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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.

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BFCSA: Advisers eye legal challenge to Hayne’s trailing commission ban

Posted by on in ROYAL COMMISSION URGENT
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Advisers eye legal challenge to Hayne’s trailing commission ban

The Australian 3:42pm April 9, 2019

James Kirby

 

The financial advice industry is planning a significant rearguard action against the Hayne royal commission with the launch of “fighting fund” to finance a High Court challenge against planned reforms.

With an estimated cost of up $1.5 million, the Association of Independently-owned Financial Professionals (AIOFP) is asking its 5000 members and affiliated professionals to donate money which will specifically challenge the Hayne commission’s recommendation to scrap trailing commissions.

The financial advisers “Regulatory Challenge Fund” has clearly been emboldened by the recent success of mortgage brokers who successfully convinced both sides of parliament that a Hayne plan to change the commission structure of mortgage broking was unrealistic.

In financial advice, trailing commissions have been “grandfathered” under previous legislation, namely the Future of Financial Advice laws of 2014 (grandfathering allows previously existing arrangements an exemption from new legislation).

Advisers opposed to the Hayne call for a ban on trailing commissions are relying on a legal argument based on “property rights”. The argument was referred to by the leader of the opposition Bill Shorten when he was financial services minister in 2011. At that time Shorten took advice from the government solicitor which implied the grandfathered commissions could continue post-FOFA.

But the prospects of the AIOFP raising sufficient funds for a High Court battle appear mixed, with evidence the advisory profession is split on the issue.

Even within the AIOFP itself there is division — a board member, Patricia Howard, went public last month with her opposition to the organisation’s stance on Hayne stating: “Grandfathered commissions have no place in our industry in the future, they are a relic.” Trailing commissions are ongoing commissions in contrast to ‘upfront’ commissions which may be paid at the start of advice arrangements.

Additionally there has been a lack of formal support from related professional associations in the financial sector for the AIOFP court action to date.

The executive director of the AIOFP Peter Johnston told members on Tuesday: “We believe that a High Court challenge of the legislation has a fighting chance of success based on legal advice and the fact that previous attempts to retrospectively strip remuneration have been identified by the Commonwealth government to be unconstitutional.”

Asked if the campaign had industry wide support, Johnston told The Australian“We’re here to act for advisers and for the interests of our members, we have plenty of support and the initiative has just been launched today but I am delighted with the support shown so far for this proposal”.

Last month the Morrison government offered a significant compromise to the mortgage broking industry on commissions, with the Hayne commission calling for an initial ban on trailing commissions and an ultimate ban on all commissions (both trailing and upfront) — the government agreed to suspend any decision on the issue for three years.

The complete backdown on mortgage commissions has clearly left the door open for other professions to mount related campaigns.

Johnston says the AIOFP also wants to review life insurance arrangements and plans for new professional standards in financial advice after the final report from the Hayne commission recommended a completely new system which apparently ignored the current remodelling of the financial advice system under the Financial Adviser Standards and Ethics Agency which is chaired by veteran company director Catherine Walter.

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