Royal Commission Final Report

February 20, 2019

On 4 February the Government released the final report from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The report summarises the issues and recommendations from the seven hearing rounds. The examples of poor advice and misconduct identified by the Royal Commission are concerning and must be addressed.


Commissions removal

Commissions were banned on new investments and superannuation products from 1 July 2013. However, ongoing commissions to advisers from financial products bought before that date were ‘grandfathered’. At the same time, commissions on life insurance products are presently exempt from the ban on conflicted remuneration. Many advisers still receive ongoing commissions from the older financial products as well as insurance commissions. Further, information about commissions does not have to be included in the fee disclosure statements that are given to clients.

One of the main recommendations in the Report was to remove grandfathered commissions, as well as recommending that the insurance commissions ultimately be reduced to zero.  In the commissioner’s view, removing commissions would prevent the temptation for advisers to use products that give them the most commissions. Removal of the commissions aims to reduce the conflict between the duties owed by an adviser and the interests of that adviser. The January 2018 ASIC report¹ shows that the current law has not resulted in this conflict being managed successfully.

In its response to the Report, the Government agreed that it is now appropriate for grandfathering to end, indicating that this may take place from 1 January 2021. At the same time, the Opposition has responded to Commissioner Hayne’s recommendation to ban grandfathered commissions by proposing a deadline of 1 January 2020 – a  year ahead of the deadline proposed by the Government. In terms of the insurance commissions, ASIC is due to conduct a review in 2021 to consider whether the recent reforms in this area have made any difference in aligning the interests of advisers and their clients. If not, the Government is likely to take further changes in relation to insurance commissions.


Disclosure of lack of independence

One of less expected recommendations of the Royal Commission is disclosure of lack of independence. In practice, this means that financial advisers, who cannot call themselves independent under section 923A of the Corporations Act would be required to give to the client a written statement explaining simply and concisely why the adviser is not independent. In its response to the Report, the Government supported this proposal.


Not yet a profession

The report recommends the need for strong consumer protections in order to restore trust in financial planning providers. In the Report, the commissioner reflected on the history of financial planning:

“Expressed in a single sentence, that history tells the story of an incomplete transformation – from an industry dedicated to the sale of financial products to a profession concerned with the provision of financial advice. I say ‘incomplete’ because I do not believe that the practice of giving financial advice is yet a profession”.


Our story

Being independent since its establishment in 2004, Aspire have been applying a fee-for-service approach – where there is no room for kickbacks or commissions. While fifteen years ago our model may have been uncommon, it has been proven time and again that charging professional fees for service, rather than relying on commissions and volume bonuses, is the only way forward. Without this, the ‘financial planning industry’ will never develop into a ‘financial planning profession’.

If you are looking for an independent financial planning advice, please consider our services.


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  1. ASIC, Report 562, 1 January 2018.