Provide some general discussion as to why in Australia, financial advisory

regulators were so keen to ban the acceptance of financial product commissions

by financial advisers / advisory firms, payable on client investments. Note that

these legislative changes were ultimately passed as part of the FOFA reforms in

Australia,

REFERENCE:

In April 2010, the Minister for Financial Services,

announced the Government's response to the inquiry. A

range of reforms (collectively forming part of the

subsequent FOFA - Future of Financial Advice reforms)

were recommended including:

- banning commissions for financial planners giving

advice on retail investment products including

superannuation, managed investments and margin

loans

- introduction of a statutory fiduciary duty so that

financial advisers must act in the best interests of their

clients, and

- increasing the powers of the corporate regulator

Two-thirds of the advice in the shadow shopping study

involved the recommendation or continuation of

in-house products or products associated with the advice

group.

It is noted that with the passing of the FOFA legislation

in 2013 many of the issues highlighted in the shadow

shopping survey such as reliance on advisers reliance on

commissions and the use of in-house products have been

addressed.