The advice community is going through the most significant period of change since the 2013 FoFA reforms. The findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission) has led to the raising of the bar in all facets of the advice process.
The Royal Commission made a number of recommendations, including changes to the way financial advisers can charge certain fees to their clients. It is currently proposed that from 1 January 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 enhanced to 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 new process will apply to both Super and non-Super/IDPS products.
We fully support the move towards full transparency around fees and believe that fee transparency safeguards client interests. This is why we are moving to implement the Government’s proposed client consent framework as soon as we can. We will implement changes to advice fees on Wrap and Asgard by 1 January 2021.
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.
We are building solutions that make it easier for you to monitor your clients fees, renew them when they are due and get your client’s consent to fees:
We’re monitoring legislative developments regarding consent for existing ongoing advice fee arrangements and will provide more details as the become available.
The information in this document regarding proposed legislative changes is intended as a guide only for dealer groups and advisers. It is not exhaustive and should not be relied upon as a complete statement of the relevant laws and the proposed legislative changes, 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 3 December 2020.