Measures concerning the payment of fees associated with financial advice provisions have received Royal Assent in Australia, and will take effect on 1 Jul 2021. Act No. 19 responds to recommendations published in the Financial Services Royal Commission’s report, including the annual renewal and payment for financial advice, disclosure of lack of independence of financial advisers, no deduction of ongoing advice fees from MySuper accounts, and restrictions on deducting advice fees from Choice Super accounts.
Financial advisers who receive fees under ongoing fee arrangements will have to provide clients an annual document that outlines the fees charged and the services to be provided during the following 12-month period. Advisers will have to obtain their client’s written consent prior to deducting fees. Some transitional arrangement will apply until 30 Jun 2022 for ongoing fee arrangements in force immediately before 1 Jul 2021.
Financial services licensees or authorized representatives who provide personal advice to retail clients must provide written disclosure of lack of independence. Financial Services Guides that are given to new clients on or after 1 Jul 2021 must include a lack of independence statement. A transitional rule applies to Financial Services Guides given to clients before 1 Jul 2021 for financial services to be provided on or after 1 Jul 2021.
Superannuation members will have greater protection from paying fees where no service is provided to them. The transparency of advice fees will be increased and the payment of ongoing advice fees for MySuper products prohibited. A superannuation trustee will be allowed to charge fees to a member only if certain criteria are met, and cannot charge fees under an ongoing fee arrangement for MySuper products. A 12-month transitional provision will apply to arrangements entered into before 1 Jul 2021.