Earlier this month the Australian Securities and Investments Commission (ASIC) announced the investigation of substantial breaches with respect to Fee Disclosure Statements (FDS) and renewal notice administration across a range of small and large licensees.  Clearly, this was triggered by the unearthly revelations of clients being charged “fee for no service” during the Royal Commission hearings.

It’s all about Client Engagement, not Compliance!


At face value, this seems like a compliance exercise for which practices need to provide evidence of having complied with the regulatory requirements.  However, the underlying motive is to ensure that Australians who have entrusted their financial wellbeing to advisers, are protected. In fact, the source guide RG 245.1 states – “The FDS obligations are designed to help clients ascertain whether they are receiving a service from their fee recipient that is commensurate with the ongoing fees they are paying.”

ASIC notes that it will focus on a few areas including the content of the FDS to ensure it is an accurate representation of – the services provided and the fees associated with these services.  I would be surprised if most practices are not using a standard template provided by their licensee or one developed inhouse. While there could be room for improvement in these templates, my understanding, having spoken to a few advisers is that the content per se isn’t the major issue.

However, if ASIC has to initiate an investigation, advisers should have failed to provide these documents to their clients.  I would argue that most advisers would do this anyway during their annual review.  Good advisers provide a valuable service to clients and this is part and parcel of having a professional and transparent relationship.   Therefore, not providing the FDS or not doing so in a timely manner could be an act of omission rather than a deliberate act.

Make the client your Compliance Officer.  This will provide your business with the right moral compass.

Where most advisers come undone is in the operational complexity around delivering these documents within the time frame and the ability to “prove” that their clients are in receipt of these documents.

Technology can reduce your compliance overheads drastically

This is where online platforms such as Bondle can be of enormous value to financial advisers. According to RG 245.43, these documents can be provided to clients through different mediums such as hard copy, emails, facsimile, an online portal, etc.,  Arguably, the most prominent document distribution channel today is email. Did you know that research1 indicates an average office worker / professional receives 121 emails per day, of which close to 50% are spam?  The chances of your email drowning in your clients’ ever growing inbox is high. In addition, this is a medium that increases compliance burden when your firm get audited no matter how many rules you have set up to auto file the emails in your X-systems.

Bondle is a secure collaboration platform designed specifically to help advisers engage better with their clients.  Through this online portal, you have the ability to load the documents and manage communications in a central location and your clients can view / respond at will.  Moreover, Bondle has a unique feature that provides you with evidence that the document was viewed / downloaded providing transparency to both parties. Your client can now indicate their response (such as Authority to Proceed, Opt-ins, etc.,), via the platform, which is captured in our fully automated audit history.  Finally, you can also set a task to send out the next years documents and Bondle will remind you in advance.

Bondle not only provides transparency to you and your clients, it will significantly reduce the cost and time burden should you be audited, since showcasing your compliant actions will be as simple as clicking a button.  This means you and your team can focus on what drives you – delivering superior service and outcomes to your clients!

Source:

  1. https://www.campaignmonitor.com/blog/email-marketing/2018/03/shocking-truth-about-how-many-emails-sent/