Xplore Wealth chief executive Mike Wright told ifa the managed account provider had suggested in its submission to ASIC’s Consultation Paper 329 that legislation to bring in annual fee consents be constructed with a view to folding fee disclosure statements and annual opt-ins together.
“We agree with the move from biannual to annual, but the proposal should be considered in conjunction with one of Hayne’s essential ideas, which is to make regulation much more efficient,” Mr Wright said.
He added that it made sense to combine the two documents given FDS’ had largely been made redundant by the removal of grandfathered commissions and the movement of client opt-ins to an annual basis.
“When FOFA was launched, the need for an FDS was legislated because opt-in was only biannual, so one of the protections was to make sure you’ve got a fee disclosure statement that year you didn’t get an opt-in,” he said.
“The second big theme was that the legislators grandfathered all opt-in arrangements pre-FOFA, so the FDS was important because that’s all they got for those clients.
“But in recommendation 2.1 [of the royal commission report] it says let’s move from biannual to annual, and secondly no longer is it only for post-FOFA clients, it’s also for pre, so now everyone gets it annually.”
Mr Wright said while the consultation paper had suggested ASIC was open to combining the documents, the regulator needed to be more explicit in allowing this to occur to ensure licensees did not double up on paperwork in a quest to be compliant.
“In paragraph 63 of CP 329, they touched on the fact that maybe [combining the documents] is the right way. However it’s not clear that ASIC’s draft instrument sufficiently allows for the combination of these obligations – it is silent on this,” he said.
“So we are encouraged that they are touching on it, but what would make it better is to make it clear in the instrument before it gets gazetted and becomes legislation. They need to make it clear that [it is] possible rather than leaving grey in the system and saying ‘maybe no one will get in trouble doing it’.”
Mr Wright said while he was surprised the regulator still seemed to be working towards a 1 July start date for the new rules despite the COVID-19 pandemic having paralysed Parliament from a lawmaking perspective, it was likely the date would be delayed.
“Could that still be legislated as planned? You would think it’s unlikely because even though Parliament is meeting in May, you’d think there would be bigger things on the agenda,” he said.
“But it’s become such a political issue, particularly off the back of fee for no service, so politically it’s very important that these recommendations are implemented.”
[b]ONE document, 1 system PLEASE !!! [/b][b][/b]
To cover All this FDS, Optin, Institutional Double up Optin & FDS, Ongoing Fee agreement, what ever you want to call it.
Or let’s continue to make it as freaking stupid as the 5 different CPD point systems from ASIC, FARSEA, FPA, SMSFA, TPB, etc how on earth they can all classify the same 1 hr of CPD 5 different ways is a great example of bureaucracy gone completely mad. Make 1 freaking system
please.
Stop the BS STRANGULATION of REPETITIVE RGES !!!!
But why do you need an FDS or Opt-In in the first place if agreements will be annual anyway? Wouldn’t you just be saying, this is our fee for the next 12months, do you consent? Clients sign the form and that’s it, they’ll need to sign again the year after and so on or if they don’t, the service is over.
The person mentioned in this article is not an Adviser, hence the point being made is all over the place.
– Renew the OFA or do a new one annually as you correctly say.
– RG 245 on FDS (fees for the last 12 months under an ongoing fee arrangement) – mandatory either way as renewed or new OFA.
Do you really not know, or is this satire?….
FDS is fee disclosure, just because you told them 12 months ago what you will charge for the future 12 months doesn’t mean youre not meant to illustrate what services were actually provided and if you missed anything the fact they’re entitled to a refund. Think of the FDS like an invoice at the end of 12 months saying hey you got your RoA and implementation as per our previous agreement.
The process you are describing is an [i]annual agreement[/i][i][/i], which doesn’t need FDS or Opt-In. The proposed change to Opt-In rules applies to annual renewal of an [i]ongoing agreement[/i][i][/i]. So the real question is why wouldn’t all advisers just switch from ongoing agreements to annual agreements?
Sorry mate. Two annual agreements form an ongoing fee arrangement (of more than 12 months). That’s already been looked at. So, FDS required
This is an example of the BS red-tape that is destroying financial planning in this country. If the client is signing off every year, there is no need for an FDS. Mandating one on top of annual agreements is just bloody minded nonsense from our regulator. There is zero benefit for the consumer. The only logical purpose for an FDS on top of annual agreements, is to make life more difficult for the adviser. So let’s call a spade a spade – making life impossible for financial planners is a higher priority for ASIC than lowering the cost of advice or good consumer outcomes.
Looked at by whom? With findings published where?
Fair question. AFSL level only, not published.
Until I see it from a regulator, I don’t accept that’s actually the legal position. Dealer group compliance people frequently lie or exaggerate about what the true legal requirements are. They want to build in lots of padding, just in case.
Exactly !!
Thanks ‘Business Transformer’ Michael Wright!
Just doing both documents at the same time would have the same effect on admin efficiency. No need to combine.