The institute – an industry association representing chartered secretaries, risk management professionals and governance advisers – has opposed the government’s proposed amendments to FOFA, including the removal of the ‘opt in’ requirement.
“Removing the ‘opt in’ requirement gives the adviser full control over the advising relationship while the consumer has no power at all to assess if the ongoing arrangement suits them,” said Governance Institute chief executive Tim Sheehy.
However, anticipating that the removal of ‘opt in’ may become a political reality, the institute has recommended a substitute requirement.
“If the ‘opt in’ rule is abolished, the government should at least consider replacing it with a less onerous alternative whereby clients are allowed to ‘opt out’ of the relationship when the fee arrangements are disclosed in their periodic renewal notices,” Mr Sheehy said.
“Disclosure at renewal time is already required, so the small step of adding an ‘opt out’ mechanism would not be a compliance burden.”
Mr Sheehy added that the best interests duty ‘catch all’ provision should be retained but amended to ensure financial advisers are protected against “unreasonable claims”.
Our firm has been on a ‘fee for service’ basis since our inception in 2002: and our clients have had opt-ions since then –
they can opt-out at any time (without financial penalty);
they can vary the arrangements at any time (subject to adjustment to monthly flat-dollar fee amount being altered); and they can review/ revise annually.
Perhaps the government could find a way to legislate these commercial processes?
Could we get something for clients who are undecided whether to opt in or opt out. Something like a ‘pay-as-you-go’. All these options are terribly confusing and even seem onerous. If I opt in for a year and ‘fall-out’ with my adviser, I would still have to pay for the balance of the year? If I opt out and there is another GFC, who will help me get quality advice since good advisers will be spending all their time on their existing paying clients. What about giving the client the choice to select the option (Opt-in, Opt-out, or Pay as you go) with the adviser at each review date. I think most clients would like to be able to get the service and advise and be able to move anytime they felt they were not getting this need fulfilled rather than be prescribed to a year on year situation?
Clients can already opt out whenever they like, any day of the year. Not sure it needs to be legislated that they can also opt out on their fee anniversary date.
What a load of Rubbish,get over it, this Industry is regulated almost to death,it is gasping for breath already, if crooks still somehow get into this industry then ban em,jail em,take their assets etc etc, but please Mr Sheehy just go away and get a real job please.