The Australian Securities and Investments Commission has released an information sheet (INFO 256) about 'ongoing' fee arrangements for the consumption of financial advisors and advice licensees that provide retail clients with personal advice. This is in line with recent changes to the law that will take effect on 1 July.

INFO 256 answers frequently asked questions about the obligations that apply to the recipients of fees in relation to continuous-fee arrangements and the disclosures that they must make to customers about fees. It will replace Regulatory Guide 245, which also deals with disclosures about fees.

ASIC has also released consequential amendments to Regulatory Guide 175 on the subject of licensing for financial-product advisors. This covers both firms' conduct and disclosures. The updated RG 175 is in line with new advice-related obligations imposed on firms by the Corporations Act 2001 at the behest of the Financial Services Royal Commission. It includes an example of a "lack of independence disclosure statement" which, ASIC hopes, will help advisors comply with ASIC's Corporations (Disclosure of Lack of Independence) Instrument 2021/125.

As readers might remember, some time ago Australia's Financial Services Royal Commission exposed the scandal of "fees for no service" and unearthed many instances of poor advice that occurred because financial advisors' interests conflicted with those of their customers. To deal with these problems, the commission asked the Government to:

• introduce an annual renewal of continuous fee arrangements and stop financial firms from deducting continuous ('ongoing') fees without their clients' consent (Recommendation 2.1);
• require firms to disclose any "lack of independence" (a statutory phrase) that they might have in contravention of s923A Corporations Act if they were to use the restricted terms 'independent,' 'unbiased' and 'impartial' (Recommendation 2.2); and
• limit advice-fee deductions from "superannuation choice" accounts (Recommendation 3.3).

The Government implemented all three recommendations in the Financial Sector Reform (Hayne Royal Commission Response No 2) Act 2021. The legislation received Royal Assent on 2 March. On 25 March, ASIC augmented this with three legislative instruments. On 13 May, the Government promulgated the Financial Sector Reform (Hayne Royal Commission Response — Advice Fees) Regulations 2021.

On 11 June, the Government also announced that it was going to issue a new regulation to tell advisors how to "provide fee-disclosure statements" (i.e. how to inform customers about fees) during the transitional year.

ASIC will update INFO 256 to give effect to that new regulation after it has appeared and will also amend other regulatory guidelines.