The Delivering Better Financial Outcomes (DBFO) legislation received Royal Assent meaning that the FSG changes are now live and the changes to FDS and OFAs will commence on 10 January 2025.
Some last minute changes were slipped in which had us all breathing a sigh of relief! The key changes for our industry include:
Fee deductions from super: maintain the status quo – Last minute changes were made as a result of concerns that the proposed legislation could be interpreted as requiring trustees to assess each piece of advice.
Financial Services Guides (FSGs): common sense prevails – Common sense has prevailed and thankfully changes have been made enabling the ‘website disclosure’ to apply to general as well as personal advice. This means the new FSG process is worth implementing. The goal of the legislation is to give providers flexibility and reduce paperwork for clients who can access up-to-date information online.
Ongoing Service Agreements and Fee Disclosure Statements – As we’ve explained previously, the Bill aims to streamline ongoing fee renewal and consent requirements, including removing the requirement to provide a fee disclosure statement. Key takeaways are;
* Clients must still give written consent annually to renew ongoing fee arrangements.
* The look back FDS will go from 10 January 2025 and there will be a new prescribed form for fee consents and renewals. These can (and hopefully quickly will) be prescribed by the Minister and, if prescribed, need to be used. The client’s written consent must be signed, dated, and retained by the fee recipient.
* Rather than an ‘anniversary date’ determining all timing requirements, the client and fee recipient will be able to agree a ‘reference day’ which can be earlier than the anniversary of the agreement.
* A new consent can be obtained any time during the period starting 60 days before the reference day and 150 days after the reference day.
* A consent can also change the reference day for the next period.
Insurance Commissions – Expanded Informed Consent – the Bill introduces an enhanced informed consent requirement for insurance commissions.
For Kit clients, an update with more detail and analysis on each of these important updates, timing for the introduction of the changes and next steps has been posted in the “News” section of the DCP.