‘Let’s make it simpler’: Expert calls for streamlined fee consent

BT head of financial literacy and advocacy, Bryan Ashenden, has echoed the sentiments of a number of professional associations that the current fee consent process is unnecessarily costly and time consuming.

Speaking at the SMSF Association National Conference in Brisbane last week, Mr Ashenden discussed industry concerns on the proposed process regarding fee consent forms that was laid out by the government last year.

“The draft legislation that came out last year was intended to give back clarity, but it probably didn’t do it in the way that was intended,” Mr Ashenden said.

“It would mean every time you wanted to charge a fee to a client’s account, you would have to provide a copy of the SOA, redacted to deal with any of the privacy issues that are there, and provide it to superfund.

“The second part, we’d need to make sure that they are appropriately resourced and have the right people with the right expertise to review that, to determine if the fee was appropriate for what it was, before they will then decide to actually allow it to happen.”

Referring to the regulatory changes made within the financial services industry since the royal commission and the Quality of Advice Review (QAR), Mr Ashenden said that if the industry is at a point where advisers are trusted to conduct themselves appropriately, simplifying the fee consent process should be possible.

“Can we not allow trustees to rely almost on some form of attestation that an adviser gives, to say, ‘This fee is about the client’s interest in that fund, this fee is in relation to personal advice, and this fee is appropriate in relation to that’?” Mr Ashenden said.

“The licensee who has authorised that adviser has responsibilities to make sure the adviser is doing the same thing, as does the adviser anyway, under a code of ethics.

“So, why do we need to introduce an extra layer?”

Speaking with ifa, Mr Ashenden said that the work has been done to bring the industry to a higher standard and now is the time to trust that advisers are doing the right thing, furthering his earlier point.

“Let’s recognise the professionalisation that now exists within financial advice,” Mr Ashenden said.

“We’ve put in place all of these things; the education requirements, we’ve got the code of ethics, all of these things are in place and have been in place now for a period of time.

“Surely, we’re now at that time where you should be about to go, ‘We’ve changed it, we should get to place reliance on it’.”

Taking this point further, Mr Ashenden said that product providers should be playing a very minor role in the fee consent process.

“We’re relying on you to go and do your jobs, and relying on the licensees that you authorise to do their jobs, to make sure it’s all correct,” Mr Ashenden said.

“It’s not for us to second-guess that adviser/client relationship. Let’s just implement.”

Earlier in February, Treasury kicked off a series of roundtable discussions with advice associations and other stakeholders to discuss the QAR-related reform proposals ahead of legislative reform.

Mr Ashenden said if he were present for the roundtable discussions, fee consent forms would be the first issue he would address.

“The most urgent is the fee consent piece because it’s something that’s already in place now that we should be able to just simplify,” Mr Ashenden said.

“So let’s not complicate things. Let’s make it simpler.

“Let’s go ‘the ongoing service arrangement is between an adviser and the client, so that’s the focus of where that consent process will be’.

“The product providers just implement.”

Advice associations such as the Financial Advice Association Australia (FAAA) and Stockbrokers and Investment Advisers Association (SIAA) and the Association of Independently Owned Financial Professionals (AIOFP) have also called for a removal of the requirement to provide a product issuer with a fee consent form.

“A standardised fee consent form will only deliver productivity benefits if product issuers are required to accept it,” said FAAA chief executive Sarah Abood in a submission to the draft legislation consultation.

“As they have already invested in systems and processes to meet this requirement, it is unlikely that product providers will change their approach without a legislative requirement for them to do so.”

According to the FAAA, the way forward is to either remove the requirement for product issuers to verify client consent for every account or require product issuers to accept the standard form as evidence of client consent.

Ms Abood said the FAAA’s preferred method would be the first of these options.