The Financial Services Council (FSC) and the Financial Planning Association of Australia (FPA) will work to codify requirements to support an industry standard for advice fee consent and independence disclosure.
In an announcement, the FSC said there was “considerable angst” that had been caused after new disclosure requirements on fees were issued by the corporate regulator that took effect from 1 July. The requirements were in relation to advice fee consent and independence disclosure relating to ongoing and non-ongoing fee arrangements.
“Different approaches to implementing the law, however, creates the risk of new uncertainty for the advice sector,” it said.
“For this reason the FSC and the Financial Planning Association have been working together to generate a set of requirements that should support an industry standard form. Our aim is to ensure that consensus on this area of regulation can reduce the cost of providing financial advice by lowering compliance complexity.
“The FSC knows that the fee disclosure statement and opt in requirements when combined with new advice fee consent documents and independence disclosure will result in a large and complex table of numbers that will be difficult for consumers to comprehend. Availability of information is not a good indicator of whether that information is understood.”
The FSC said the solution to the complexity would not come from regulators.
“Subject to legal review and implementation by FSC’s members we will look to codify this as standard industry guidance,” it said.
“The effectiveness of the guidance will depend on how broadly it is accepted by the industry, including by financial advisers themselves.
“The FSC is strongly of the view, however, that a consistent approach is a better outcome than the prospect of a variety of different forms requiring different levels of scrutiny from the regulator which will drive up cost.”