Changes bonus for consumers
renewal, in writing, of ongoing fee arrangements with all clients; to require advisers to record, in writing, the services that will be provided and the associated fees; and mandate the client’s express written authority for the payment of fees from any account held for or on behalf of a client.
As a part of this it has also recommended that trail commission paid to advisers from older, often more expensive styled products be abolished by 2021. Commission paid to mortgage brokers One of the more surprising and perhaps controversial recommendations was in relation to commissions paid to mortgage brokers.
The proposal means that instead of your mortgage broker being paid by the lender (bank or finance company) when you take out a new loan you will be required to pay them an upfront fee from your pocket.
The idea behind this is to eliminate mortgage brokers from selecting a lender that pays them the higher commission instead of getting you the best rate.
Those opposed to this change argue that those seeking a home loan often don’t have any extra funds available to pay for the advice from a broker upfront or even the room in their LVR (loan to value ratio) to bundle it into their loan.
Advocates for the change argue customers already pay thousands for brokers’ services, as a hidden cost in their home loan, and they say this reform will add transparency to the process.
One default superannuation fund The commissioner has recommended a single default super fund be mandated for all workers.
This is to avoid people moving from one job to another, perhaps not paying much attention to their super and simply defaulting into a new employer fund each time resulting in unnecessary multiple arrangements consequently paying multiple fees often with insurance in each paying premiums for cover they may not need.
If you require further clarification on any of these points or want to know if you will be impacted, please contact your financial planner for advice. Sam Stevenson is an authorised representative and credit representative of JSSJ Financial Pty Ltd (ABN 55612605437), trading as Edge Advisory Partners; is an authorised representative of AMP Financial Planning Pty Limited, Australian Financial Services Licensee and Australian Credit Licensee.