Government loosens squeeze on planning fees

The wealth management and "platform" businesses of banks have secured concessions from the Australian Government in the reform of commissions payable to financial planners, major media outlets reported today.

While the reforms will ban up-front commissions and similar payments from July 2013, the Government will allow existing commission arrangements to remain in place.

Most volume-based payments, such as those based on sales targets, will be banned. Commission on life insurance sold as a bundle with superannuation will also be banned.

And so-called "soft dollar" commissions will be banned from July 2012, a year earlier than the other reforms come into effect, though exceptions will be made for payment by fund managers and platform providers to financial planners for IT services and "professional development".

One detail banks will need to clear up from the formal release of the policy document by Treasury this morning is the scope of the fiduciary responsibility placed on financial advisers.

Banks have been lobbying for a carve-out for over-the-counter sales (for example, of some superannuation products).