A senior federal opposition front-bencher has signalled that financial planners who have purchased books of clients on the basis of trailing commissions can expect little sympathy from a future Labor Government.
Shadow Assistant Treasurer, Matt Thistlethwaite made his party’s position clear during a hearing of the House of Representatives Standing Committee on Economics when he suggested that financial planners should have known better than to have taken out loans to acquire books of clients.
While questioning ANZ deputy chief executive, Alexis George during the committee’s review of the four major banks, Thistlethwaite said he had been approached by an affected planner but had little sympathy.
“I recently had a financial planner come up to me at an event and say: 'You guys have got it wrong with grandfathered commissions. In a lot of financial-planning businesses, people had borrowed money to buy the business on the basis that the grandfathered commissions were part of the profits of the business, the structure of the business, and the reason why they bought into that particular business',” he said.
“Obviously I said to the person: 'Look, I've got little sympathy for you. You've been on notice about this, and, if you'd done your due diligence, you should have known about this’,” Thistlethwaite said.
He then asked George how prevalent such circumstances were where “people have bought into these sorts of businesses with their eyes closed?”
The ANZ deputy chief executive said she was not the right person to ask because she had not been involved in too many smaller acquisitions and ANZ did not own any adviser groups any more.