payment received from a platform or fund manager which is not passed straight through to the consumer should be disclosed as "commissions".

The FPA says similar provisions apply to fees paid by a fund manager to a platform/licensee and fees paid by the platform provider to a licensee.

Print Friendly, PDF & Email

Your Compliance Support Plan

We understand you need a cost-effective way to keep up to date with regulatory changes. Talk to us about our fixed price plans.