Jennifer O’Donnell
The Australian Securities andInvestments Commission (ASIC) is considering making it mandatory for so-called ‘shelf fee’ arrangements between fund managers and dealer groups to be disclosed within a Statement of Advice (SOA).
Head of Compliance Jennifer O’ Donnell told Money Management that the regulator is concerned that shelf fee arrangements are “often disclosed in the financial services guides (FSG) and in product disclosure statements (PDS) but not always in SOAs”.
The concern is whether shelf fees have the “potential to ultimately influence advice to clients, because this can influence the type of products that are on offer, and if so, whether disclosure about these arrangements fees needs to flow through to the SOA”.
ASIC is currently talking to a number of industry players about their shelf fee arrangements to try to “understand for ourselves just where any stress points are located” in terms of any potential conflicts of interest, O’Donnell said.
These ongoing discussions have left her with “the impression that some of these shelf fee arrangements are pretty unobjectionable, and are being managed properly, while others are probably stretching some limits a bit more”.
There are “some questions that needed to be asked about whether shelf fees are capable of influencing advice”, she said, “but whether or not we need to come out with any guidance on this issue depends a bit on how the discussions with the industry unfold”.
“From our point of view, there’s no doubt shelf fees can be a conflict of interest if they do result in inappropriate products or in some products being favoured over others, and thus they need to be properly disclosed,” she said.
“What we as the regulator ultimately care about is transparency and consistency around the way some of these arrangements are described and then disclosed to investors.”
O’Donnell said the increased regulatory attention to shelf fees had not been initiated by the extensive commercial debate engendered by Asgard Wealth Solution’s recent decision to implement its ‘preferred partners program’.
