Lack of consensus hampering fee consent form development

Ongoing advice fee consent forms were a hot topic during consultation on the first tranche of the Delivering Better Financial Outcomes (DBFO) reforms, with advice associations largely pushing for the removal of consent forms entirely.

While this didn’t eventuate, the next best option did – sort of.

Under the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Act 2024, which was passed in July, the mandatory content for ongoing fee consents was amended and replaced the Australian Securities and Investments Commission’s ability to prescribe this content with ministerial ability.

Broadly, as Treasury explained in in a letter to stakeholders in October, this means that the minister has the power to approve a form for “giving consent to enter into or renew an ongoing fee arrangement or authorise the deduction of ongoing fees”.

Where this measure falls short is that a mandated form is yet to be delivered. Indeed, Treasury conceded that it has no chance of being in place, nor is it the department’s “intention to finalise the design of a form” ahead of the new arrangements commencing on 10 January 2025.

“Transitional arrangements and appropriate timing for implementation will form part of the design considerations,” Treasury said.

The department also stressed that, in order for the government to approve a form, there needs to be a “broad consensus from stakeholders” and it must be “clear that efficiency benefits will be achieved”.

This is something with which the Association of Superannuation Funds of Australia (ASFA) has taken particular issue in a submission to the consultation on the forms.

“From the outset, ASFA wishes to state as clearly as we can that our members do not believe the two necessary preconditions outlined by Treasury above have been met,” it said.

“That is – we do not believe there is broad consensus for the approval of such a form, neither do we believe it is clear efficiency benefits will be achieved.”

According to the submission, ASFA members have raised a number of issues that they believe disqualifies a standardised form from meeting Treasury’s “stated necessary preconditions”.

“For any form to be effective in this space, it would have to have the unanimous support not only of the superannuation sector, but of the professional financial advice sector. Such consensus does not exist presently,” ASFA said.

The submission also argued that, given the “multiplicity of obligations” already placed upon financial advisers, additional mandatory requirements would actually impede efficiency. In a similar vein, ASFA said supplementing the “already exhaustive and clear” requirements in the legislation would “just be a repetition of existing requirements which are already in legislation” at best.

“The multitude of variables that need to be addressed may make it challenging for a single prescribed form mandated by the government to cover these variables,” it said.

“For example, product providers will have a different subset of possible fees that trustees will allow, a variety of fee caps that will apply and potentially different opinions around the ability [and consent required] to transfer fees to a new adviser/AFSL if the existing adviser moves.”

In addition to privacy concerns where fees are to be deducted from more than one product provider, the submission also said there are “considerations” in relation to how a standardised form might address “more complex situations where advice is being provided to a couple rather than an individual”.

“In the absence of Treasury’s own stated necessary preconditions for issuing a form being met, ASFA does not support the issuing of a standardised form at this time,” it said.