Government provides relief for financial advisers to meet ongoing disclosure obligations

Just over a week after ASIC chair Joe Longo was questioned about “regulatory overload’ in the sector, the Morrison government on Friday announced a new regulation that will “lower compliance costs for generating fee disclosure statements in the transition year, streamlining processes for licensees and advisers”.

From 1 July, advisers are required to report the fees paid under an ongoing fee arrangement and provide a reasonable estimate of the fees that will be paid over the following 12 months.

Advisers can issue the fee disclosure statement anytime between 1 July 2021 and 30 June next year.

“To address circumstances where advisers are unable to report actual fees in the required time, the government will make a regulation to allow financial advisers to report an estimate of fees for the 60 days prior to the statement being issued,” a statement issued by the Treasury read.

“The estimate would be reported alongside the actual fees charged for the remainder of the previous 12 months.

“This regulation will only apply for the transition period. After the transition period, financial advisers will have 60 days from the anniversary date to issue their fee disclosure statements which must report all fees paid in the previous 12 months.

“The Government will continue to work constructively with industry to provide an enhanced regulatory framework for financial advice that reduces costly red tape on industry and maximises outcomes for consumers.”

The government’s announcement follows a study conducted by life insurer AIA Australia with Deakin University and peak performance researcher Dr Adam Fraser in March that found that regulatory change was the top contributor to stress and anxiety for advisers, with 82 per cent saying they found current compliance demands highly or very highly stressful.

A further 10 per cent said they found regulation moderately stressful, meaning over 90 per cent of practitioners found compliance stressful to some degree.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.