Levy backs fee disclosure reform

advice fees quality of advice qoa review Michelle Levy

9 February 2023
| By Charbel Kadib |
image
image
expand image

The independent chair of the Quality of Advice (QOA) Review has called for the removal of “onerous” ongoing fee disclosure obligations.

Under recommendation 8 of the final report of the report, Michelle Levy called for the simplification of ongoing fee disclosure provisions.

Providers of financial advice were currently required to give a fee disclosure statement to the client, to obtain the client's agreement to renew an ongoing fee arrangement, and obtain the client's consent to deduct advice fees.

Levy stressed compliance with these consumer protections should not be an “onerous obligation” for financial advisers.

As such, Ms Levy — a partner at global law firm Allens — recommended existing provisions be replaced with a “single consent form”.

The catch-all consent form would explain the services that to be provided and the fee the adviser proposed to charge over the proceeding 12 month period.

The single consent form, which “should be prescribed”, would also authorise the deduction of advice fees from the client's financial product and “should be able to be relied on by the product issuer”.

“Multiple forms would only be required where fees are to be deducted from financial products issued by more than one product issuer,” Levy noted.

Additionally, under the same recommendation, Levy called for “a single prescribed form” which would be applicable to all product issuers, including superannuation trustees.

However, she stressed product issuers would not be legally required to accept the form.

“This is because it is possible and should continue to be possible that different product issuers might apply different rules to the payment of ongoing fees,” she said.

“Some might apply caps on ongoing fees or permit ongoing fees to be provided in relation to some advice only.

“While it is desirable to have a single consent form, it is not desirable to dictate whether and in what circumstances a product issuer must allow a client to pay advice fees from their financial product.”

Levy has also proposed “greater flexibility” be given to advisers regarding when they obtain a consent form from a client, provided consent is received on an annual basis.

This new obligation, which would apply only to financial advisers, would aim to ensure advisers were “motivated solely by the interests of their clients when providing advice”.

The Albanese Government was yet to issue a formal response to Ms Levy’s final report, but has indicated it would launch further consultation before handing down a decision.  

 

Read more about:

AUTHOR

Submitted by Realistic on Thu, 2023-02-09 17:04

However, she stressed product issuers would not be legally required to accept the form.

Yeah, A trustee might not approve of a Financial Planner not under the control of the Trustee providing Advice on an area for which the Trustee is already charging the member - even when the member is not using that service?

Any yearly form needed providing consent for the Trustee to charge a members Retirement savings for advice provided to other members (you did say so the trustee can retain FUM) who has not used the Trustees Advice? Guess not.

Well done Michelle Levey - you do seem to have thought of it all?

Honestly - had to make this stuff up.

Submitted by Anon2 on Tue, 2023-02-14 13:48

What world does she live in ? Quote "However, she stressed product issuers would not be legally required to accept the form." I'm 110% confident and I'll bet my house Michelle Levy that we'll still be faced with multiple processes, and no doubt a product specific 5 page form requiring three different signatures. I'm no lawyer just a person dealing with Super funds for the last 30 years. What a farce.

Add new comment

The content of this field is kept private and will not be shown publicly.

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

Shareholder

Get rid of the rest of the old guard to clean up the culture, then you might have a chance....

3 days 11 hours ago
Ray Mitchell

The previous directors and managers of both Dixon Advisory and the ultimate holding company Evans and Partners should be...

3 days 23 hours ago
Old Fella

Why would any Licensee invest in educating and training new advisers, when as soon as the handcuffs come off, they will ...

4 days 3 hours ago

Insignia Financial has unveiled a new operating model and executive team, including a new head of advice, while three senior executives are set to depart the licensee....

4 days 13 hours ago

ASIC has obtained interim orders from the Federal Court to freeze the assets of a registered managed fund and prevent its former director from leaving Australia. ...

3 weeks 5 days ago

The $280 billion Australian Retirement Trust is the first superannuation fund off the block to report its performance for the 2023-24 financial year....

2 weeks ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND