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ASIC releases advice fee legislative instruments after consultation

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The corporate regulator has made three legislative instruments setting out the requirements for provision of advice services, after Parliament passed laws that arose out of reform proposals made by the Hayne royal commission.

The Australian Securities and Investments Commission (ASIC) says it took into account industry feedback on advice fee consents and independence disclosure in finalising the legislative instruments.

“ASIC considers that the legislative instruments strike 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 said in a statement.

“ASIC does not have powers to provide exemptions from the new advice fee consents and independence disclosure requirements or to modify how the requirements apply.

“ASIC can only specify requirements for the advice fee consents and the form of the disclosure of lack of independence.”

The instruments spell out 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;

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” and

the 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 number of the new requirements will commence on July 1 and will apply to all ongoing fee arrangements (OFAs) entered into on or after that date.

These include requiring financial services licensees to seek clients’ renewal of OFA annually rather than every two years and providing information for the upcoming year in fee disclosure statements.

The new requirements to have written consent before deducting the costs of providing financial product advice from a superannuation account will be introduced on a staggered basis. They will apply from July 1 for fees payable under arrangements entered on or after that date and July 1 next year for costs deducted under all other arrangements.

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