Industry bodies blast ‘unreasonable’ fee consent guidance

The letter to trustees on 30 June from ASIC and APRA called out reliance on adviser attestations and basic client consent paperwork as being insufficient to determine if a member had consented to advice fees being deducted from their fund, and said trustees should undertake “further oversight practices” such as checking an adviser’s SOA.

AFA acting chief executive Phil Anderson said encouraging such practices by trustees was “unreasonable” and could amount to a breach of the Privacy Act.

“An SOA is an agreement between a client and their financial adviser and contains a great deal of personal information about the client that should not be shared with trustees,” Mr Anderson said.

“Not only does this requirement for trustees ignore the Privacy Act obligations, therefore putting clients at risk, it is also excessive and will add to the already significant administrative burden on financial advisers.” 

He pointed out that when questioned by Liberal senator Slade Brockman earlier in June on reports of trustees asking to check SOAs, APRA had said it “had not been prescriptive in describing” how advice client consents should be verified.

“In less than a month, APRA have gone from describing the situation in terms that they have not been prescriptive, to specifically stating that they have had expectations that trustees review SOAs,” Mr Anderson said.

“The AFA is calling for financial advisers and superannuation funds to argue against this excessive, unnecessary, and costly interference by the regulators.”

AIOFP executive director Peter Johnston also flagged the association had written to the prime minister and chairs of ASIC and APRA outlining its concerns with the regulators’ directive.

“Trustees are not licensed to assess or give advice and will be acting outside of corporations law. They will be accessing confidential consumer information in breach of the privacy laws,” Mr Johnston said.

He added that the additional administration requirements on trustees as a result of the guidance would drive up costs for fund members.

“ASIC and APRA have written to all trustees instructing them to effectively distrust any information advisers put forward and perform their own assessment of the advice by requesting the SOA, a comprehensive document paid for by the consumer,” Mr Johnston said.

“The advice community has become frustrated with this continued fabrication of negativity about their profession and challenge ASIC to produce the necessary information to justify their position on this matter.”