Commissions on financial products sold following general advice will be banned under forthcoming changes to the Future of Financial Advice (FOFA) legislation. 

However, the rule will exclude personal advice on general insurance products from brokers and banking staff.

The Government will also introduce a ban on recurring payments for products sold under general advice.

Finance Minister Mathias Cormann says the bans add to current FOFA legislation requiring people giving advice to be clearly identified as employees of financial product providers.

“The Government has supported the ban on commissions and conflicted remuneration for financial advisers since it was first legislated,” Senator Cormann said.

“At no point has the Government sought to reintroduce commissions or conflicted remuneration for financial advisers.”

Certain incentive payments will be allowed, provided they are not conflicted.

“This is not and never has been designed to bring back commissions for financial advisers,” Senator Cormann said.

“The Government is moving to put this absolutely beyond doubt by prescribing that any payment related to the provision of general advice cannot be an upfront or a trailing commission.”

FOFA’s grandfathering provisions will also be changed, to let advisers move between licensees while receiving grandfathered remuneration from their previous jobs. 

“We welcome the positive and constructive approach taken by the Opposition in… finalising these revised grandfathering arrangements to address unintended consequences,” Senator Cormann said.

The Government also proposes removing the catch-all clause from the best-interests duty and the opt-in requirements, while streamlining annual fee statements.

It hopes to make the changes through regulations – rather than legislation – introduced to Parliament this week, so they can take effect from July 1.

However, conflicted remuneration, operation of volume-based shelf-space fees and moves to extend fee disclosure statements to 60 days must be introduced as amendments to the Corporations Act.