AFA Calls For Removal of FDS Requirement – Submission

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The AFA’s Royal Commission submission to Treasury recommends removing the Financial Disclosure Statement requirement and rationalising the agreement document, the Opt-In Notice and the Client Consent form.

In its submission on Ongoing Fee Arrangements and Disclosure of Lack of Independence AFA says it recognises the Government’s desire to implement the Royal Commission recommendation “however this reform presents an excellent opportunity to address the flaws in the current process and needs to be implemented in a way that avoids additional red tape”.

The AFA’s recommendation summary in its submission reads:

  • Removal of the FDS requirement. This information is already provided in product statements and the workload to prepare them is excessive and subject to a range of issues, and as such prone to errors
  • Opt-In should apply to all ongoing fee clients and the Renewal notice should describe the services to be provided and the fees payable in the upcoming year. Any estimate of fees should be based upon the current circumstances (account balance)
  • The client renewal should be for a 12-month period from a fixed date, not the last renewal date, to achieve a genuine 12-month renewal, however with flexibility for the client to sign anywhere between the 9th and 15th month. Greater flexibility will benefit both clients and financial advisers, while still achieving an annual renewal
  • Product provider proof of client authorisation is important, however this does not need to be provided on an annual basis. A sensible timeframe is every three to five years. Other automated solutions need to be considered to avoid this additional red tape.
  • We would like to combine the agreement document, the Opt-In Notice and the Consent form.

The AFA also states that commencement should be deferred until 1 July 2021 and the transition for all clients should be two years, “in order to ensure that advisers have sufficient time to work with each client, particularly during the current demanding period, when they are also dealing with other challenges such as the FASEA exam, education requirements, the FASEA Code of Ethics and the transition of grandfathered commission clients”.

“This two year period will enable clients to retain their existing review arrangements,” it notes.

In a newsletter providing an update on its submissions AFA notes it is “particularly concerned that these reforms will make financial advice inaccessible and unaffordable for everyday Australians. We believe there are options to improve the outcomes and to reduce the red tape”.



2 COMMENTS

  1. Great work AFA!!!…………Mmmmm FPA, still in your comfort zone and not ready to stand out for your members yet….let alone the industry???

    • Great effort I would rather say the work bit is still in limbo it has to be agreed to first and so far no association has said NO that’s not good enough we won’t “wear” that! To limited less changes to our profession
      Previous recommendations such as commission reduction to an unacceptable rate of 60% a 2 year unworkable clawback period FASEA exams with absolutely no benefit to anyone ( except maybe the 1% of unethical advisers who don’t last anyway) a uni degree so a risk adviser can stay in the business learn heaps but have no use for it ( plus the cost) section three on the adviser rules of client first issues which has still not be clarified to any acceptable explanation and I am sure will raise it’s ugly head come December 2020 when ASIC yet again decide our future with no or limited commission and the list goes on
      Less advisers means less premium income to the companies and that is yet another bit of fallout not being addressed correctly
      Who is wearing the issue to supposedly fix it ? The client with outrageous premium increases and advisers losing more and more income for doing more and more unpaid work
      Why do I feel like a “ lamb to the slaughter “

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