News

For more than a decade, FSU has been advocating for an end to conflicted remuneration systems in the finance sector that have increased the variable or at risk component of members take home wages and placed corporate profits above the interests of customers. Hidden commissions, employer driven volume based sales targets and a lack of transparency has resulted in reduced fixed income for employees and a significant reduction in customer confidence in the industry as evidenced in the downward spiral of Australians seeking financial services such as planning and advice. The professionalism of the industry and employer respect for their workforce have also been casualties of conflicted remuneration.



But, things are finally changing and for the better. The Minister for Financial Services and Superannuation, The Hon Bill Shorten when recently addressing the FSU’s National Conference, acknowledged your union’s efforts to end conflicted remuneration, our drive to improve the public standing of the industry and to help Government understand the issues.



Following an intensive consultative process, the Federal Government has released draft legislation covering the first wave of Future of Financial Advice (FOFA) reforms and they tackle conflicted remuneration in the area of advice and planning.



The reforms are also aimed at restoring consumer confidence in the financial services sector and they include:

• Opt-in advice – planners required to write to clients every two years, with clients to confirm ongoing arrangements.

• Banning commissions on insurance – super group life insurance products and any life insurance attached to a default or My Super product

• Customer best interest duty – planners and advisers must act always in the customers best interest and put clients’ interests above their own

• Increased ASIC enforcement powers to give effect to the above changes.

Minister Shorten and the Government are to be congratulated for having the courage to deal with these issues, often in the face of extreme industry opposition. Measures such as these are good for customers, they are good for the industry and they are good for people who work in it. The challenge now is to extend the same principles to the full range of financial services and products.

Importantly, these reforms also provide the opportunity for us to continue to challenge the validity of conflicted remuneration and all that comes with it across the entire industry.



FSU will track the progress of the draft legislation through the Parliament, and keep members informed of the implementation details, and the effect it is likely to have on employees.



From: FSU webpage