As the government prepares to introduce further royal commission legislation early next year, one industry body has argued that the annual fee consent forms recommended in the commission’s report should be rolled into advisers’ existing paperwork.
In a communication to parliamentarians this week, AIOFP executive director Peter Johnston warned fee consents could add around $1,500 per year to the cost of advice, at a time where the government and regulators had demonstrated their eagerness to reduce advice costs.
“The consent forms are an expensive, unnecessary and duplicated paper trail that consumers will pay $1,500 per annum for,” Mr Johnston said.
“Currently the cost of advice to onboard a new client is a minimum of $5,000, something 80 per cent of the eligible population cannot afford.”
Mr Johnston pointed out that much of the information proposed to be contained in the fee consents could already be included in a number of other advice documents.
“The information contained in the consent forms are duplicated, or can be included, in the following compulsory documents – financial services guide, statement of advice, service agreement, application form and fee disclosure statement,” he said.
“A solution could be to include the term ‘consent form’ to a ‘service agreement and consent form’ document.”
ASIC released a consultation paper around the fee consents, which were a recommendation of the royal commission’s final report, in March, but has since flagged that legislation around the consent forms would likely be delayed to at least the end of 2020 due to the disruption of the COVID-19 pandemic.
However, the government has indicated its response to the royal commission is back on the agenda in recent weeks, having brought new legislation to Parliament to tighten fiduciary duties and anti-hawking provisions for super in recent weeks and suggesting it will soon release legislation around the single disciplinary body and compensation scheme of last resort.
Mr Johnston said if introduced in their current proposed form, fee consents would increase the costs passed across to consumers through both advisers and product manufacturers.
“The manufacturers have already indicated that their fee margin will increase to accommodate the additional expense around this new impost,” he said.
“Again, consumers will pay if this goes ahead.”
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