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April 2, 2013 at 11:40 pm #3023
Is it the case that unless the advice involves a product replacement recommendation, there is no requirement under the Corps Act to disclose the product fees related to the advice (unless associated with the providers remuneration)? If that is the case, is it fine to simply refer the client to a PDS / FSG to wade through and attempt to calculate the fees (think ICRs, tiered admin structures etc)?
Perhaps I’m still in the minority, but I would have thought any client would have an interest in knowing all costs associated with the advice they have received in a simple and easy to understand format, notwithstanding that some of those fees are not paid to the advice provider. Even if there is not a strict legal requirement to disclose product fees, is there a danger that a client could dispute the advice if these fees are not disclosed in an advice document?
I’m interest to hear other member’s views on this issue and also whether the best interest safe harbour possibly changes the position (eg ‘take any other step….’).
JamesApril 15, 2013 at 4:42 am #3169
Advisers must disclose to retail clients remuneration or other benefits that might reasonably be expected to be capable of influencing themselves, their corporate authorised representative (if applicable), the licensee, and other parties. However, you’re correct in saying that there is no specific requirement to include the recommended product fees in the SoA.
As you know, PDSs and FSGs often include examples to illustrate the impact of various fees. Although some disclosure can be ‘incorporated by reference’, statements of advice must still be clear, concise and effective.
ASIC’s interpretation of the new ‘best interests’ provisions requires advisers to help clients to be in a ‘better off’ position. We think a consideration of product fees is a significant component of this process and should be clearly explained.
If you require further information, please don’t hesitate to contact our financial services team.
Author: Paul Derham
Co-contributor: Megan Jaksa