The AFA will not seek a ‘carve-out’ around opt-in requirements stating that many of its members had already implemented appropriate procedures which were causing little or no concern to advisers.
In a communication sent to members prior to Christmas, AFA General Manager Policy & Professionalism, Samantha Clarke said any ‘carve-out’ would not remove the need for clients to opt-in and only extends the maximum period for that to take place from two years to three years.
Clarke said regardless of whether advisers subscribed to an ASIC approved code, all fee-paying clients must be provided with a Fee Disclosure Statement annually as well as arrangements to opt-in as set out under the FoFA legislation.
Clarke also stated the move followed on from the Association’s position during the negotiation of the Future of Financial Advice (FoFA) reforms where it stated that “…obviating the need to meet the legal requirement for Opt-In would be unusual”.
“…the AFA believes it is confusing to consumers to have inconsistent arrangements between one adviser and another…”
“Through the lens of clients of financial advisers, the AFA believes it is confusing to consumers to have inconsistent arrangements between one adviser and another for re-committing to an advice agreement with a financial adviser,” Clarke said.
“In considering what is required from an adviser to go from a maximum period of two years to renew their client service agreements to a maximum three years, the AFA believes best practice is to simply meet what is required under the Corporations Act as it stands.”
The AFA’s position runs counter to that of the Financial Planning Association (FPA) which announced in late November 2016 that some of its members will be exempt from the two year opt-in rule under its ASIC approved Professional Ongoing Fees Code.
FPA members who are able to receive the exemption will be required to renew opt-in and ongoing fee arrangements but could set renewal intervals with clients, provided the interval was not more than three years.
