The Australian Securities & Investments Commission (ASIC) is proposing reforms designed to address a royal commission’s findings that many clients were charged ongoing fees for financial advice they never received.
The country’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry uncovered, among other things, three major problems in the financial advice industry: conflicts of interest that led to unsuitable advice; firms charging fees for services that were not provided; and the erosion of investors’ accounts by inappropriate advice fees.
The ASIC’s proposals to address these issues include requirements that firms obtain written consent from clients for fee arrangements and that firms provide written disclosure of their lack of independence.
The consultation also seeks feedback on issues involving ongoing fee arrangements, including renewal notice requirements and fee disclosure statements.
The ASIC is also proposing to update its guidance in this area by mid-2020.
The consultation is open until April 7, with new measures to take effect on July 1.
“The government proposes to introduce legislation implementing the Royal Commission recommendations from July 1,” said ASIC commissioner Danielle Press. “We are consulting on our proposals now to help provide certainty to the industry as it prepares for the new requirements.”