A Victorian financial advice practice will formally pass on the additional compliance cost created by implementing the unamended FOFA to clients, in the form of a levy named after the responsible senators.
Speaking to ifa, Tony Dann, principal of NAB-aligned practice BW Advisers in Ballarat, said his business will introduce a “levy or surcharge” to cover the additional compliance burden awarded to advisers by the parliament as a result of its passage of Labor’s FOFA amendment disallowance motion.
“In the lead up to the FOFA changes I had direct ongoing costs of around $30,000 – essentially a three-day-a-week staff member – arranging the paperwork and compliance, mail outs etc. [and now] we are having to go back to that,” Mr Dann said.
“At each review we will present our new service agreement as we always do, with a separate section explaining in full what FOFA is, what we now have to do, the time involved, the cost involved [and] the duplication of what they already get.
“I’m confident if done correctly I won’t lose a client but they will know why their cost has risen.”
The Apogee authorised rep said he will be explaining the politics of the situation to clients – including the links between the labour movement and industry funds – and will therefore apportion blame for the rising fees to Senators Lambie, Muir and Madigan, whom he will name the levy after.
BW Advisers has an associated accounting practice in which new laws and regulations directly impact fees for service, Mr Dann explained, adding that this would serve as the blueprint for rolling out a similar price structure for the advice business.
“I see this as no different [from the accounting compliance levy],” he said.
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