Treasury is currently looking for an appropriate way to make the Future of Financial Advice reform of opt-in advice work, officials told delegates at the Association of Financial Advisers (AFA) conference on the Gold Coast.
“We are looking at all the practicalities around opt-in, all the issues around forms, and in what way can a client indicate to you that they want to keep going – and it doesn’t necessarily have to be about lots of forms. There are others ways of doing this,” Treasury corporations and financial services general manager Geoff Miller said.
“We are talking to various people about the best way and the cheapest way and the easiest way of making that happen.
“So for the time being we’re looking for a way to make opt-in work, but we’re not dismissing the issues that industry is raising with us about opt-in and we’re obviously telling government about all those issues.”
Treasury’s Richard Sandlant said they were talking to a range of industry participants in the financial planning industry, including small boutique licensees.
“If we introduce a requirement that adds red tape to the administrative costs and requires you to produce additional pieces of paper and chase after clients there’s a cost attached to that, but we’re very conscious of that – we don’t want to over-engineer,” he said.
“What we’re hearing from boutique and small practitioners about opt-in … is that opt-in is less of a problem for their A or B clients, because they have more best practice relationships with these clients as they’re seeing the client maybe four times or more a year.”
However, Sandlant raised an issue around those clients that advisers didn’t have regular contact with.
“It’s hard to imagine how an adviser can be providing a valuable service and a client relationship if they’re not in contact with the client frequently, because then you don’t know about the changes that may have taken place in the family or the circumstances,” he said.
In response, AFA GenXt chair Brad Fox drew on an analogy. “If you have a business premises you are happy to pay for an alarm even when it doesn’t go off, because nothing has gone wrong. Isn’t that what an ongoing commission is on insurance?”
“You pay for the adviser to be there when the alarm goes off and yet you’ve got to have some contact to make sure the insurance is appropriate, but that’s not necessarily a once a year or twice a year conversation.”
