From July 2013, the Future of Financial Advice Reforms has banned so-called ‘conflicted charges’, being commissions and other payments to financial advisers that could reasonably influence the advice given to retail clients.
Under ‘grandfathering provisions’ of the FOFA Reforms, certain commissions or other payments to be made under an arrangement entered into prior to 1 July 2013 were excepted from the ban.
At issue are fees charged to members of the MLC Super Fund by NULIS from 1 July 2016 onwards, some of which were diverted to pay "conflicted remuneration" to financial advisers. This matter was a highlight of Kenneth Hayne's commission in August, a harrowing week that humiliated NAB managing director Andrew Thorburn, forced the hasty exit of the bank's wealth head Andrew Hagger and set the scene for Thorburn's own bruising end to his career early this year.
The class action lawyers allege that the decision by NULIS (which became trustee for the MLC Super Fund in mid-2016) to maintain the payment of conflicted charges constituted a breach of its duty to act in the best interests of members of the fund.