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.”
Affordable advice and BID do not go together. My local GP churns through patients in 5 minutes, how does BID get complied in 5 minutes?
While I agree with the sentiment, throwing out random numbers do not help anyone. $1500 to get a fee consent is just ridiculous.
You really think so – can you please offer a price you will do it for on contract and let us know here please.
The point was it is not an ADDITIONAL $1500 to get a consent form signed, read the article and then read my comment again
It is not just getting a form signed – do some reaserch. $1500 will be about right considering all the issues – which is NOT A SIMPLE ONE PAGE FORM.
$1,500 for about 2 mins work is good money! That is assuming we actually have engaged clients we are actually servicing.
Anyone who actually thinks this costs $1,500 a pop are the people who need to call the clients they haven’t spoken to for years (sometimes ever if they just bought a book) and try to convince them to pay a fee when they haven’t received any value.
Are you saying it is just one form to get signed and that’s it – Really?
Really, so Admin platforms are now asking for SoAs to vet, Authorities to proceed to vet and now these platforms will be determining what if any advice fees are paid upfront.
Then there will be annual FDS / Optin that protect the platforms, nothing about the clients (see CFS forms) and again the platforms are then vetting if and when Advisers get paid.
It’s not just the admin getting another complete duplication of AFSL compliance done it’s then the follow up and arguments with platforms about why they now decide what is acceptable advice for our clients.
Plus platform costs will have to increase as they will need more people at a decent level to be vetting all this AFSL compliance.
Why even have AFSLs if Platforms are doing all this compliance work.
Additionally, ATO is now vetting all new SMSF members and new SMSF, as another complete layer of ADSL compliance. 2 mths chasing the ATO to allow a new member to join an exisiting SMSF and still waiting on ATO.
DUPLICATION AND INCREASED COSTS MADNESS OF BS REGS AT EVERY TURN!!!
Its easier to simply establish a SMSF, & control your own remuneration via annual invoicing. The platforms are brain dead allowing the Union Super funds to set the agenda on Opt-Ins & the red tape that goes with it.
Fantastic to see AIOFP working hard for advisers.. Well done.
ASIC, Ms Hume and lots of Pollies say they want more affordable advice.
Yep thus let’s load up the BS Red Tape REGS approach again and DUMP MORE COST, MORE REGS, MORE USELESS COMPLIANCE onto Advisers.
Completely off their heads or just flat out lying.
Meanwhile, 1000 tied agency Intrafund Advisers are paid over $100 million a year in ongoing salaries & bonuses, without having to obtain informed consent or any ongoing opt-ins for the ongoing advice fees being charged to super fund members. The playing field (against non-aligned retail advisers) is as level as the Himalayas.