A guide covering rebates and related payments to help improve remuneration practices in financial services and planning has been has been published by the Financial Planning Association (FPA) and the Investment and Financial Services Association (IFSA).

It provides standard definitions and offers a summary of rebate practices and disclosure requirements at the different stages of the advisory and sales process.

Compliance is a mandatory condition of FPA and IFSA membership. The guide will become an IFSA standard, meaning that sign-off is required from the member company’s compliance officer. Alleged breaches will be investigated and handled under the FPA disciplinary scheme.

The guide outlines obligations that are additional to the disclosure requirements as set out in the Financial Services Reform Act.

Merrill Lynch Investment Managers CEO Maurice O’Shannassy, who chaired the IFSA/FPA Rebates Working Group, says the industry believes in a higher standard of disclosure “that more clearly defines and describes rebates and related payments”.

The new guidelines take effect from January 1, with a six-month transition period.