Industry welcomes ASIC's approach to fee disclosure
The financial planning industry has welcomed the new regulatory guidance on fee disclosure, though some argue it should have applied only to new clients.
The Australian Securities and Investments Commission (ASIC) has released a regulatory guide which outlines the requirements around fee disclosure statements for retail clients who pay ongoing fees to their financial advisers.
The Financial Planning Association (FPA) director of policy and standards, Dante De Gori, said the association was delighted to see ASIC take a "common sense" approach, especially with respect to the 'no-action' clause.
The no-action clause, which was not included in other parts of Future of Financial Advice (FOFA) guidance, will allow ASIC to provide more flexibility around some of the rules.
"For example, the fee disclosure date will be the anniversary date for the client," De Gori said.
"There are going to be circumstances where you're not going to know the anniversary date, so ASIC is not going to take action for that - for example when you're buying a book of clients," he added.
"We're very happy that ASIC has taken that on board and put that in the guidance document."
However, both De Gori and the Association of Financial Advisers chief executive officer Brad Fox have expressed concerns about how the fee disclosure statement requirements will be applied to pre-existing clients.
"There remains a bigger picture concern around how this is to be applied to pre-existing clients prior to introduction of FOFA," Fox said.
"There is an enormous amount of system re-work required at an enormous cost - we have real concerns about whether this can be in place by 1 July, 2013."
De Gori said the FPA still thought the fee disclosure statement requirements should apply only to new clients.
"There's potential duplication of disclosure that goes to clients that could be confusing - some of the main admin issues all apply to existing clients," De Gori said.
"It's just caused unnecessary complication and unnecessary uncertainty for the industry - if it was just for new clients, it wouldn't be that costly and would be quite clear."
The Industry Super Network (ISN) has expressed its support for ASIC's new guide, saying transparency around financial planner remuneration was key.
"It is reasonable that clients understand the services they are paying for where an ongoing fee is being charged," said the ISN chief executive officer David Whiteley.
"These measures in the Future of Financial Advice reforms are filling a regulatory gap to ensure that much needed disclosure is provided to all clients, both existing and new."
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