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Are you ready for advice fee consent reforms?
Are you ready for advice fee consent reforms?
This month the Financial Sector Reform (Hayne Royal Commission Response No. 2) Bill 2020 was officially introduced and read in Parliament.
At the same time we announced a January 2021 go-live for phase one of our blockchain-based infrastructure-as-a-service supporting the wealth industry to manage new advice fee consent requirements.
When it comes to advice fee consent, we have been working with the industry to support a response to these proposed changes for some time.
What’s in the legislation?
From our reading of the legislation tabled, we note:
- The changes will come into effect from 1 July 2021
- Fee Disclosure Statements will be required to be both retrospective and forward looking
- Opt-in renewal will become an annual process
- Advisers will be required to obtain written consent before fees under an ongoing arrangement can be deducted from a client’s account
- Where the account to be debited is through a third-party account provider, the fee recipient must have provided a copy of that consent to the third party prior to, or as part of, arranging the deduction.
How should the industry respond?
The infrastructure-as-a-service model we’ve built with the industry allows advice practices and their technology providers to securely send data and fee consent forms to platform providers as well as manage return responses with any industry participant that implements the service.
We’ve brought together a consortium of players from across the licensee and product provider communities to agree on an industry standard. We then designed our solution in collaboration with the industry, leveraging blockchain technology to authenticate agreement at each and every stage of the value chain. This will drive vastly better efficiencies than the current model.
Are you ready?
With the legislation expected to pass into law early next year, advice firms and product providers need to ensure they are ready to manage the post-Royal Commission reforms ahead of the July 2021 effective date. It’s also crucial this change is managed appropriately to drive greater efficiency, rather than become an impost on the industry and its clients.
Phase one of the industry-standard solution we’ve built will be delivered in January 2021. This will see Iress’ Xplan become the first to use this infrastructure to enable licensees to manage their obligations and capture fee consent data for ongoing service clients.
Towards the end of Q1 2021 this will be automated to include guided journeys for clients through Xplan’s client engagement portal, the ability to enable bulk activation of digital signatures and for clients to digitally sign once for multiple documents.
Balancing reform with sustainability
What we’ve built is both advice software and platform provider agnostic. We encourage all parties - licensees, product providers and other advice software providers - to join with us in creating a system which allows for industry-wide consistency and standardisation. One which drives efficiencies and cost reductions, while meeting the demand for greater accountability and transparency in the advice process.
Michael Blomfield, chief commercial officer, Iress
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