Broker junkets face severe curtailment as Combined Industry Forum sets limits on soft-dollar spending
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Junkets face severe curtailment as Combined Industry Forum sets limits on soft-dollar spending
Broker conferences are set for change after brokers, lenders, and aggregators agreed to strict spending limits and educational requirements.
Last week the Combined Industry Forum presented a range of reforms, including a spending limit for lenders for entertainment and hospitality of $350 per broker, per event. According to the CIF, “this value was chosen to align with Fringe Benefit Tax (FBT) reporting, which enables lenders and aggregators to use existing reporting for better monitoring and supervision.”
From the end of 2018 lenders, aggregators and brokers will be required to maintain a register of all such benefits, with details provided to the public on request.
Professional development and education events will be outside the maximum spend but must include 80% educational content under the new rules.
The CIF noted that “Minimum education and professional development for brokers is not considered a reward but as driving a level of competency to improve customer outcomes.”
'Business appropriate' locations
In its recommendations, the Combined Industry Forum notes that “locations for conferences and professional development must be business appropriate and not likely to cause reputational harm to the industry.”
Lavish, offshore conferences of past years have been seized on by critics of brokers as evidence of conflicts of interest. At ASIC’s conference earlier this year, consumer advocate CHOICE brought up AFG’s 2015 Caribbean cruise for its elite Chairman’s Club.
In conversations with aggregators over the past year, aggregator heads told MPA that conferences will be held onshore in future, or take place in business centres in similar time zones, such as Hong Kong. Many conferences are now state-based, including the MFAA conference, from 2016, and Connective’s conference.
The exception is AFG, who this year for the first time held a national conference in Sydney, open to all of its brokers.
Broker clubs
Elite conferences may also change, due to rules on elite broker clubs.
Entry to broker clubs, such as Westpac’s Platinum Brokers or CBA’s Diamond Brokers, will from 2018 be determined by a balanced scorecard, with a maximum 30% volume component.
Other criteria will be aligned the Combined Industry Forum’s new definition of good customer outcomes.
Brokers will now have to disclose their membership of a broker club when recommending a product from that lender.
According to the CIF, “such programs should not entitle brokers to preferential customer discounts or to additional payments or commissions. Instead, these programs should provide preferential service which can assist customers in achieving better outcomes.”
This article is part of a series on the future of broker remuneration and governance. To read more click here.
Broker conferences are set for change after brokers, lenders, and aggregators agreed to strict spending limits and educational requirements.
Last week the Combined Industry Forum presented a range of reforms, including a spending limit for lenders for entertainment and hospitality of $350 per broker, per event. According to the CIF, “this value was chosen to align with Fringe Benefit Tax (FBT) reporting, which enables lenders and aggregators to use existing reporting for better monitoring and supervision.”
From the end of 2018 lenders, aggregators and brokers will be required to maintain a register of all such benefits, with details provided to the public on request.
Professional development and education events will be outside the maximum spend but must include 80% educational content under the new rules.
The CIF noted that “Minimum education and professional development for brokers is not considered a reward but as driving a level of competency to improve customer outcomes.”
'Business appropriate' locations
In its recommendations, the Combined Industry Forum notes that “locations for conferences and professional development must be business appropriate and not likely to cause reputational harm to the industry.”
Lavish, offshore conferences of past years have been seized on by critics of brokers as evidence of conflicts of interest. At ASIC’s conference earlier this year, consumer advocate CHOICE brought up AFG’s 2015 Caribbean cruise for its elite Chairman’s Club.
In conversations with aggregators over the past year, aggregator heads told MPA that conferences will be held onshore in future, or take place in business centres in similar time zones, such as Hong Kong. Many conferences are now state-based, including the MFAA conference, from 2016, and Connective’s conference.
The exception is AFG, who this year for the first time held a national conference in Sydney, open to all of its brokers.
Broker clubs
Elite conferences may also change, due to rules on elite broker clubs.
Entry to broker clubs, such as Westpac’s Platinum Brokers or CBA’s Diamond Brokers, will from 2018 be determined by a balanced scorecard, with a maximum 30% volume component.
Other criteria will be aligned the Combined Industry Forum’s new definition of good customer outcomes.
Brokers will now have to disclose their membership of a broker club when recommending a product from that lender.
According to the CIF, “such programs should not entitle brokers to preferential customer discounts or to additional payments or commissions. Instead, these programs should provide preferential service which can assist customers in achieving better outcomes.”
This article is part of a series on the future of broker remuneration and governance. To read more click here.
