SMSF service providers review fee arrangements post RC

Some of the major SMSF service providers are consequently now in the process of reviewing any arrangements they have with advisers that may constitute a grandfathered commission arrangement or that would require the client’s written authority in line with the royal commission’s annual renewal recommendation.

With the government agreeing to end grandfathering of conflicted remuneration effective 1 January 2021, any payments of previously grandfathered conflicted remuneration that are still in contracts will need to be rebated to clients after this date.

SuperConcepts said this may impact some ongoing fee arrangements put in place before FOFA.

“SuperConcepts will begin assessing any fee collection arrangements in place with advisers that may constitute a grandfathered commission arrangement,” it said.

“If any grandfathered commission arrangements are identified, the process to terminate this fee arrangement by 1 January 2021 will begin, as well as ensuring fee arrangements which cannot be terminated are rebated to the client from 1 January 2021.”

SuperConcepts said the measure may also impact any trail commission payments it may be receiving from third parties if the arrangement was put in place before 1 July 2013.

“We will update all clients when the assessment is complete,” it said.

The government also agreed to adopt the recommendation to limit deductions of advice fees levied on non-MySuper superannuation accounts consistent with the requirement to have annual fees and services renewed annually in writing.

SuperConcepts said it is investigating any obligations it has to ensure these requirements have been met before any advice fees can be deducted.

“SuperConcept is seeking clarification around the obligations an SMSF service provider has — if any — to ensure the annual fee renewal requirement has been satisfied before ongoing fees can be deducted from an SMSF and paid to the adviser,” it stated.

Prior to the release of the final royal commission report, BT announced in June last year that it would end grandfathered payments attributable to BT products for advisers employed by BT, effective 1 October 2018.

In relation to external financial advisers, a BT spokesperson told SMSF Adviser that BT will be carefully considering the recommendations of the royal commission and will work with policymakers and regulators on the best path forward for customers and the industry.

BT said it is currently still honouring its contractual obligations to external advisers who are receiving grandfathered payments in respect of a BT financial product.

Commonwealth Bank likewise announced in October last year that it would rebate grandfathered commissions for Commonwealth Financial Planning (CFP) customers from January this year.

It also announced that it would provide CFP customers with an option to renew their ongoing service arrangements every two years.

Macquarie Group also decided last year that it would switch off grandfathered commissions for its salaried advisers within Macquarie Private Bank and Macquarie Private Wealth.

At the time, Macquarie said there would be no changes to arrangements with independent financial advisers receiving grandfathered payments through its third-party wealth channels.

NAB also announced last year that it would be switching off grandfathered commissions paid by NAB Wealth superannuation and investment product providers to NAB Financial Planning and NAB Direct Advice advisers.