ob体育

media release (21-058MR)

ob体育 releases advice fee consent and lack of independence disclosure legislative instruments

Published

ob体育 has made three legislative instruments that deal with advice fee consents and independence disclosure following Royal Assent of the 聽(the Act) earlier this month.

The Act was passed by the Parliament to give effect to recommendations by the Financial Services Royal Commission (Royal Commission) (see Background). It provides for ob体育 to make legislative instruments setting the requirements for:

  • the written consent that a fee recipient must obtain from a client before deducting, or arranging to deduct, advice fees from a client account as part of an ongoing fee arrangement (Recommendation 2.1);
  • the disclosure of lack of independence that an Australian Financial Services (AFS) licensee or authorised representative must give clients where they would breach s923A of the Corporations Act if they used words such as 鈥渋ndependence鈥�, 鈥渋mpartial鈥�, or 鈥渦nbiased鈥� (Recommendation 2.2); and
  • the written consent that a superannuation trustee must obtain from a member before deducting advice fees from a superannuation account under a non-ongoing fee arrangement (Recommendation 3.3).

In finalising the legislative instruments, ob体育 took into account industry feedback on the proposals in Consultation Paper 329 Implementing the Royal Commission Recommendations: Advice fee consents and independence disclosure (CP 329), which was released in March 2020.

ob体育 considers that the legislative instruments strike an appropriate balance between minimising regulatory burden for the financial advice and superannuation industries and ensuring that consumers receive the information that is relevant to them.

ob体育 does not have powers to provide exemptions from the new advice fee consents and independence disclosure requirements or to modify how the requirements apply. ob体育 can only specify requirements for the advice fee consents and the form of the disclosure of lack of independence.

To help licensees comply with the new requirements, ob体育 has published examples of the written consent forms. Additional information to help superannuation trustees comply with their new obligations will be provided in a follow-up to the April 2019 joint letter from ob体育 and APRA and will be released in the next few months.

Today, ob体育 has also released Report 687, which highlights the key issues raised in submissions to ob体育 on CP 329 and details ob体育鈥檚 responses on those issues.聽

Background

The Royal Commission Final Report made a number of recommendations to address consumer harm resulting from fees for no service, erosion of superannuation balance through inappropriate advice fees and poor advice from financial advisers whose duty to their client conflicts with their own interests. To address these issues, the Royal Commission made recommendations to:

  • introduce annual renewal of ongoing fee arrangements and a requirement that AFS licensees cannot deduct ongoing fees without the client鈥檚 consent (Recommendation 2.1);
  • introduce a requirement for AFS licensees to disclose their lack of independence where they would contravene s923A of the Corporations Act if they used the restricted terms 鈥渋ndependent鈥�, 鈥渦nbiased鈥� and 鈥渋mpartial鈥� (Recommendation 2.2); and
  • limit advice fee deductions from superannuation choice accounts (Recommendation 3.3).

The Government implemented Royal Commission Recommendations 2.1, 2.2 and 3.3 in the . The legislation received Royal Assent on 2 March 2021.

ob体育 will consider updating existing regulatory guidance to reflect the new requirements in the Act before the reforms commence for new fee arrangements and the lack of disclosure statement on 1 July 2021.

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