The act was passed by the Parliament to give effect to recommendations by the financial services royal commission (royal commission). 

In finalising the legislative instruments, ASIC said it took into account industry feedback on the proposals in Consultation Paper 329 Implementing the Royal Commission Recommendations: Advice fee consents and independence disclosure (CP 329), which was released in March 2020.

The regulator said it considers that the legislative instruments strike an appropriate balance between minimising regulatory burden for the financial advice and superannuation industries and ensuring that consumers receive the information that is relevant to them.

“ASIC does not have powers to provide exemptions from the new advice fee consents and independence disclosure requirements or to modify how the requirements apply,” ASIC said.

“ASIC can only specify requirements for the advice fee consents and the form of the disclosure of lack of independence.”

To help licensees comply with the new requirements, ASIC said it has published examples of the written consent forms. 

“Additional information to help superannuation trustees comply with their new obligations will be provided in a follow-up to the April 2019 joint letter from ASIC and APRA and will be released in the next few months,” it said.

ASIC also noted it released Report 687, which highlights the key issues raised in submissions to ASIC on CP 329 and details ASIC’s responses on those issues. 

Previously, the royal commission final report made several recommendations to address consumer harm resulting from fees for no service, as well as the erosion of superannuation balance through inappropriate advice fees, and poor advice from financial advisers whose duty to their client conflicts with their own interests. 

To address these issues, ASIC said the royal commission made recommendations to introduce annual renewal of ongoing fee arrangements and a requirement that AFS licensees cannot deduct ongoing fees without the client’s consent.

This would also include introducing a requirement for AFS licensees to disclose their lack of independence where they would contravene s923A of the Corporations Act if they used the restricted terms “independent”, “unbiased” and “impartial” and limit advice fee deductions from superannuation choice accounts.

The government then implemented Royal Commission Recommendations 2.1, 2.2 and 3.3 in the Financial Sector Reform (Hayne Royal Commission Response No. 2) Act 2021. The legislation received royal assent on 2 March 2021.

The regulator noted it will also consider updating existing regulatory guidance to reflect the new requirements in the act before the reforms commence for new fee arrangements and the lack of disclosure statement on 1 July 2021.