Retrospective fee disclosure no surprise, says CHOICE

CHOICE chair Jenni Mack has dismissed claims by the Opposition that the imposition of an annual fee disclosure statement came as a complete surprise to the industry.

Mack highlighted a question Shadow Assistant Treasurer Mathias Cormann directed to Professor Joanna Bird at a Parliamentary Joint Committee hearing last Monday:

"Based on the evidence we have had from others today, this whole proposition of a retrospective annual fee disclosure statement came out of nowhere right at the end of the process when the legislation was introduced into the parliament in September or October. Is that good process?" asked Cormann.

The concept of annual fee disclosure was first discussed on 24 January 2011 during a Peak Consultation Group meeting led by Treasury's Geoff Miller, said Mack.

During the meeting, consumer groups suggested that if opt-in was to become a two-year requirement, then consumers should be told how much they paid in fees and for services in the intervening year.

The Minister for Financial Services Bill Shorten adopted the idea in his Future of Financial Advice (FOFA) information pack released on 28 April 2011, said Mack.

In addition, when he announced the draft FOFA legislation on 29 August 2011, Shorten said the two-year opt-in requirement would also include "an annual fee disclosure statement to all clients", according to Mack.

Mack added that it was "extraordinary" that the financial planning industry didn't tell consumers what they have paid for services "as a matter of course".