Senior Government Senator, David Bushby, has pointed to the costly administrative problems encountered by financial planning firms as they have sought to deal with the Future of Financial Advice (FOFA) changes.
Addressing a Money Management breakfast, Bush said he heard regulatory horror stories on a weekly basis, and this was something which critics of the Government's forthcoming changes to FOFA needed to understand.
"One planning firm advises me that over the last 12 months it has been forced to write to all of its clients, for the sole purpose of providing totally unnecessary fee disclosure statements, to advise their clients of fees that were already disclosed in the Statement of Advice to those clients, and, which are also spelt out in the regular client statements sent from both the fund and platform managers," he said.
"At a cost of $20 per letter (including admin costs), this firm was required to send not one but three separate sets of letters, and after 2,400 (800 x 3) such communiques they still await responses from the 100 or so who have not responded," Bushby said.
The Tasmanian Liberal Senator said it was hard to conceive how this requirement was adding in any way to the consumer's protection — or understanding of the fee structure — and that it was entirely possible that it might even contribute to the consumer being less likely to read any of the advice as it was repetitive and offered nothing new.
"Across the whole financial services industry, it is estimated that removing the requirement to prepare fee disclosure statements for pre-1 July 2013 clients will result in savings of some 20 hours per week for each firm (on average)," he said. "If this is the case, it would collectively result in ongoing savings to the financial services industry of around $41 million per annum, which I hope would, in a competitive environment, result in commensurate savings to the consumer."
