Just over a week after ASIC chair Joe Longo was questioned about “regulatory overload’ in the sector, the Morrison government on Friday announced a new regulation that will “lower compliance costs for generating fee disclosure statements in the transition year, streamlining processes for licensees and advisers”.
From 1 July, advisers are required to report the fees paid under an ongoing fee arrangement and provide a reasonable estimate of the fees that will be paid over the following 12 months.
Advisers can issue the fee disclosure statement anytime between 1 July 2021 and 30 June next year.
“To address circumstances where advisers are unable to report actual fees in the required time, the government will make a regulation to allow financial advisers to report an estimate of fees for the 60 days prior to the statement being issued,” a statement issued by the Treasury read.
“The estimate would be reported alongside the actual fees charged for the remainder of the previous 12 months.
“This regulation will only apply for the transition period. After the transition period, financial advisers will have 60 days from the anniversary date to issue their fee disclosure statements which must report all fees paid in the previous 12 months.
“The Government will continue to work constructively with industry to provide an enhanced regulatory framework for financial advice that reduces costly red tape on industry and maximises outcomes for consumers.”
The government’s announcement follows a study conducted by life insurer AIA Australia with Deakin University and peak performance researcher Dr Adam Fraser in March that found that regulatory change was the top contributor to stress and anxiety for advisers, with 82 per cent saying they found current compliance demands highly or very highly stressful.
A further 10 per cent said they found regulation moderately stressful, meaning over 90 per cent of practitioners found compliance stressful to some degree.
The above is no benefit to me and probably 50% of advisers. Every industry in Australia should have to work under our Regulations and lets see where that gets the economy?
Until real reform to reverse some of the incompetent decisions of the Government and Industry bodies is achieved, we the advisers are left out there to deal with the mess.
[b]All Governments, stop treating the consumers (our clients) as idiots.[/b]
We have a Client Service Agreement that states the ongoing fees.
The annual renewal or consent of the fees with the fund managers that has to be signed, if not, the fees turn off after a certain time.
The fees are disclosed on each statement twice (once in the transaction and in the summary) they receive, every 6 months or yearly.
So why do we have to issue a FDS and annual renewal statement that also needs to be signed, but this cannot be done at the review, wasting more time and resources and follow up.
we have become a public service Department without taxpayer support with the amount of regulation it’s been introduced into our industry over recent times
Not sure what the actual relief is going to assist with, clueless
guys – this is a misrepresentation of the impacts ( again) these requirements when coupled with the obligation of the FASEA standards essentially require a total reset and rebuild of the business model. the changes arent at all onerous they are totally bloody disasterous.
I wonder if a lot of advice businesses will fall over due to the 1 July changes. The regulations are unclear, error prone as shown here, not bedded down two weeks before they start and now advisers need to give proof of opt-ins to the providers. This is a nightmare designed to put advisers out of business, like much of the Royal Commission recommendations.
There is an irony in that everybody with power supports the Royal Commission recommendations even though many are contradictory and clearly punitive and that the result will be that much of the middle market clients and most insurance clients will lose their access to advice.
Revenge is like that.
“This is a nightmare designed to put advisers out of business, like much of the Royal Commission recommendations”.
Gee, you think the Government is smart enough to do that deliberately?
Why not impose this on the legal profession given the charge our rate / hour is X5 of the typical adviser? Only lawyers can get away with charging a client 100% of a contested (and even non-contested in some cases) insurance pay out and no ramifications
Lawyers can also charge on a retainer basis, which would work great for the financial advice sector and clients. Instead all the legal recommendations for compliance and supervision of Financial Advice have not allowed a retainer type system and instead we have regulation overload and a fee charging mess! Anyone see the hypocrisy!
Obviously because they have an Association which supports them unlike us!!
Every super fund statement shows quite clearly adviser service fees deducted in the past year so why a fee disclosure statement again saying the same thing ?
This is life changing for advisers and should reduce their stress by about…NOTHING!
Government clowns.
clear as mud, thanks
This govt are really taking us for mugs!