BT head of financial literacy and advocacy, Bryan Ashenden, has echoed the sentiments of a number of professional associations that the current fee consent process is unnecessarily costly and time consuming.
Speaking at the SMSF Association National Conference in Brisbane last week, Mr Ashenden discussed industry concerns on the proposed process regarding fee consent forms that was laid out by the government last year.
“The draft legislation that came out last year was intended to give back clarity, but it probably didn’t do it in the way that was intended,” Mr Ashenden said.
“It would mean every time you wanted to charge a fee to a client’s account, you would have to provide a copy of the SOA, redacted to deal with any of the privacy issues that are there, and provide it to superfund.
“The second part, we’d need to make sure that they are appropriately resourced and have the right people with the right expertise to review that, to determine if the fee was appropriate for what it was, before they will then decide to actually allow it to happen.”
Referring to the regulatory changes made within the financial services industry since the royal commission and the Quality of Advice Review (QAR), Mr Ashenden said that if the industry is at a point where advisers are trusted to conduct themselves appropriately, simplifying the fee consent process should be possible.
“Can we not allow trustees to rely almost on some form of attestation that an adviser gives, to say, ‘This fee is about the client’s interest in that fund, this fee is in relation to personal advice, and this fee is appropriate in relation to that’?” Mr Ashenden said.
“The licensee who has authorised that adviser has responsibilities to make sure the adviser is doing the same thing, as does the adviser anyway, under a code of ethics.
“So, why do we need to introduce an extra layer?”
Speaking with ifa, Mr Ashenden said that the work has been done to bring the industry to a higher standard and now is the time to trust that advisers are doing the right thing, furthering his earlier point.
“Let’s recognise the professionalisation that now exists within financial advice,” Mr Ashenden said.
“We’ve put in place all of these things; the education requirements, we’ve got the code of ethics, all of these things are in place and have been in place now for a period of time.
“Surely, we’re now at that time where you should be about to go, ‘We’ve changed it, we should get to place reliance on it’.”
Taking this point further, Mr Ashenden said that product providers should be playing a very minor role in the fee consent process.
“We’re relying on you to go and do your jobs, and relying on the licensees that you authorise to do their jobs, to make sure it’s all correct,” Mr Ashenden said.
“It’s not for us to second-guess that adviser/client relationship. Let’s just implement.”
Earlier in February, Treasury kicked off a series of roundtable discussions with advice associations and other stakeholders to discuss the QAR-related reform proposals ahead of legislative reform.
Mr Ashenden said if he were present for the roundtable discussions, fee consent forms would be the first issue he would address.
“The most urgent is the fee consent piece because it’s something that’s already in place now that we should be able to just simplify,” Mr Ashenden said.
“So let’s not complicate things. Let’s make it simpler.
“Let’s go ‘the ongoing service arrangement is between an adviser and the client, so that’s the focus of where that consent process will be’.
“The product providers just implement.”
Advice associations such as the Financial Advice Association Australia (FAAA) and Stockbrokers and Investment Advisers Association (SIAA) and the Association of Independently Owned Financial Professionals (AIOFP) have also called for a removal of the requirement to provide a product issuer with a fee consent form.
“A standardised fee consent form will only deliver productivity benefits if product issuers are required to accept it,” said FAAA chief executive Sarah Abood in a submission to the draft legislation consultation.
“As they have already invested in systems and processes to meet this requirement, it is unlikely that product providers will change their approach without a legislative requirement for them to do so.”
According to the FAAA, the way forward is to either remove the requirement for product issuers to verify client consent for every account or require product issuers to accept the standard form as evidence of client consent.
Ms Abood said the FAAA’s preferred method would be the first of these options.
Goid points but Jeez Bryan have you had to deal with your own Bank owned company. BT/Asgard have to be the most pedantic organisation that I have ever dealt with. If I never had to deal with them again it would be too soon
Exactly, clearly no one in BT or Asgard admin platforms listen to anything Bryan has to say. Far too sensible and smart for your own company Bryan.
