Guidance provided by the Australian Securities and Investments Commission (ASIC) around its new fee disclosure regime has highlighted the onus placed on advisers to act promptly when clients for any reason opt out or don’t fill in their paperwork.
In a guidance document titled ‘Tips for complying with fee disclosure and renewal notice obligations’, the regulator made it clear that if a client terminates an ongoing fee arrangement (OFA) by opting out or by not returning a signed renewal document “you need to stop charging them fees under the OFA”.
What is more, it makes clear that it is the adviser’s responsibility to stop such arrangements where fee deductions are occurring via platforms, including checking that they [the platform] had actually turned off the fees.
It said that where clients were charged through fee deductions on the part of a product issuer or platform provider, it was wise to implement processes to reduce the risk of non-compliance including providing instructions to third party product providers and platform providers to turn off fees.
ASIC is also recommending that advisers run regular reconciliation and exception reports comparing their incoming fee revenue from the fees they should be receiving from OFA clients.
It said this might help advisers detect instances where clients’ fees had not been turned off and required further investigation.