Check SoAs along with consent forms, regulators tell trustees
ASIC’s Danielle Press (left) and APRA’s Helen Rowell
ASIC and APRA urged administrators not to rely solely on the signed consent forms that counselors must provide as of July 1, but to keep an eye on notice statements and related documents in the part of their “director oversight practices” to ensure fee deductions are appropriate.
Just hours before legislation went into effect requiring trustees to receive a copy of client informed consent to deduct super account advisory fees, regulators sent a joint letter telling trustees to avoid to “rely too much on the consent of the members”.
“Instead, the use of consent should be combined with other administrator oversight practices, particularly proactive reviews of a sample of Notice Statements (SOA) and / or related documents to prove provision. services, either in the event of suspected misconduct, or as part of a regular review, ”the letter said.
“While the written consent of members shows that the charge was properly incurred, SOA reviews and other documents for a sample of members provide additional assurance that the expected services have been provided in respect of these charges. “
The joint letter is signed by APRA Vice President Helen Rowell and ASIC Commissioner Danielle Press.
In a move that won’t do much to instill confidence, the exhortation from regulators came with a warning not to take advisers at their word.
“There are limitations to reliance on certificates from financial advisers or advisory licensees that the services have been provided due to the potential for conflicts of interest, and therefore cannot be relied on. “
Regulators justified the directive by saying it observed a wide range of practices used by trustees to determine whether members had given consent for fees to be deducted, as part of a 2019 review of supervision of trustees.
“Our review identified a wide range of practices with respect to the extent of the use of consents and certificates, ranging from some trustees relying solely on certificates from financial advisers indicating that advice has been provided, to others who will not pay financial advisers without clear proof of the member. consent, ”the letter reads.
Industry super funds like Aussie Super, Sunsuper and Hostplus have been increasingly asking advisers for copies of advisory documents since the Hayne Royal Commission, according to fiduciary experts.
This practice has the potential to raise concerns about confidentiality and disclosure.
If the funds did not include a consent for advisers to provide clients’ SoA in the original fund request form, it will need to be sought. Even with permission, the question remains for advisers: How much information is it safe to provide?
“It depends on what has been agreed between the client and the advisor,” explains Jonathan Steffanoni, partner at the consulting firm QMV.
The concern is more around the disclosure of confidential information than personal information, says Steffanoni.
“What is governed by the Privacy Act is personal information like the client’s name, date of birth, that sort of thing, that is separate from confidential information,” he says. “It is important that the advisor understands all confidentiality agreements in place with his clients and ensures that they adhere to them.
According to Simon Carrodus, partner of The Fold Legal, the practice of asking for SoAs dates back to the single purpose test. After the royal commission, the super funds wanted to make sure that the fees that came out of them were tied to super tips.
Still, administrators generally shouldn’t really need to review SOA as a whole, he says.
“What trustees need to check is the name of the advisor, the name of the client and the scope of the advice,” Carrodus continues. “This information will usually be contained in the first two or three pages. The rest of the SOA can be deleted or redacted. Administrators don’t need to see the entire SOA.