Legislation aimed at protecting Australians from hidden advice fees and unexpected expenses passed in Parliament last week.

The new laws will require advisers to provide clients with an annual, forward-looking summary of fees and corresponding services, in addition to existing disclosures. Advisers will also need to obtain written consent from clients prior to deducting fees.

The Morrison Government says the passage of Financial Sector Reform Bill 2020 signals its commitment to implement the proposals made by the Hayne royal commission.

“These changes complement the introduction of a new disclosure obligation that requires financial advisers who are not independent of product providers to provide their clients with a clear and concise written disclaimer,” a statement from the office of Treasurer Josh Frydenberg says.

“The legislation will also prohibit the deduction of ongoing advice fees from MySuper products and increase the transparency of fees to members.

“These changes are an important step in restoring trust and confidence in Australia's financial system.”

While consumer advocates have welcomed the new laws, advisers believe the mandatory requirement to provide annual renewal statement could add to the already prohibitive cost of providing financial advice to Australians.

The Association of Financial Advisers say it does not believe an annual renewal summary is necessary.

“The legislation is another royal commission related Bill that has been pushed through the Parliament with undue haste and lack of due process,” the association says.

“The inevitable result of this is an increasing number of unintended consequences which will have negative implications for financial advice practices and flow on effects in terms of extra cost and complexity for clients. These issues will need to be fixed down the track.”

However, Choice has welcomed the passage of the Bill, calling it an important step forward in improving consumer outcomes in the financial advice sector.

“Advisers will now be required to provide an annual, forward-looking statement of fees and services to customers,” Finance Policy Adviser Patrick Veyret said. “This reform adds much needed transparency to the deduction of advice fees.

“Customers will now be much better positioned to assess value for money.”