National Australia Bank Ltd. said NAB Financial Planning and NAB Direct Advice will stop accepting grandfathered commissions from NAB Wealth superannuation and investment product providers, effective Jan. 1, 2019.
In a Sept. 3 statement, the Australian bank said the move will benefit about 32,000 customers through fee rebates and reductions of about A$11 million. NAB Financial Planning and NAB Direct Advice will work with other external providers of financial products to utilize grandfathered commissions currently paid to them for the benefit of members, the bank added.
National Australia Bank said it supports transitioning off from grandfathered commissions at an industry level. However, the bank ensured that it will continue to pay commissions to aligned advisers and independent financial advisers under FoFA legislation.
Earlier in July, Westpac Banking Corp. unit BT Financial Group Pty Ltd. said it will stop making grandfathered payments attributable to its financial products, effective Oct. 1.
Until 2013, Australian banks used to pay commissions to financial advisers for recommending their products to clients. The commissions were paid in two forms: up-front commissions and ongoing or trail commissions. In July 2013, the Australian government introduced the Future of Financial Advice, or FoFA, reforms, banning commissions on all financial products apart from life insurance, in a bid to ensure that advisers act in the best interest of their clients. However, the reforms included provisions for "grandfathering" trail commissions on products that had already been sold before July 1, 2013.