The finalised legislation, which was introduced to Parliament on one of the last sitting days of the year, contains a number of concessions following industry consultation, 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.
However, the cost impacts listed in the explanatory memorandum of the bill estimate the compliance costs for ongoing fee arrangements alone to be more than $28 million.
“This includes $11.7 million of upfront costs in the year of commencement, followed by an annual compliance cost of between $21.2 million and $33.7 million in subsequent years,” the bill states.
Roxburgh Securities adviser Steve Blizard said, “The EM does not justify the basis for imposing these additional costs on consumers.
“You would think the consumer activists would be outraged by the government increasing costs like this.
“The real solution is to ensure informed consent is provided in any SOA or ROA for any ongoing fees, and to renew that consent when an updated SOA or ROA is produced.”
Lifespan Financial Planning chief executive Eugene Ardino said while concessions such as merging the number of documents needed to be completed by advisers were “very positive”, the bill in its current form would ensure the cost of advice continued to increase.
“There’s bits of it that are good, but it’s still having to do the annual opt-in that is going to raise the cost of advice,” Mr Ardino said.
“The fact they’ve made it more efficient is good, but there’s no doubt that that requirement is going to raise the cost and reduce accessibility.”
As the government’s legislative response to the royal commission switched back into gear after months of COVID-related delays, Mr Ardino said the industry needed to be realistic about the levels of regulatory relief they were likely to get in the months ahead.
“The government might look at ways to pare that back a bit, but we have to accept that they do want more and more compliance and they are just prioritising that ahead of accessibility,” he said.
“That’s life and advisers have to accept that, and reposition their business to be able to cope with it.”
Can someone please explain how having an annual opt in will increase the costs. Surely every client that has an ongoing relationship with their adviser meets their adviser at least once a year. How hard is it in this meeting to get the clients consent for the following year?
Surely the bigger fish are things like why do we need to provide clients with a lengthy SOA when we recommend they do something like change investments or super funds. This is where the real red tape is.
Because its crazy 2nd layer complete duplication of AFSL level compliance to Vett everyhting Adviser do for the client from SoA’s, Upfront Fees charged, Onging Services and Ongoing Fee arrangements.
It this is all done already at AFSL level (Except for the Banks that have now left the industry).
[b]Why cant the Government mandate a SINGLE form that covers All 3 parties, The client Consents, The Advisers have met FDS Optin and Admin Platforms have met Trustee / Responsible Entity oversigh of Fees authorised and service provided. [/b][b][/b]
Similar the the Universal ATO Rollover Form.
STOP THE MADENSS OF REPETITION AND REPROPDUCTION OF MULTIPLE FORMS DOING HTE EXACT SAME THING.
Lets not forget the Pollies / ASIC telling us they want to make Advice more affordable and Reduce Red Tape costs = More BS Red Tape COSTs, MORE BS REGS, MORE BS useless ADMIN Costs.
POLLIS / ASIC are telling utter Lies.
Many advisers will meet with their client “on average” once a year, but because of the client’s preferences and other commitments, this might be at 9 month then 15 month intervals. The 15 month interval has the potential to result in “fee for no service” and Renewal Notice issues. Hence advisers need to waste enormous amounts of time and effort on strict admin of this process. They often need to push clients into doing things in specific time frames that are not amenable for them. Clients don’t understand why we are so pedantic about this, and resent being harassed for something they see as just petty, time wasting, bureaucracy. (Which it is). Trying to get clients to change meeting dates and sign bureaucratic forms in this situation requires lots of follow up and badgering, all of which comes at a cost. Sometimes even the cost of losing the client who gets the shits with it.
Also many advisers don’t actually meet face to face for reviews any more. With better technology and busier client lives this was a trend that started well before COVID and has only accelerated since. It requires much more proactive effort by the client to sign documents associated with an online meeting. If they see no value in it they will put it on the backburner, necessitating more costly followup and badgering.
