The letter to trustees on 30 June from ASIC and APRA called out reliance on adviser attestations and basic client consent paperwork as being insufficient to determine if a member had consented to advice fees being deducted from their fund, and said trustees should undertake “further oversight practices” such as checking an adviser’s SOA.
AFA acting chief executive Phil Anderson said encouraging such practices by trustees was “unreasonable” and could amount to a breach of the Privacy Act.
“An SOA is an agreement between a client and their financial adviser and contains a great deal of personal information about the client that should not be shared with trustees,” Mr Anderson said.
“Not only does this requirement for trustees ignore the Privacy Act obligations, therefore putting clients at risk, it is also excessive and will add to the already significant administrative burden on financial advisers.”
He pointed out that when questioned by Liberal senator Slade Brockman earlier in June on reports of trustees asking to check SOAs, APRA had said it “had not been prescriptive in describing” how advice client consents should be verified.
“In less than a month, APRA have gone from describing the situation in terms that they have not been prescriptive, to specifically stating that they have had expectations that trustees review SOAs,” Mr Anderson said.
“The AFA is calling for financial advisers and superannuation funds to argue against this excessive, unnecessary, and costly interference by the regulators.”
AIOFP executive director Peter Johnston also flagged the association had written to the prime minister and chairs of ASIC and APRA outlining its concerns with the regulators’ directive.
“Trustees are not licensed to assess or give advice and will be acting outside of corporations law. They will be accessing confidential consumer information in breach of the privacy laws,” Mr Johnston said.
He added that the additional administration requirements on trustees as a result of the guidance would drive up costs for fund members.
“ASIC and APRA have written to all trustees instructing them to effectively distrust any information advisers put forward and perform their own assessment of the advice by requesting the SOA, a comprehensive document paid for by the consumer,” Mr Johnston said.
“The advice community has become frustrated with this continued fabrication of negativity about their profession and challenge ASIC to produce the necessary information to justify their position on this matter.”
It just keeps getting better from those clowns at ASIC…!
It appears that I am one of the lucky ones who sold my practice for very good $$$ and leave at the end of this year after a long career so none of my hard earned will be going to the beige cardigan wearing public servants that come up with this crap.
Good luck to those of you who will remain as advisers and remember to increase your client fees (minimum $4,000 p.a. per person) given less of you will remain post 31/12/21 with very few newbies joining anytime soon!
Inform your clients their fee increases are entirely due to the costs to serve them having gone up dramatically due to the government who created (and continue to do so) this red tape mess and their ASIC and APRA beige cardigan wearing public servant clowns who police it for them. And if some clients leave so what let them go and be served by the union industry fund call centres and their intrafund product information providers.
Happy Days…!
Retail funds wont question vertically integrated advice, but industry funds will question external adviser advice. Simple solution, just don’t use industry funds and stick with your retail platforms who value FUM.
Hear, hear. Well said.
“The advice community has become frustrated with this continued fabrication of negativity about their profession and challenge ASIC to produce the necessary information to justify their position on this matter.”
In 20 years I could count on one hand the amount of plan fees and ongoing fees deducted from a client’s personal super account, including platforms. They have almost always paid by invoice. I prefer to keep my clients advice private and so do they. As we will all be only advising wealthy (and cashed up) clients going forward the outrage is understandable but you need to see the writing on the wall and act now to ring fence your clients.
How long before ASIC finds issues even with charging clients directly? They might as well come out and say advice should be free.
Completely agree.
as I have said time and again. I have a brilliant. once only a one-time solution.
are you all ready?
– the solution DRUM ROLL PLEASE.
we the advisers pay the client for providing the service. how is that? see no problem with any disclosures then is there.
consumers, happy as – free money for everyone
regulator – happy as – free money for everyone at the expense of the greedy planner
financial planner – happy as (wife and children will be on the streets) but at least I have the regulator and super fund trustees of my back.
happy as. let’s do it.
Your wasting your time and ours mate.
#makefinancialadviceaffordableagain
Good on the AFA. Note that the FPA are missing in action. Again.
Ben Marshan has made some comments on FPA chatter. Don’t expect much from the FPA on this – not a surprise but a good reason to say goodbye to the FPA.
Soft hands the FPA they are off in dream land of their own interests, not willing to get their hands dirty, passive and lazy voices, over paid, with a strange sense of entitlement
And since when are Trustees licensed to sit in judgement on SoA’s? And how would they even know what they are looking at or for? And why would a written instruction from a member to pay a third party for advice not be enough?
So who do these regulators think they are?
Should a Financial Planner manage to pass FASEA, survive Fee for no service lookback, pass all other educational challenges, operate a practucd with no grandfathered revenue, provide advice to a satisfied client, then ASIC believes the Trustee is well placed to judge your SOA. Sole purpose test, informed consent, bid will all be used by the trustee to prevent the Financial Planner reducing Trustee FUM. All other personal information provided to the Trustee will be kept by the tTrustee for in-house advice teams to target increasing FUM.
ASIC clearly using conflicys to achieve their goal on this one.
ASIC is corrupt and biased against planners.
ASIC & the Gov’ts response to advice affordability this year:
– Create yet another regulatory body but still keep all the others in place. Is that 8 now?
– Introduce annual opt-in fee forms which are product specific
– Have super trustees check SoA’s, because we are deemed untrustworthy
– ASIC levy increased at an alarming rate
What else have I missed?
When fees and service delivery are agreed in a separate opt-in/ engagement with FDS at renewal date, then what purpose is there for fees to even be included in the SoA ? The SoA is a deliverable under the service agreement, so Trustees can scrutinise all they like.
Sole purpose test.
ASIC in future questions from the MP’s- What evidence to do you have, what research did you do? how are you going with all the tiktok unlicensed advice… ASIC answer = I’ll take all questions on notice.