July, 2021
The immediate issues of additional oversight, delays and inconvenience may pale into insignificance in October when additional regulatory reforms – breaches, complaints and distribution obligations – kick in (“Check SOAs as well as consent forms, regulators tell trustees“, July 1).
While Trustees should be prudent, requesting an SOA as a precondition to acting on members’ clear consent seems imprudent. Quite apart from questions about their capability and competence to assess advice, it may expose Trustees to additional liability. For example, if a Trustee received the written advice and approved the payment of advice fees, isn’t that an implicit (if not explicit) endorsement of the appropriateness of the advice? Trustees might find themselves joined in actions seeking compensation for inappropriate advice and breaches of their duties to their members.
The Licensee is the party that is, and should be, accountable for the advice and the legitimacy of any consent order submitted to a Trustee.
Sean Graham, Assured Support in Sydney, NSW
APRA Funds require the client to sign a declaration about the fees to be deducted (“Check SOAs as well as consent forms, regulators tell trustees“, July 1).
If this can’t be relied on then why does any of the attestations the client makes have validity?
It is not appropriate for RSE’s to become gatekeepers for ASIC in their supervisory role of financial advisers. If the deduction of fees from super is not for super purposes, it should be detected by the AFSLs internal file reviews. AFSLs are the gatekeepers for Adviser conduct and with FASEA, Advisers must also take responsibility for their behaviour. ASIC is the regulator, not APRA.
It seems that clients are not credited with any capacity to understand what is said or asked of them, advisers deliberately attempt to exploit this, and AFSLs are incompetent.
Enough is enough. The ‘sole purpose test’ furore which saw ASIC and APRA issuing ‘joint statements’ on the subject has set a precedent. But to me it just highlights the demarcation of responsibility and that teaming up is the only way to ‘solve’ some regulatory issues. This latest move is yet another example.
The SPT issue came to prominence as Industry Funds tried to roll out financial advice to members via a ‘one in all in’ fee take which should never have been considered appropriate.
So now we have the joint regulator with a precedent to continue to ‘shirt front’ the industry.
Kym Bailey, JB Were in Sydney, NSW
This is getting ridiculous and the spirally costs from all parties is going to push advice costs higher and higher (“Check SOAs as well as consent forms, regulators tell trustees“, July 1).
An SOA contains all a clients financial information which the Trustee of a super fund has no right to. The only information relevant to them is the information relating to their product and trying to carve this out will be another cost at the practice level.
ASIC has provided guidance on what needs to be in a fee consent form and it does not include services. The Fee consent form can only be given with an FDS and that is the reference document – you don’t need to reincorporate it. The client is provided with a fee estimate in their first or second meeting via a letter of engagement. They then receive an SOA with a full explanation of not just the advice fees but a whole range of fees charged by other suppliers that have nothing to do with advice, including administration fees, fund manager MERS, ICRs and buy sell spreads and then comparisons of what other products costs as well as analysis of other benefits. Each year they receive an FDS which fully outlines all the fees and services provided and a forecast of the next twelve months and now each year they have to opt in to those services. Each meeting they have with an adviser must be evidenced by an advice document and in most cases this will also explain any fees and services provided. The product provider also provides a full transaction statement to the member with any fees deducted for advice services fully disclosed (unless you are in an industry fund that just charges all members below the line) and summarised.
You can’t legislate against stupidity. The consumer must take some responsibility somewhere in here, given the amount of both written and verbal disclosure that is provided on fees and services, to make an informed decision. Layer and more layers of disclosure takes more and more time, adds cost and adds no value.
ASIC needs to hold licensees and advisers accountable and they do. We do not need trustees of product providers reviewing advice – they are not competent to do it and they should be focusing solely on managing the administration and investments entrusted to them by the members and advisers.
APRA may not trust advisers but our clients do and they are being serviced by appropriately educated advisers with a very robust professional standards regime.
Jane Hume has said the government is about reducing complexity and the cost of advice, well here is an opportunity for common sense to trump overzealous regulators
Paul Forbes, Australian Advice Network in Brisbane, QLD
To quote another adviser ‘why not makes all of us ASIC employees at the Department of Advice?'(“Check SOAs as well as consent forms, regulators tell trustees“, July 1).
Then create another three mega-departments: superannuation, insurance, investments, where all super, insurance and investments will be managed. Then we won’t need AFCA, APRA, TPB, AFA, FPA, etc. Everything will be managed by only ONE government agency. No need for Royal Commissions because government cannot investigate itself. Everybody will be employees of this agency. There won’t be any compliance issues, no ethical issues, etc. Everything will be done by the book.
If anyone does anything wrong – firing squad without trial. Happy Days!
Steve Blizard, Roxburgh Securities in Guildford, WA
Tahn, there is clearly fundamental mis trust at all levels behind what is occurring (“Check SOAs as well as consent forms, regulators tell trustees“, July 1).
What everyone keeps ignoring is the client/member. The amount of time the business needs to spend redacting these documents for the different super funds as well as dealing with separate consent forms further adds to inefficiency and cost the client ultimately pays for. I would argue the separate requirements and processes are anti member. Enter the FSC, who have just put on the record via a Green paper how much they want to impact the cost of advice. Here is opportunity for action.
Tom Reddacliff, Encore Advisory in Brisbane, QLD
Unfortunately, without true collaboration across all stakeholders ie regulators, industry, advisers and consumers there is a very high risk that the lessons from the past will not be learnt, and the issues with the banks vertical integration will be replayed again (“Widening guidance: The case for more advice in super builds“, July 1).
Neil Macdonald, The Adviser Association in Sydney, NSW
How many documents does ASIC want clients to sign with fees disclosed before they are convinced the client is informed? (“The fee consent era begins, but are advisers ready?” June 30).
We have an engagement letter, fact find, SOA/ROA, Setvice Agreement, invoice, platform fee deduction form and Fee Disclosure Statement. Hmmm not sure if the client really understands what they are paying. Better have another form, let’s call it a Fee Consent Form just to make sure. Completely and utterly ridiculous.
Craig Lindner, Granite Financial Services in Sydney, NSW
It’s not as if we (advisers) have not had enough notice, time or opportunities to upgrade our qualifications and pass the exam (“Hume grants 9-month FASEA reprieve“, June 24).
I commenced my qualification upgrade in 2015 (yes, because it was being discussed 6 years ago) and have now met the required education standards and passed the exam well ahead of time as well as continuing to run a full time advice practice. I find the continuous complaining by many that they haven’t had enough time or that they shouldn’t have to upgrade their qualifications because of their experience (by the way I’ve been an adviser for 21 years) very tedious.
Just get on with it and do what you need to do or find another vocation.
Craig Elliott, Galpins Financial Planning in Mount Gambier, SA
The ‘existing adviser route was recognition of the current state of play (“Hume grants 9-month FASEA reprieve“, June 24).
Many advisers have been in the industry for a long time and amassed enormous experience. By and large the exam has been built to confirm this. The only other ‘one in all in’ uplift was the Ethics bridging course. This was required because the Code was new and no-one could claim to be competent in it.
Then there are many iterations down to being required to complete 6 – 8 subjects.
But even the ‘worst case scenario’ education uplift for existing advisers is better than the “new entrant” route. Under that route they don’t become an adviser for some time post base-line AQF 7 minimum attainment.
However, our only chance of breaking free of regulatory shackles is to morph into a profession. This can’t be done without a level of qualification and a Code of Ethics.
Kym Bailey, JB Were in Sydney, NSW
