The Quality of Advice Review Stream One legislation will grant ministerial power to approve a standardised fee consent form, but only if the minister considers it necessary to do so.
The legislation, which was tabled in Parliament on Wednesday, tackles the issue flagged in Stream One draft legislation which didn’t explicitly mandate a standardised fee consent form.
Streamlining fee consent was part of Recommendation 8 of the QAR and the minister said last November he would “prescribe a form if we need to” when asked about the wording of the draft legislation.
“The objective is to have a single form that advisers can use,” Jones said at FAAA Congress last year. “We’ve consulted on the draft; if we can’t get there by one means we’ll get there by another.”
The legislation, which was dubbed the Delivering Better Financial Outcomes package by the government, allows the minister to approve “one or more forms” to standardise consent for ongoing fee arrangements.
“The ability to approve multiple forms and the requirement that the approved form be in relation to the circumstances specified is intended to give the minister appropriate flexibility in determining consent forms to respond to evolving practices in the industry and the regulatory context,” the exploratory memorandum for the draft bill said.
However, there is also no requirement for the minister to approve a potential form if it is not deemed appropriate or necessary to do so.
“There is no requirement for the minister to approve a form or a form for all circumstances, however, where the minister approves a form, that form becomes mandatory for collecting a consent,” the memorandum said.
“If the minister approves a mandatory form, it will help to standardise information collection requirements and reduce administrative burdens on industry and provide certainty that a consent satisfies regulatory requirements.”
Consent for ongoing fees which are deducted from multiple accounts, including across multiple account providers or product issuers, can be consolidated into one form.
Additionally, if the minister has approved two forms for “different aspects of the same circumstance” both forms can be consolidated.
The memorandum pointed to circumstances where one form could be used for general ongoing fee arrangements and another form used where ongoing fees are deducted from the client’s interest in a super fund.
Change of dates
While the ongoing annual requirement to gain consent will continue to be required, the legislative amendments will extend the window around the anniversary dates and deadlines for forms.
Advisers and clients can agree on an earlier renewal date – known as the reference day – at the time consent is first signed or renewed.
“This means that a fee recipient and a client can agree on an earlier, more convenient day to be used in working out the renewal period and so that renewal can occur in a period that better suits their schedules on an annual basis,” the memorandum said.
Additionally, consent can be given up to 60 days before the reference day. “This gives the fee recipient and client a buffer period to accommodate new or unforeseen circumstances that make it more practicable to give consent earlier than this day,” the memorandum said.
Compliant consent must be given on or before 150 days after the reference date, extending it from the current 120 days.
“The new 150-day period during which a new consent must be put in place standardises the applicable periods for both ongoing fee arrangements and deductions of ongoing fees from accounts,” the memorandum said.
In addition to changes to fee consent, the other changes included in the bill included more flexibility for advice providers over how Financial Services Guide requirements can be met, how advice fees can be charged from a super fund, simplify the rules banning conflicted remuneration, and introducing new consumer consent requirements for certain insurance commissions.
