Regulatory change necessary to protect consumers: Industry body

A major advice industry body has expressed its broad support for legislation flowing from the royal commission, saying advisers need to “expect and support” action to be taken to protect consumers from poor advice.

Commenting on the release of ASIC’s Consultation Paper 329 this week, FPA chief executive Dante De Gori told ifa the association was in the process of reviewing the specifics of ASIC’s proposals around fee consents and independence disclosure, which were “critical issues for the profession”.

Mr De Gori said as a whole the royal commission should still be viewed as “another positive step towards the professionalisation of financial advice”.

“It was necessary to call out the misconduct and accelerate changes that were already underway,” he said.

“We need to call out bad behaviour where we see it, whether that be to the other person, to licensees, to associations or to regulators. As a profession we should expect and support action to be taken to protect consumers.”

Mr De Gori added that the association was discussing ASIC’s draft legislative instruments and the regulator’s proposal to issue further guidance around fee consents and independence disclosure with its members and would respond to ASIC shortly.

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“The FPA is committed to progress in the financial planning profession by engaging with key stakeholders on major issues impacting the industry,” he said.

The comments come following the release of the regulator’s consultation paper, titled Implementing the Royal Commission recommendations: Advice fee consents and independence disclosure, on Tuesday.

In the paper, ASIC said it would develop three legislative instruments outlining the written consent fee recipients must receive from clients before arranging to deduct ongoing fees from a client’s account; the written consent super trustees must receive from members before allowing ongoing fees to be deducted from their account; and prescribing requirements in the statement providing entities must include in their financial services guide around lack of independence.

The list of requirements the regulator proposed in its guidance around fee consent forms advisers will need to give their clients annually include:

  • The name and contact details of the account holder;
  • An explanation of why the account holder’s consent was being sought;
  • The services the client was entitled to receive under the arrangement;
  • The frequency, amount and time of each payment deducted from the client’s account;
  • Details of benefits in the account that could be eroded because of the fees;
  • The expiry date of the consent; and
  • The option for the client to withdraw their consent at any time.
Regulatory change necessary to protect consumers: Industry body
Dante De Gori
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