The Australian Securities and Investments Commission (ASIC) has released three legislative instruments that dictate the rules for consent that must be gained by advisers and superannuation funds when deducting ongoing fees from clients as part of certain fee arrangements.
The instruments are the result of an enabling act – the Financial Sector Reform (Hayne Royal Commission Response No 2) Act 2021 – receiving royal assent earlier this month and stem from recommendations made at the conclusion of that commission.
ASIC stated the Consent to Deductions – Ongoing Fee Arrangements Instrument set the requirements “for the written consent that a fee recipient must obtain from a client before deducting, or arranging to deduct, advice fees from a client account as part of an ongoing fee arrangement”.
Similarly, the Consent to Pass on Costs of Providing Advice Instrument set the requirement for “written consent that a superannuation trustee must obtain from a member before deducting advice fees from a superannuation account under a non-ongoing fee arrangement”.
A further instrument, Disclosure of Lack of Independence Instrument, sets the requirement for the “disclosure of lack of independence that an Australian financial services licensee or authorised representative must give clients where they would breach s923A of the Corporations Act if they used words such as ‘independence’, ‘impartial’ or ‘unbiased’”.
ASIC stated it viewed the legislative instruments as an “appropriate balance between minimising regulatory burden for the financial advice and superannuation industries and ensuring that consumers receive the information that is relevant to them”.
The regulator added it did not have powers to provide exemptions from the new advice fee consents and independence disclosure requirements or to modify their application, but had supplied examples of written consent forms to help licensees comply with the requirements.
It would, however, consider updating existing regulatory guidance to reflect the new requirements in the act and instruments before the reforms commenced on 1 July.