The Financial Planning Association is warning advisers to prepare for the widely despised opt-in provision – just in case.
The Coalition has indicated it will retract opt-in – where every two years advisers are required to request clients to renew their advice agreements if clients are paying ongoing fees.
But advisers should have a system in place to comply with opt-in, in the “unlikely event” the government does not repeal it – although do not spend a lot of money doing so, FPA chief executive Mark Rantall said at a media roundtable yesterday.
As an alternative, ASIC has been given the power to exempt advisers from the opt-in provisions where they are bound by a code of conduct which achieves the same outcome.
FPA has submitted such a code to ASIC and is waiting to hear back, although no policy is likely to go ahead until the government makes its next move.
Opt-in is a redundant provision because advisers have a best interest duty and are required to submit fee disclosure statements, said Rantall.
“Adding opt-in in there was overkill to what had already been dealt with from a consumers’ perspective. We never supported opt-in, and to add that additional piece of red tape and compliance burden on advisers is inappropriate when they are already drowning us in a tsunami of legislative change.”
Rantall also pointed out the second issue is consumers could “find themselves without advice whenever they need it most”, because if they neglect to see the notice or forget to reply, the adviser has to discontinue advice.
“It’s the government interfering with the relationship between the professional and client just one step too far… Clients are already drowning under paperwork.”
But as to other FOFA requirements?
“Everybody should be operating under the current law. The law is the law,” Rantall said firmly. “The law has not been changed as we sit here today and you should be meeting your requirements under that law.”
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