The Financial Planning Association (FPA) has urged the Australian Securities and Investments Commission (ASIC) to be more flexible around arrangements for the deduction of advice fees from superannuation accounts, arguing that requiring repeat consent processes will not be in clients’ best interests.
In a submission filed with ASIC as part of its review of implementing the Royal Commission recommendations around advice fee consents and independence disclosure, the FPA made clear it believed ASIC’s proposed approach involving time limits and multiple consents was unnecessary.
In doing so it pointed out that around two-thirds of clients who paid fees through superannuation would have trouble paying for advice in any other way.
“The provision of the agreed advice services should not be restricted to a time period of how long the consent will last,” it said. “The priority must be the provision of advice services in the best interest of the client and personal advice that is appropriate for the client’s circumstances.”
“It is most likely that the member consent would be sought at the time of the client and advice provider agreeing on the terms of the advice engagement, including the services to be provided and the non-ongoing fee for those services,” the FPA submission said.
The submission said that the collection of vital information about the client’s circumstances and goals could significantly impact the period of time between agreeing on the terms of engagement and the provision of the advice and the statement of advice (SOA).
It said that ASIC’s proposals would impose an expiry timeframe on the member consent, and in turn, potentially on the provision of the advice.
“If the above factors resulted in the advice not being provided within the stated time period, this could lead to unnecessary duplication of the client consent process even though the terms of the advice engagement the client agreed to had not changed,” the submission said.
“The FPA suggests this is unreasonable and inconvenient for the client and does not provide any additional consumer protection under this measure. It is not in line with the best interest duty in the Corporations Act or the professionalism requirements of the new FASEA code of ethics to provide advice services diligently and efficiently by including a timeframe that could result in the need to repeat the consent process.”