The only situation where Opt-In is easy, is the traditional model of retiree clients who willingly come into the advisers office at the drop of a hat and sign anything put in front of them. But not all advisers or clients operate that way anymore.
why SMSFs are going to boom, where the adviser works with the fund trustee regarding invoicing. Platforms have lost their way, as they don’t understand how they grew in the first place.
Fee are already disclosed
– Discussion with clients
– In SOA/ROA
– Service Agreement
– every year or 6 months on super statements
– FDS every year
But apparently we need more.
Are ASIC for real when they say they want to reduce costs? pathetic.
Can we possibly have more BS regulations and requirement for client signatures. Long standing clients are bewildered and new ones shy away or complaint about the constant need for signatures. We are effectively becoming professional beggers for signatures. Of course heaven help us if we miss one. It is rubbish, costly, time consuming and assumes every client is a dope to be reminded that they pay fees to evil FPs and that FPs must be constantly supervised like children. I’m close to calling it quits.
Certainly relate to that. One client told me recently “I am sick of signing all this $@$@$ paperwork” I didn’t become an adviser to explain forms that say the same thing.
Many already called it quits. I still say, 10,000 advisers remaining at the end of 2021.
I think you are right and even if you are wrong it wont be by much!
I think clients understand the government has forced the fees up. It is the older clients in their 80s with reduced money that need more support that is concerning to me. Unfortunately I have been switching this age group off of advice in droves, it is really disgusting that the government has had no consideration in regard to how the elderly can retain reasonable priced Financial Advice when they need it most in their final years.
There’s a whole lot of things consumer representatives should be outraged about in relation to higher costs and complexity of financial advice. Yet we hear nothing from them. Why is that? Because former consumer associations such as Choice and CALC have been hijacked by ideological zealots and career political activists. They don’t represent real consumer interests at all anymore.
My fees will be going up to reflect these changes. All of my clients understand that my increased fees are as a result of increased Government legislation.
We will be charging an annual renewal fee of $440 on-top of the ongoing advice fee we already charge. We were happy to cop the 2-yearly renewal notice BS but this is just ridiculous especially where it applies to pre-FOFA clients as well! This will cause low income or FUM clients not to renew which means those most vulnerable in society will be mostly disadvantaged – well done you stupid government and kenny hayes the ISN, Union & ASIC puppet!
There wont be pre-FOFA clients from 1st January
Small fish are sweet.
The government’s annoucement represents a step in the right direction.
Well done Jane Hume.
Yeh right Phillip, we still have complete 2nd layer New AFSL compliance from Admin platforms, 2nd FDS Optin on Platforms own forms, mindless duplication and costs.
As for FARSEA, same crap under different management.
Useless minor changes of almost zero substance. Great job MIA Jane.
I think the $28 million is low. It would most likely be closer to double this figure wouldn’t it????? Can we get some TRUE and REAL industry experts that acutally do work in our industry to do some estimates? Not ASIC and the rest of those who have never done what we have to do on a day to day basis, Thanks.
ASIC and Pollies say they want more Affordable and more access to Advice = MORE BS REGS AND MORE BS RED TAPE COSTS YET AGAIN.
[b]Pollies and ASIC you are either:
1) Telling utter LIES about reducing Red Tape Costs ???
or
2) Have ZERO idea of the REAl WORLD ??? [/b][b][/b]
It is interesting that activist consumer groups would approve anything that impacts financial advisers in the false belief that whatever it is , it will be better for consumers.
This in fact is false as the cost to provide more and more information and duplicated documentation adds significantly to the cost of access, time and efficiency without necessarily providing any measurable and quantifiable benefit to the consumer at all.
This about significant over reach being applied to an industry which has over complicated the process and therefore increased the cost.
If we are going to attempt to encourage more and more Australians to seek and access financial advice in order to provide better outcomes, then the compliance overload needs to be addressed immediately.