In a letter to Western Australian senator Linda Reynolds, financial services minister Jane Hume said the government was “committed to enhancing the financial advice OFA framework” to address the risk of fee-for-no-service misconduct revealed by many of the major financial institutions during the royal commission.
Senator Reynolds had made representations to Ms Hume on behalf of Roxburgh Securities adviser Steve Blizard, who has been a staunch critic of the reforms to advice fee renewals passed by Parliament earlier this year.
“Under the legislation, consumers will receive an annual forward-looking summary of the fees that they will be charged and the services they will be entitled to receive,” Ms Hume said.
“Fee recipients will need to obtain their clients’ written authority prior to arranging the deduction of fees from a client’s account.”
Cost impacts listed in the explanatory memorandum of the new laws, which come into force on 1 July and were a response to the royal commission’s final report, estimate the compliance costs to the industry for reforms to ongoing fee arrangements will total $28 million.
However, Ms Hume said the additional restrictions were necessary to assist advice clients in making more informed decisions on the fees they were being charged.
“These new obligations will help clients in an ongoing fee arrangement to determine whether they are receiving services commensurate with the fee they are paying and ensure that fees are not charged ‘invisibly’,” she said.
“The government considered carefully the feedback received last year on the exposure draft of the legislation and made corresponding amendments in order to minimise compliance costs for advisers without weakening protections for consumers.”
Ms Hume added that the industry had “generally reacted positively” to the amendments made before the bill was passed, including the merger of fee disclosure statements with annual renewal of ongoing fee arrangements and relaxed requirements around the dates that advisers must seek client consent.
It is worrying that Hume thinks the industry had “generally reacted positively” to the Liberal party changes. I am yet to meet one adviser who thinks a massive addition in red-tape is a good thing.
With the exception of the AIOFP, all the industry associations have been missing in action. It is their fault that Hume and Frydenberg could possibly think their changes have been well received.
ON another matter, Invisible fees?
clients currently get their fees disclosed …
– In their SOA
– A signed Fee Agreement
– An annual FDS
– Opt-in forms
– On their super statements at least twice a year
– Access to their account to look for themselves anytime
Who in this industry ‘generally reacted positively’??
This minister must have sensory deprivation she is so out of touch
Show us the coatings Ms Hume.
$28 Mill what a load of rubbish.
These extra FDS Optin, complete 2nd layer AFSL compliance costs are already expensive pre starting and will Cost way more than $28 Mill.
Lies, Lies and more Lies from Hume, LNP & I Hate Advisers Frydenberg.