The Federal Treasurer, Josh Frydenberg, has announced a brief public consultation into whether financial advisers should receive 'stamping fees' for distributing listed vehicles to their clients. The results of this Firstlinks survey will be provided to Treasury as input to its decision. Please take a moment to share your views and we will publish the results next week.
[Note: This survey is now closed]
A changing landscape for listed entities
After $4 billion of issuance in Listed Investment Trusts (LITs) and Listed Investment Companies (LICs) in each of the last two years, the regulatory landscape is about to change. Although two fixed income LITs are currently raising money under the old rules allowing stamping fees to be paid to financial advisers, it is likely that the Federal Treasurer will ban the practice in future and bring listed funds and trusts in line with unlisted vehicles under FoFA.
For those who require more background, we have published several articles on the subject, including:
Advisers and investors in the dark on LITs and LICs, a detailed background paper explaining the current regulations and why they are unsustainable.
Authorities reveal disquiet over LIC fees, following the FOI revelation that ASIC argued the payments should be banned.
1 January is moment of truth for the wealth industry, a financial adviser argues good advice must be free of conflicts.
Three overlooked points on the LIC/LIT fee battle, offers the same conclusions we expect Treasury to reach.
Here is Josh Frydenberg's announcement:
"The Morrison Government is today announcing that Treasury will undertake a four week targeted public consultation process on the merits of the current stamping fee exemption in relation to listed investment entities.
Stamping fees are an upfront one-off commission paid to financial services licensees for their role in capital raisings associated with the initial public offerings of shares.
Public consultation will allow the Government to make an informed decision on whether to retain, remove or modify the stamping fee exemption in order to ensure that the interests of investors are protected and capital markets remain efficient and globally competitive."
In addition, the CEO of the Financial Planning Authority (FPA), Dante De Gori, responded with support to ban payments:
“At this point in Australia, all other forms of product-directed payments that a financial adviser receives from clients have been banned, leaving most financial planners only receiving fee-for-service payments. The FPA supports the government’s efforts to improve the quality of financial advice that all Australians receive."
Let us know your opinion including comments and we will ensure the survey is presented to Treasury. The survey is only a few questions and no identities will be revealed.
Either complete the survey embedded below, or use this web link.