Currently, advisers have a two-year period to renew client fee arrangements.

“The FPA agrees financial advisers should be required to periodically review and renew ongoing fee arrangements, document them and seek the consent of their clients for any fees to be charged,” said FPA chief executive Dante De Gori.

“However, we believe requiring this to be conducted annually without any modification to the laws around when an ongoing fee arrangement can be renewed rather than reset, adds considerable time and cost pressures on financial planning practices. It is not practical and will be too much of an administrative burden for many practices.”

The FPA noted it would remain cautious about the impact that implementing the recommendations under the legislation would have on advisers.

In particular, it warned of the further increase of the administration burden on financial planners while servicing their clients.

Mr De Gori said it is committed to helping members prepare and comply with the new legislation.

“The most important thing for financial planners is to understand the impact this will have on their business and to start planning how they can efficiently and effectively operate their business in this new legislative environment,” he said.

“This legislation will require business practice changes, administration changes, disclosure changes and financial planners need to be thinking about this sooner rather than later.”

What the government’s draft legislation will address

The government’s new draft legislation that will implement the following recommendations from the final report of the Hayne commission:

• Recommendation 1.15 on enforceable code provisions
• Recommendation 2.1 on annual renewal and payment of financial advice fees
• Recommendation 2.2 on disclosure of a lack of independence from advisers on why they are not independent, impartial and unbiased
• Recommendation 3.1 on prohibiting superannuation trustees from having duties other than those arising from or in the course of the performance of their duties as a trustee of a superannuation fund
• Recommendation 3.2 on removing a superannuation trustee’s capacity to charge advice fees from MySuper products
• Recommendation 3.3 on removing the capacity of a superannuation trustee to charge advice fees to a member unless certain conditions are satisfied, including the new requirements outlined in relation to Recommendation 2.1 for ongoing fee arrangements
• Recommendation 3.4 on prohibiting the hawking of superannuation products
• Recommendation 4.1 on prohibiting the hawking of insurance products
• Recommendation 4.3 on establishing an industry-wide deferred sales model for the sale of add-on insurance products
• Recommendations 4.4 on providing ASIC with the power to impose a cap on commissions for add-on insurance products and insurance-like products.
• Recommendation 4.5 on implementing a duty to take reasonable care not to make a misrepresentation to an insurer for consumer insurance contracts.
• Recommendation 4.6 on adding an extra condition for life insurers to show they would not have entered into a contract on any terms if they had known about the unintentional misrepresentation or non-disclosure.
• Additional commitments in response to Recommendation 4.2 to restrict use of the term “insurer” and “insurance” if the product or service is not insurance in circumstances where it is likely that the product or service could mistakenly be believed to be insurance.

In addition, the government said it would move to strengthen and enhance the regulatory regimes for ASIC and APRA by implementing: