The Association of Financial Advisers (AFA) has expressed surprise and concern that product providers rather than advisers are initiating the client authorisation process for ongoing adviser fees.
AFA policy director, Phil Anderson has notified members of the practice, stating that the product providers are writing to clients asking them to provide confirmation of agreement to pay their adviser ongoing fees in the 2019/20 year.
“If the client does not respond before 30 June 2019 then the fees will be turned off,” he wrote in a message to members.
Anderson said this process was on top of the adviser’s client renewal process and in advance of any law being passed that might require such action to be taken.
“This is part of the Royal Commission Recommendation 2.1 on Annual Renewal and Payment,” he said. “We had assumed that this exercise would have been undertaken by the financial adviser on behalf of the product provider, however in this case it is a totally separate process.”
“We are hearing more and more stories of product providers moving on different Royal Commission recommendations in advance of any legislation,” Anderson wrote.
“Advisers need to be aware of any of these developments and ensure that their clients both know what is required and respond to what the product provider requires”.
The AFA is seeking member feedback on any other instances of product providers acting unilaterally.