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2 December 2019
A review of financial advice fee disclosure statements by the Australian Securities and Investments Commission (ASIC) has found widespread non-compliance with the disclosure obligations.
ASIC employed a compliance consultant to investigate 176 fee disclosure statements in detail, out of the 1496 it received from 30 randomly selected licensees. It also received 373 renewal notices. It excluded the major banks, AMP and Macquarie in its review.
Of the 176 fee disclosure statements reviewed in detail, 80% did not include all the required information about services that clients were entitled to receive, 73% did not cover all the information about services that clients received, and 44% did not include the amount of each fee paid by the clients.
Some 7% of fee disclosure statements and 35% of renewal notices required to be provided by law weren’t given to clients, and more than half of the licensees didn’t have effective processes to remind them when renewal notices are due or to turn off ongoing fees.
Fee disclosure statements were introduced as part of the Future of Financial Advice reforms to protect consumers. They are provided every year, and a renewal notice every two years.
ASIC Commissioner Danielle Press says the results suggest this may be an industry-wide problem.
“This is a timely reminder that while disclosure alone is not enough as a consumer protection mechanism, transparent and timely disclosure still has an important role to play,” she said.
ASIC expects the licensees to remediate affected clients. It started the review after it received many breach reports from licensees on the issue. It is also investigating several other licensees for potential breaches of the obligations.