The annual renewal requirement in the Hayne Royal Commission Response No. 2 Bill will add more costs to financial advice and will impact access to advice for everyday Australians, according to the Association of Financial Advisers (AFA).
The annual renewal would be required from clients for all ongoing fee arrangements which the AFA said was not necessary in a statement.
“The legislation is another Royal Commission-related bill that has been pushed through the Parliament with undue haste and lack of due process. We have repeatedly seen these bills submitted and passed without a Regulation Impact Statement or any form of Parliamentary Inquiry and inadequate debate of the substance of the bill,” the statement said.
“The inevitable result of this is an increasing number of unintended consequences which will have negative implications for financial advice practices and flow on effects in terms of extra cost and complexity for clients. These issues will need to be fixed down the track.”
While the AFA was “pleased” the Government had made significant improvements to the final Hayne Royal Commission Response No. 2 Bill, it said it was disappointment it had failed to take onboard its feedback.
The Government would need to work out how to fix the important issue with timing differences with fee disclosure statements (FDSs), that had led to ASIC recommending that advisers manually check product systems to confirm that FDSs were correct. The failure to address this as part of this reform, when the Government was simultaneously talking about red tape reduction, was disappointing.
“The bill is due to start from 1 July, 2021, which is now only four months away. While there is a 12-month transition period, there is a lot of complexity in the transition arrangements and much to be done in this short time,” the AFA said.
“Product providers will need to ensure that system solutions are available for the efficient capture of client consent forms.”