So many logical quick and easy wins could be implemented in this industry but we seem over-complicate and over-regulate everything. Remember when the government advocated for a simpler super system, yet all proceeding governments have done is introduce more complexity.
Today I also learned that postage costs will rise from $1.20 to $1.50 PER LETTER from April. Given a number of clients simply don’t attend to emails regarding the Fee Consent forms (because it ends up in their junk mail folder), you then have to send out multiple letters to clients to get them to sign a pointless form, simply to get paid. This is 18th Century stuff. All of this extra cost has to be paid by the consumer. It is RIDICULOUS.
This is a non existent problem that has had an easy fix for years. The fact that if anything it has gotten worse over the past 5 years is why financial planning won’t exist as a profession in Australia in 5 years.
Wouldn’t it be simpler if we did away with collecting fees from products and had the clients pay us via invoice? Of course, if advice fees were universally tax deductible, the clients would be happy t use this method, as well.
I propose more regulation not less as feel the current rules are far too lax and more signatures on forms is the way to go. Pity so many tree investments fell over as they could have provided the extra paper to help deal with this need…
It’s the same issue with the fact that a client can’t consent to an ongoing fee arrangement – they have to consent to it periodically. Meaning by definition of action, that they aren’t agreeing to an “ongoing” fee arrangement at all – they’re doing multiple one-offs. My gym doesn’t have to do this.
Totally agree Bryan, it is so simple and a quick easy fix. In fact, I would argue the way it is now it is much more confusing for the client, having to go through somewhere between 5 to 20 pages of Fund manager paperwork and then sign 2 to 4 times for the same thing.
Why can’t the Regulators/Government work this simple issue out and sort it out in quick time?
“Why can’t the Regulators/Government work this simple issue out and sort it out in quick time?” – because they have zero interest in helping advisers. All of the focus is on the ISF’s and how to create the general advice carve out. Every single Adviser in Australia should do their absolute best and get every single client to vote this Government out as they do not give a single stuff about the Advice Industry. We have been sold another stitch-up with the QAR, don’t believe any single word that comes out of Jones and Albo’s mouths. Just churn them out of office and bring in anyone that will work collaboratively with the advice Industry, for the best interests of all of the stakeholders, not just Jones and his Insto buddies. Not Liberal / Labor / Greens voter here, just a long standing adviser that has had enough of being spun total BS for the last 20 years. Enough is enough.
Advisers don’t make political donatios.
Eliminating the Annual Fee Renewal forms was blindingly obvious over three years ago. So here we are – the former Liberal Govt fully implemented recommendations from a lawyer that primarily benefits lawyers. Meanwhile, 1 million Australians are orphaned on platforms, who cannot access cost-affordable advice, due to this pointless red tape. Adviser numbers continue to fall, with a growing number of advisers choosing to operate in overseas jurisdictions where such ridiculous red tape simply doesn’t exist. The only compliance required is a scaled-back SoA & an initial (opt-out) low ongoing dollar-based fee, which only needs to be renewed when the fee dollar amount changes. Which for time-poor working families, will probably be every 5 years or so. This also reduces admin costs to the platforms (& fund members), by eliminating unnecessary transaction forms.
respectfully, i disagree. Client consent on an annual basis is good for clients and a protection to the practice. The problem as i see is that the method of consent is inconsistent and done multiple times on multiple forms.
“So, why do we need to introduce an extra layer?”
BECAUSE CANBERRA POLLIES AND REGULATORS LOVE TO TRIPLICATE USELESS, COSTLY, BS RED TAPE FOR ADVISERS.
THE ONLY THING CANBERRA MANUFACTURES IS MORE BLOODY RED TAPE !!!!!!!!!!!!!!!!!!!
Yes absolutely and the second thing is why cant advisors get ATO access to a clients super details? We are advising on catch up concessional and relying on the client for the information. It is as ridiculous as the fee consent fiasco!!
Utterly ridiculous and absurd – Provide a copy of a redacted SoA ? You cannot be serious !
It should be opt-out for starters. Done ONCE and then only when altered.
Ridiculous.