What's changing?

In 2019 the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission) made a number of recommendations, including ending grandfathered payments and changing the way financial advisers can charge certain fees to their clients. These changes will also impact the way superannuation funds can deduct fees from client accounts.

This update provides an overview of the following changes:

Legislated

We are going to support you through these changes and advise of any new processes, additional requirements and any impact for your clients here on the adviser hub.

Please note that the information contained on this hub does not apply to any Life Insurance products. Further information is available on LifeCENTRAL.

Ending grandfathered payments

Since 1 July 2013, certain payments made by product issuers to advisers and/or their related dealer groups were banned as part of the Future of Financial Advice (FoFA) reforms.

However, the ban on paying and accepting conflicted remuneration didn’t apply to those payments made under arrangements that were entered into prior to 1 July 2013. These were allowed to continue and have since been referred to as grandfathered payments.

What's changing and when?

The new legislation means grandfathered payments cannot continue from 1 January 2021. From this date, the remaining grandfathered payments to financial advisers or their dealer groups will cease. For some, the last period chargeable will be 30 November, with the final payment paid in December 2020. Any benefit arising from no longer making these payments must be passed on to clients. This legislative change is based on Royal Commission Recommendation 2.4.

Impacted products and what it means for you

Currently, we pay grandfathered payments to you or your dealer group in arrears. The last payment will be calculated up to 30 November 2020 and be made to you and/or your dealer group in December 2020 for the following products:

Retail Super 

  • BT Super 
  • Advance Retirement Suite

Insurance Bond Products

  • Westpac Foundation Plan (includes Children’s Foundation Plan)
  • Westpac Investment and Protection Plan
  • Westpac Investment Insurance Bond
  • Westpac Universal Life
  • Westpac Insurance Bond
    (includes Children’s Head Start Insurance Bond and Children’s Head Start Regular Plan)

Annuity Products

  • Westpac Rollover Investment Bond
  • Westpac Rollover Bond
  • Westpac Variable Income Plan
  • BT Complying Income Plan

Retail Trust MIS Managed Funds

  • BT Investment Funds
  • Advance Investment Funds
  • BT Investor Choice Funds
  • BT Classic Investment Funds
  • BT Premium Cash Fund

BT Wrap

  • BT SuperWrap (including badge versions)
  • BT Wrap (including badge versions)

Wrap Essentials

  • BT SuperWrap Essentials (including badge versions)
  • BT Wrap Essentials (including badge versions)

Margin Lending

  • Absolute Investment Loan
  • BT Margin Loan
  • St George Direct Margin Lending
  • BT Professional Investment Loan
  • St George Margin Lending

How does this change impact your clients

BT will not retain these grandfathered payments. The benefit of the ceased payment will be returned to impacted clients from 1 December 2020, and how this is returned to the client will vary depending on the product and payment type. We’ll communicate further product specific information and how this impacts your clients at a later date.

Retail Managed Investment Schemes and Westpac Insurance/Rollover Bonds

If your client was previously getting charged a contribution/entry/establishment fee on any additional investments or contributions, you may have been receiving all or part of that fee as commission. From 1 December 2020, contribution/entry/establishment fees will be switched off, and therefore no commissions will be payable in respect of these fees from that date onwards.

BT Complying Income Plans

Your clients will have grandfathered payments passed on to them in respect of all future income payments they have remaining as part of their BT Complying Income Plan, in the form of a one-off  lump sum payment. We will also contact your clients to ensure they understand they will receive a one-off  lump sum payment of all remaining grandfathered payments, and allow them to contact us back if they do not wish to receive the additional payment (in the event it may have any adverse tax or Centrelink benefit consequences to them).  

Changes to BT Complying Income Plans

Your clients will receive grandfathered payments passed on to them in line with any future income payments they have remaining as part of their BT Complying Income Plan.

We will also contact clients to ensure they understand their future income payments after 1 December 2020 may increase, and allow them to contact us if they do not wish to receive the additional income (in the event it may have any adverse tax or Centrelink benefit consequences to them).

Changes to ongoing advice fee arrangements

From 1 July 2021, ongoing fee arrangements which advisers have in place with their clients will need to be renewed on an annual basis, and advisers must obtain written consent from their clients before any advice fees in relation to the ongoing fee arrangements can be deducted.

Fee disclosure statements (FDS) must be issued for ongoing arrangements each year, no later than 60 days after the anniversary day of the arrangement. These statements must include information on the fees to be charged and services to be provided in the coming year, as well as information about the previous year.

