ASIC has granted a limited “no-action” enforcement position due to issues with the lack of inclusion of an account number in a client’s written consent for the deduction of ongoing advice fees.
However, the regulator will only take this no-action as long as advisers enter into a new ongoing fee arrangement (OFA) with clients and receive an updated written consent, which must cover the period where any fees were deducted under a “non-compliant” written consent.
“The regulator is still calling on financial advisers and superannuation trustees to ensure they are complying with client consent requirements when entering into ongoing fee arrangements,” ASIC said in a media release on Friday morning.
ASIC won’t act on a breach if an account number was not included in the written consent that was given between 10 January 2025 (when the change was due to commence) and 5 September 2025.
The regulator warned relying on this no-action position does not prevent an OFA being terminated under the law. Revised OFAs must comply with all legal requirements and if not in place by 5 September 2025, the fee recipient will be unable to continue receiving fees.
Superannuation trustees have also been instructed by the regulator to review the processes for the oversight of advice fee deductions and ensure that any written consents comply with all legal requirements.
The Financial Advice Association Australia informed members since the commencement of new fee consent obligations on 10 January 2025, introduced in Tranche 1 of the Delivering Better Financial Outcomes legislation, it has been necessary to include an account number.
The account number is the unique identifier used by the product provider and the issue raised by the association is that when applying for a new product, the account number isn’t provided until the new business process has been completed. This means the fee consent form that is meant to include the account number at the time of application can’t be completed.
In the case of new accounts, the account number may not have been known, and forms were likely submitted without it.
The FAAA said it recognised the issue back in January and has been working with ASIC and Treasury to find a solution. The association suggested this could be fixed with a legislative amendment.
Account numbers must be known before a fee consent form is processed, which means when it comes to new accounts, the application for the product must be done separately to the completion of a fee consent form.
This approach does not apply universally as some product providers can generate account numbers through an online application, but the association expects remaining product providers to address this complication. This issue doesn’t apply to clients who are paying their fees from a bank account or credit card.
ASIC’s decision is governed by Regulatory Guide 108 No-action letters, which means it is not a legal opinion but an “expression of regulatory intent and is specific to the facts and circumstances”.
However, the regulator noted this position doesn’t impede third parties from taking legal action in relation to the conduct.
Friday’s update marks another setback over what was meant to be an improved process to streamline fee consent requirements.
The Hayne royal commission recommended the introduction of a law that prevents the deduction of ongoing fees without the client’s consent, which was passed by the Coalition government in March 2021 and came into effect that July.
It quickly became a key advocacy priority for the FAAA and the Quality of Advice Review recommended streamlining fee consent into a single prescribed form.
After issues in the original draft legislation of the first tranche of the DBFO bill were uncovered that rendered the changes ineffective, the bill was further modified to give ministerial power to mandate a singular prescribed form, which is yet to be utilised.
Allens partner Michelle Levy, who led the QAR, said in her final report advisers “complained loudly” about the time and cost spent preparing disclosure statements like fee consent/OFAs, as well as Statements of Advice, Fee Disclosure Statements and Financial Services Guides.
