Levy backs fee disclosure reform
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.
AUTHOR
Charbel Kadib
Recommended for you
Insignia Financial has announced a board director will be stepping down next year after almost a decade amid a board refresh.
Zenith Investment Partners has appointed a Brisbane-based business development manager, who previously led Fitzpatrick Private Wealth Partners as a director and senior adviser.
Praemium has said it is open to investing in artificial intelligence “in a big way” as it believes it can transform the business and details how it is already being used by the firm.
Sequoia has shared its strategic initiatives for FY25, including organically increasing its licensee market share and restructuring its specialist investment arm.
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.
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.