The Financial Ombudsman Service (FOS) has called for the opt-in proposals in the Future of Financial Advice Bill to be modified to deal with clients not responding to renewal notices.

In a submission to the Parliamentary Joint Committee on Corporations and Financial Services, FOS says there are occasions when a client is genuinely unable to respond due to illness, a long holiday or has difficulty understanding technical documents.

Consumers that would be most likely to fail to respond to renewal notices for these reasons would be retirees and vulnerable and disadvantaged consumers, FOS said.

“We suggest a safety mechanism be added to address these issues.”

FOS wants any renewal notices to explain in simple terms how not signing these documents will affect them in the future.

“The bill requires a renewal notice to include a basic statement about how non-renewal terminates the adviser/client relationship, but does not require explanation of how failure to renew may affect the client,” FOS said.

“We acknowledge the adviser would want to provide this explanation to encourage renewal, but this motivation may not be enough from the consumer’s perspective.”

FOS says the legislation could give those clients who have not renewed their agreement the chance to consider their position later.

This could include the adviser sending out a reminder three months after the original notice has been allowed to lapse, reminding the client of the consequences of not receiving any advice.

This letter should also include details of how the client can renew the agreement again.