How will non-ongoing fee consents apply under DBFO?

The process of superannuation trustees approving the deduction of financial advice fees from member accounts became a hot button issue throughout the consultation process for the first tranche of Delivering Better Financial Outcomes (DBFO) reforms.

Chief among concerns from advice professionals and industry stakeholders was the onerous obligations that changes to section 99FA of the SIS Act appeared to impose, despite reassurances from government and the regulators that little would change.

However, following a number of challenges, a Senate committee hearing, and amendments from the minister, Treasury Laws Amendments (Delivering Better Financial Outcomes and Other Measures) Act 2024 finally received royal assent in July.

Just days after this occurred, the Australian Securities and Investments Commission (ASIC) began outlining the obligations for advisers to comply with the act.

At the time, the regulator did not provide any updated information on the deduction of advice fees from superannuation accounts. Now, it has provided updates to both Information Sheet 280 and 287, which cover the transitional and ongoing periods, respectively.

Namely, INFO 287 applies to written requests or consents to charge fees under non-ongoing fee arrangements:

• Entered into on or after 10 January 2025 (start day).
• Already in force on the start day, after the arrangement is terminated, renewed or varied, or from 12 months after the start day (whichever is earlier).

“Superannuation trustees must have a member’s written request or consent, or a copy of the request or consent, before they charge advice fees (non-ongoing fees) under an arrangement that is not an ongoing fee arrangement (non-ongoing fee arrangement) to a member’s superannuation account,” ASIC said.

“General advice costs cannot be charged to a member’s superannuation account under a fee arrangement (see Question 4) and the personal advice costs charged need to be consistent with the sole purpose test.”

The question that ASIC refers to is around what qualifies as a personal advice cost. According to the regulator, a newsletter to clients could fall under that definition.

“ASIC recognises that the provision of personal advice may involve a package of services, such as assistance with advice implementation and a regular newsletter on investments,” it said.

“ASIC considers costs to be personal advice costs if there is a direct nexus between them and the personal advice provided to a member. For example, a regular newsletter on investments that is only provided to current personal advice clients is likely to fall within this category.

“We expect advisers to exercise judgement and keep records of how they determine what is a personal advice cost.”

While many of the details around the specifics of a fee consent form are similar to the previous rules, ASIC noted that the minister “has the power to approve a form for the written request or consent”, however it added that “no form has currently been approved for this purpose”.

Additionally, while the stoush over whether super funds would be required to check statements of advice (SOA) before deducting advice fees ended with assurance that this would not be a blanket requirement and could be done on a risk-based basis, ASIC has explained that a trustee is still not required to fulfil advice fee requests.

“A superannuation trustee is not required to charge a fee to a member’s superannuation account under a non-ongoing fee arrangement when provided with the member’s written request or consent, or a copy of the request or consent, even if all the requirements in section 99FA(1) of the SIS Act are met,” it said.

“This is because superannuation trustees may decide whether to charge the non-ongoing fee to the member’s superannuation account.”

The regulator also reiterated that the written request or consent may be given electronically and that the member can also sign the written request or consent electronically.