The FDS must also inform the client that they can renew their fee arrangement, and that the fee arrangement will terminate if they do not renew it. Clients will have 120 days from the anniversary day to renew their fee, and fees will cease 150 days from the anniversary day if the arrangement is not renewed.

We will apply the new process to both Super and non-Super/IDPS products.

Customers may also withdraw or vary previous consents provided for ongoing advice fee arrangements. The Trustee must be provided with evidence of the withdrawal or variation within ten business days of receipt from the client.

Where the advice fee is being deducted from a platform account or super fund, a copy of the consent must be given to the account provider before the fee is deducted.

We fully support the move towards full transparency around fees and believe that fee transparency safeguards client interests.

We recognise that these changes will create challenges in your advice practice as we all adapt to the new framework.  Your processes for issuing fee renewals and collection of client consent may need to change.

New ongoing advice fee arrangements (established from 1 July 2021)

Panorama

Effective 6 June 2021 we implemented changes to our processes which require clients to provide their consent to BT Panorama upon set-up of a new advice fee arrangement, amendment of an existing advice fee arrangement, as well as annual renewal of an ongoing fee arrangement.

  • It’s important to note that we made system changes on 5 June 2021, and as a result, any pending account applications with an advice fee that were created prior to this date, which had not been accepted by your clients by midnight on 4 June 2021, were automatically discarded.
  • If an advice fee was already being deducted from a client’s account on an ongoing basis prior to the system changes that occurred on 5 June 2021, a new client consent must be received and processed by BT by no later than 30 June 2022.
  • We are applying the new process to both Super and non-Super/IDPS products to meet our Responsible Entity obligations and for consistency.

For information on how to provide a client consent using our fee consent functionality, log in to your BT Panorama account then go to Help & Support > Fees.

Frequently Asked Questions

Here are some of the most frequently asked questions we’ve received about the changes.

1.       Why did this happen earlier than the 1 July 2021 legislated date?

To ensure a smooth transition in readiness for the 1 July 2021 compliance date, we implemented our new processes from 6 June 2021. This approach also reduced disruption to services provided as a result of increased service volumes leading up to the end of the financial year.

2.       Do these changes apply to both Super and non-Super/IDPS clients?

Yes, we apply the consent requirement to both Super and non-Super/Investment products when any new or amended ongoing and non-ongoing advice fees are charged from 6 June 2021.

While RCR 3.3. only applies to Superannuation products, for consistency, Royal Commission Recommendation 3.3 is applied to both Superannuation and Investment clients.

The only exception is Sophisticated and Wholesale investors in IDPS accounts to which the consent requirement in RCR 2.1 does not apply.

We recognise that these changes will create challenges in advice practices as we all adapt to the new framework.

3.       Will all the fee consent information flow through to Xplan?

Currently, an existing feed sends consent information provided and confirmed via the consent management screen in Panorama to XPLAN.

From 6 June 2021, we added 4 additional Consent Types:

  • Consent advice fee 
  • Consent advice fee (Offline)
  • Consent one-off advice fee
  • Consent one-off advice fee (Offline)

Everything else remained the same.

The other consent types already existed and flowed through to XPLAN. No fee details such as Consent Expiry Date, Next Anniversary Date etc. flow through to XPLAN.

While our focus in June 2021 was ensuring compliance to the legislation from 1 July 2021, we are continually looking to enhance our platform and how it works with XPLAN, as will the industry moving forward in light of these new requirements.

Note, the following consent types will not flow through to IRESS from 6th June:

  • MPAF – paper offline consent (intra account transfers)
  • PMF – paper offline consent (new investments and intra account transfers).

4.       How are we working with IRESS on an XPLAN solution?

We are discussing with IRESS how we can provide a seamless experience where consent can be collected once, and automatically shared between XPLAN and Panorama. We will provide more information about a solution as it becomes available.

5.       What is our approach in working with the industry to develop a standard consent form?

The Financial Services Council (FSC) has set up the Super and Advice Working Group, an industry group established with the intent to streamline the client consent process for the industry, which includes the goal of developing an industry wide consent form.

BT is an active member of the FSC Super and Advice Working Group and we are committed to working with both the FSC working group and the industry towards an outcome of minimising duplication for advisers and clients, when obtaining and submitting client consent.

BT Wrap

  • We migrated all Wrap clients to BT Panorama by 30 June 2021, where they will now be able to take advantage of the Panorama solution to provide and renew consent.

