ASIC has raised concerns that advisers may not be complying with requirements to produce Fee Disclosure Statements (FDS) and Renewal Notices for their clients, claiming reported breaches indicate the possibility of systemic non-compliance.
The regulator stated it would begin a review of the requirements after receiving a number of breach reports from licensees, and is also currently investigating ‘substantial breaches’ of the obligations.
“In addition to investigating these particular instances, the volume and range of breach reports indicates a significant risk of systemic non-compliance,” the regulator noted, adding, “ASIC is investigating these reports and will take enforcement action where breaches are substantiated”.
As part of its review, ASIC will test compliance with FDS and renewal notice requirements by examining to what extent licensees:
- issue FDSs and Renewal Notices to customers
- issue FDSs and Renewal Notices within the time frames set out by the law
- include the required content in the FDSs
- ensure the content of FDSs is accurate
- have procedures to ensure fees for ongoing services are discontinued when the arrangements are terminated because the licensees failed to comply with the FDS or Renewal Notice requirements
The review will test compliance with these obligations, which were implemented as part of the Future of Financial Advice (FoFA) reforms in 2013, across a range of small and large licensees and ASIC will release its findings in 2019.
