Accept that a signed client renewal notice is enough says FPA

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.

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“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.”

 




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I thought we were all having to move to Annual Fixed term agreements?

Just AMP I believe? Or is it a case of we have already moved on and around the legislation?

You still need the client to sign off on it for your own files and now the proposal is that you need a separate form for each product provider that client is having fees deducted from as well.

God the FPA are so out of touch it's not funny. They should be arguing for FDS's to be abolished. If the client is signing off on the fees every year, what is the point? Just list the fees and services in the Opt-In notice. Why is it so hard? These documents should be the most simple one-page document, instead they have become a compliance nightmare. This is all that should be required: Here are the fees, these are the services, if you want to continue, sign here. Done. The way things are going, ASIC will destroy small businesses next time around with another lookback in years to come, based on ridiculous technicalities.

That is how it's going to be. There's not going to be a separate FDS. One document which outlines what they paid last year and what services they received and the same for the upcoming year. The problem is then having to have clients sign a second document for each product provider. A client might have a super account, managed fund and insurance bond with fees coming out of each, then you'll need 4 documents signed each and every year.

Unless the client moves to a SMSF, where very little of this baloney is required. It is abundantly clear that the industry has caved in, being forced to move to a legal industry retainer form of remuneration, as practiced by lawyers. First financial planning was high-jacked by accountants and now we have been high-jacked by lawyers, that is all.

How does an advised SMSF escape the FDS/Opt in rules?

Charge the total fee in one amount per year payable on invoice. No FDS, no Opt-In.

I have heard this but regard that you could easily still be held in breach.

We have about 70 SMSF's and are still doing FDS and Opt In.

ASIC "ssshuuushh I hunt wabbits"....and I don't want to be one of the wabbits.

https://www.youtube.com/watch?v=uzQ9kxs6RL8

No, it's no a breach. Not an ongoing fee arrangement (OFA)

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