Licensees face potential court action of FDS failures

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:

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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.




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If you regulate any industry enough you guarantee it’s failure. Congratulations ASIC it seems you may have finally created the situation that guarantees a job for life. Not sure why you didn’t just lock all advisers to begin with?

the more complicated you make the laws the greater the probability that mistakes will occur... ..

Surely a client can decide whether they are getting value from an Adviser, based on the fee they are paying. This is just regulation going overboard. Next time I'll ask Foxtel to provide a list of all the channels and tv shows I am able to access, then list those which I watched, and the fees for doing so. Is personal responsibility a thing still?

Don't try and make sense of ASICs approach with the customer in mind - it will just drive you nuts. The clients don't want the FDS either, as they know the fees, have agreed for the fees and been shown the fees multiple times a year - it's just another piece of paper that makes it all look complicated to the client.
The truth seems to be, ASIC just loves Industry Super and will stop at nothing to eliminate all competition.

funny thing is, even if a client received a FDS, and they complain about fee for no service, AFCA will still award them fees plus interest...so what benefit does the FDS really have? At least ASIC didn't find 80% are not sent!!
The compliance burden was high. Why..not sure, may be too many clients, or archiac systems, or advisers are too busy for more needless paperwork. Was this compliance for compliance sake?
Just move to annual fee for service already and remove this crap.

ASIC are a corrupt joke. This has been their intention all along when they first introduced this debacle in such a way that very few initially realised what was required, but then even as the severity of this BS regulations came through, no clear absolute guidance was provided. We know they source a large portion of their staff from couldn't-hack-it in the commercial world scumbag lawyers, this is the classic lawyer's intellect of laying a trap for us to walk into down the track.

No other industry or group of businesses is under such over the top regulations regarding fee disclosure and operating environment. If surgeons, health care professionals and even aged care groups - who deal literally with life and death of their clients - aren't under such close overbearing scrutiny, what rationale is there for us to be so over regulated?

Industry funds, who we know have conflicts and in general sub-par advice, and yet handle billions of dollars of Aussie wealth aren't subject to our rules - clearly, there is a political agenda and bias here with a planned outcome of removing us as their competition.

If you have to get clients to sign 5-10 forms to charge a fee and 30 forms to provide advice whilst standing on your head whilst rubbing your stomach... chances are you'll stuff up. I'm thinking of taking up a safer job, one that has less regulatory risks or I'm retained no matter how many blunders I do. Perhaps something like a Bank CEO or a FPA CEO. These all appear a much safer job.

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