Nina Kazmierczak- Partner and Principal Adviser
Sovereign Wealth Partners
The financial advice sector has been undergoing a period of significant change since the completion of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (FSRC).
The Financial Services Royal Commission Final Report made a number of recommendations to address consumer harm resulting from fees for no service and poor advice from financial advisers, whose duty to their client conflicts with their own interests.
To address these issues, the Royal Commission made several recommendations which the Government has since implemented via legislation which received Royal Assent in March 2021.
What has changed- new regulation
On 13 May 2021, the Government announced the Financial Sector Reform (Hayne Royal Commission Response on Advice Fees) Regulations 2021.
From 1 July 2021, financial advisers will be required to report to you the fees paid under an ongoing fee/service arrangement and provide you, our client, with a reasonable estimate of the fees that will be paid in the subsequent 12 months.
In addition to the expansion of disclosures within the Fee Disclosure Statement, which you will be familiar with already, the Government has introduced the need to obtain your signed consent.
What Consent will look like-
Legislated into law is the requirement to obtain your signed consent on-
- The fees and services that you have paid for the past 12 months;
- The fees that you will pay over the coming 12months and the services you are entitled to receive for this fee; and
- Platform consent to have these fees deducted from your account.
This means that you will be required to sign TWO (2) consent forms. One that we will be required to be maintained on file at Sovereign Wealth Partners and another consent form that your platform provider (likely Macquarie or Netwealth) will maintain for their records.
Unfortunately, for privacy reasons, we are unable to amalgamate the two forms into one to save you from multiple signatures and paperwork.
However, for those that have multiple accounts with the one provider, we can consolidate all the accounts onto the one provider form.
Over the next year, the new regime will apply and all clients will need to consent to their ongoing fee arrangements by signing and returning the relevant forms. For practical purposes we will likely combine this with your normal review timetable, although this may not always be the case.
What we need from you-
Please assist us by promptly addressing the paperwork as without your consent we and the your platform provider will cease all fees and our ongoing service to you after a 120 day grace period.
If you have any questions or queries about the information outlined in the new enhanced fee disclosure statement or the process, please reach out and get in touch with your financial adviser as soon as possible.