The Australian Securities and Investments Commission (ASIC) has placed advice licensees on notice over potential breaches of their fee disclosure statement (FDS) and renewal notice obligations, after a review of 176 FDSs found significant shortcomings.
ASIC has made its position clear while releasing a new report on Compliance with fee disclosure statement and renewal obligations based on a review of licensees which it said had identified both less material and technical breaches and more significant breaches.
It said that of the 176 FDSs reviewed in detail:
80% did not include all the required information about services that clients were entitled to receive
73% did not cover all the information about services that clients received, and
44% did not include the amount of each fee paid by the clients.
“When reviewing policies and procedures, ASIC found that more than half of licensees did not have effective processes to remind them when RNs are due or to turn off ongoing fees,” the regulator’s announcement said.
“Our review has found widespread non-compliance with fee disclosure obligations across the sample of AFS licensees and their representatives, suggesting that compliance with the FDS and RN obligations may be an industry-wide problem,” ASIC commissioner, Danielle Press said.
The announcement said that, separately, ASIC was investigating a number of other advice licensees for potential breaches and would be determining whether court action was appropriate at the end of its investigations.