Existing ongoing advice fee arrangements (entered into immediately prior to 1 July 2021)

For existing arrangements there will be a 12-month transition period for existing arrangements, ending on 30 June 2022. All ongoing fee arrangements entered into immediately prior to 1 July 2021 must be brought into compliance with the new requirements by 30 June 2022 or the fee can no longer be deducted from the member’s account.

To comply with these legislative changes, you will need to issue an FDS with the new information required, obtain consent from the client for the deduction of fees, and provide this consent to the product provider (if fees are deducted from a platform or super account).

Other product changes

As part of the legislative changes we also decided that for some products, the ability to deduct ongoing advice fees will no longer be available. This means any existing ongoing advice fees that are currently in place for your clients’ super and investment accounts within these products ceased to be deducted after 30 November 2020. The last payment to dealer groups and/or advisers was made in December 2020 for the November period.

Products impacted by this termination of ongoing advice fees are:

  • Advance Retirement Suite Super/Pension
  • Advance Investment Funds
  • BT Investment Funds
  • BT Classic Investment Funds
  • BT Investor Choice Funds

Since 30 November 2020, you can still arrange for the deduction of one-off advice fees with your client’s consent from these products by completing the applicable advice fee form. Please refer to the relevant product page to access the product specific advice fee form. 

In early December 2020 we provided you with 30 days’ notice of changes to the Wrap Terms and Conditions for both Advisers and Dealer Groups. As the start date of advice fees changes has been delayed, we will not be proceeding with the changes to the Terms and Conditions and therefore we have withdrawn the notice of changes previously provided.  Accordingly, the current Terms and Conditions will continue to apply.

What help is available?

All forms and documents relating to these changes, including the new fee consent form, will be available on this page prior to the changes coming into effect.

Changes to advice fees for super choice accounts

In addition to the changes for ongoing advice fee arrangements, there are requirements on trustees for deducting advice fees from superannuation choice accounts. The changes are based on the Royal Commission Recommendation 3.3 which was legislated in February 2021.

Super fund trustees will need written consent from clients before deducting advice fees (ongoing and one-off) from the choice investment component of a member's super account.

This means in addition to obtaining and providing consent for ongoing advice fees, you will also need to obtain and provide consent for any non-ongoing fees such as one-off advice fees and fixed term advice fee arrangements.

Please note - The above law applies to Superannuation schemes. However, to meet our Responsible Entity obligations and for consistency, we will require consent for non-ongoing fees on super and investment accounts.

BT Su­per/​​Su­per for Life

  • From 4 De­cem­ber 2020, su­per fund trustees need to re­ceive your clien­t’s ex­press writ­ten con­sent be­fore any ad­vice fees can be de­ducted from the choice in­vest­ment com­po­nents of the clien­t’s su­per or pen­sion ac­count.

Panorama

Effective 6 June 2021 we implemented changes to our processes which require clients to provide their consent to BT Panorama upon set-up of a new advice fee arrangement, amendment of an existing advice fee arrangement, as well as annual renewal of an ongoing fee arrangement.

  • It’s important to note that we made system changes on 5 June 2021, and as a result, any pending account applications with an advice fee that were created prior to this date, which had not been accepted by your clients by midnight on 4 June 2021, were automatically discarded.
  • If an advice fee was already being deducted from a client’s account on an ongoing basis prior to the system changes that occurred on 5 June 2021, a new client consent must be received and processed by BT by no later than 30 June 2022.
  • We are applying the new process to both Super and non-Super/IDPS products to meet our Responsible Entity  obligations and for consistency.

For information on how to provide a client consent using our fee consent functionality, log in to your BT Panorama account then go to Help & Support > Fees.    

Changes to advice fees for MySuper

In December 2020 we informed clients that BT had made the decision to no longer allow one-off Member Advice Fees to be deducted from MySuper accounts for BT Super, BT Super for Life and BT Super for Life - Westpac Group Plan. This decision was made in order to comply with expected legislation that would not have permitted the deduction of any advice fees from a MySuper product.

However, the final legislation has changed and will continue to allow one-off Member Advice Fees to be deducted from MySuper accounts.

As a result of this updated legislation, from 1 March 2021 BT Super, BT Super for Life and BT Super for Life - Westpac Group Plan will allow one-off Member Advice Fees to be deducted from MySuper accounts with consent.  Clients will need to continue to provide written consent before the one-off Member Advice Fee can be deducted from their account. The changes are based on the Royal Commission Recommendation 3.2, which has been legislated in February 2021.

The fol­low­ing prod­ucts will allow one-off Member Advice Fees be­ing de­ducted from My­Su­per - Lifestage com­po­nents:

  • BT Su­per
  • BT Su­per for Life
  • BT Su­per for Life – Tran­si­tion to Re­tire­ment
  • BT Su­per for Life – West­pac Group Plan

If clients pay their one-off ad­vice fees through their MySuper or choice in­vest­ment com­po­nent of their su­per ac­count, they will also need to con­sent in writ­ing to the fee be­ing charged by their ad­viser, com­menc­ing from 1 July 2021.

From 1 March 2021, the Member Advice Fee form is avail­able at bt.com.au. Please ensure the latest form is downloaded and completed. If you need ad­di­tional in­for­ma­tion please call us on 132 135.

Change to the responsible entity of some managed funds

The Royal Commission recommended a change to the underlying trustee structure for some managed funds (Funds) where customers are invested in.

BT Funds Management Limited ABN 63 002 916 458, AFSL 233724 (BTFM) intends to retire as responsible entity (RE) of these Funds and appoint Westpac Financial Services Limited ABN 20 000 241 127, AFSL 233716 (WFSL) as the new RE, effective from 15 March 2021.

For the two MIS funds BT Australian Share Fund and BT Split Growth Fund, BT Funds Management Limited ABN 63 002 916 458, AFSL 233724 (BTFM) intends to retire as responsible entity (RE) of these Funds and appoint BT Fund Management No.2 Limited (BTFM2) ABN 22 000 727 659,  AFSL 233720  as the new RE, effective from 30 June 2021.

This change is based on the Royal Commission Recommendation 3.1.

Why is a change to the RE being proposed?

In 2019 the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission) made a number of recommendations, which were legislated in 2021.

As part of these changes, from 1 July 2021 a superannuation fund trustee can’t hold a role to act in the interests of other persons, other than  as a super fund trustee.

BTFM is both an RE of some managed funds and a trustee of superannuation funds. BTFM therefore proposes to retire as RE and appoint WFSL/BTFM2 as the new RE.

What does this mean for impacted customers?

The change of RE has no direct impact to product features, fees and costs or investment asset allocation. WFSL/BTFM2 are entities within the Westpac Group and the funds will continue to be managed and administered by the same people and resources within BT. BTFM considers there will be no adverse consequences due to this change in RE.

The change of RE to WFSL/BTFM2 will result in a change to the governing board of directors that oversee the funds on behalf of unitholders. We consider this change is in line with best practice governance and will enable the Funds to continue to be managed in the best interests of unitholders while allowing BTFM to meet the requirements of the proposed legislation recommended by the Royal Commission.

The following table shows the Fund(s) you are invested in, the current RE for each Fund, and the proposed new RE for the Fund (from 1 March 2021).

Will you also contact my clients?

Yes, we will notify your clients, outlining what these changes mean for them and where to get help. This notification will provide an overview of the new rules and your clients won’t be required to take any immediate action in regard to the Royal Commission Recommendations.

Please find below sample versions of the client communication for the following products.

This list will be updated regularly with additional sample versions of client communication.

Platform access and forms

Panorama access

Access client information and lodge advice fee requests online for Panorama clients

Go to Panorama

Wrap access

Access client information and forms for Wrap clients

Go to Adviser Wrap

Forms

For BT Super for Life super and pension products your clients are currently able to request on-off fees through their online banking.

Please note - this functionality will be turned off from December 2020. However, we will provide your clients with a link to access a new form which they can use to request one-off fees, going forward.

ADVANCE

Contact us

We’re here to help. If you can’t find the answer to your question in the FAQs section above, please call us on 132 135, Monday to Friday from 8:30am to 5:30pm (Sydney time), or contact us online.

Disclaimer:

The information shown on this site regarding the proposed legislative changes is intended as a guide only for dealer groups and advisers. It is not exhaustive and does not constitute legal advice. It is based on our interpretation of the law currently in force on the date of this notification and the proposed Bills and we do not undertake to provide any further updates to the extent that any of the information in this document changes in the future. Consequently, it should not be relied upon as a complete statement of the relevant laws, the application of which may vary, depending on your particular circumstances. It must not be made available to any retail client and may not be copied, used, reproduced or otherwise distributed or circulated without the prior written consent of BT.

This information current as at 22 March 2021.