The Financial Planning Association (FPA) has acknowledged that the problem of ‘fee for no service’ was the ‘invisible nature of ongoing fees” but it wants the Government to avoid imposing an unnecessary administrative burden by duplicating opt-in processes.
In a submission filed with the Treasury, the FPA is arguing that when a client consents to renewing their arrangement as provided through a letter or engagement, that this should equate to consent to deduct advice fees for product providers.
It said that so long as the ongoing fee arrangement was in place, then the consent to deduct fees remained.
“The only difference between the client signing the renewal notice and signing the product consent form is of who the ultimate recipient of the consent is (i.e. the adviser for the renewal notice and the product manufacturer for the product consent form),” the FPA submission said. “The preference of our members and to minimise administrative burden and cost on consumers is that both obligations be handled by the adviser, and to minimise the number of forms of consent to be provided by the client.”
The FPA submission said that the proposed new consent requirement was a duplicate of client consent already provided through the renewal notice process.
“There is also a client expectation that signing a renewal notice is indicative of their intention continue paying for the services in the manner they have negotiated and agreed to with their adviser and disclosed to them annually in their Fee Disclosure Statement (FDS),” it said.
“Thus, if an adviser can present the signed renewal notice to a product provider as proof of consent, this provides the same consumer protection that Commissioner Hayne sought to achieve with this recommendation whilst minimising compliance cost, and the administrative burden on advisers and consumers.”