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Delivering better outcomes to members

In April 2019, APRA and ASIC issued a joint letter to all Registrable Superannuation Entity (RSE) licensees outlining their expectations of trustees to ensure they have appropriate oversight of advice fees and other charges being deducted from members’ accounts. The letter also explains that best practice is to obtain effective consumer authorisation to charge the fees on a regular basis.

Please note. The treasurer has announced a 6-month deferment of the implementation of the Royal Commission legislation. This would mean no changes until Jan 21 at the earliest. We’ll keep you informed as things progress.

Areas of Focus

  • Compliance with the super sole purpose test (SIS Act 1993)
    • Ensuring advice fees deducted from a member’s account relate only to advice provided for their superannuation with our fund and insurance held though our super fund (and not for advice relating to investments outside of superannuation or for another person).
  • Ensuring fee deductions are in the interest of members
    • To ensure we continue to meet our trustee obligations, we’re strengthening our process. From late 2019, we began progressively contacting members of our super and pension funds who have paid ongoing Adviser Services Fees that commenced prior to 1 July 2018, and requesting they confirm their agreement to continue deducting these fees from their account.  Read our initial communicationfollow up communication and FAQs.
  • What you need to know
    • In December 2019, a list of your clients where we required an updated consent to continue deducting the fees from their account was made available via FirstNet Adviser. We provided this list to you so you know which of your clients will likely be required to provide an updated consent, allowing you time to proactively request this authority from your clients. We were to start contacting members in groups from February 2020, but this was put on hold due to Covoid-19. Advisers impacted were communicated with directly and will continue to be updated.
    • We won’t request reauthorisation from members who have established or reconfirmed an ongoing Adviser Service Fee after 1 July 2018.
    • If we receive a completed Adviser Service Fee and Adviser Trail Rebate Nomination form or the Reauthorisation of Ongoing Advice Fees form from the member, this will be sufficient confirmation that the member is aware of the advice fees they pay from their account and we won’t seek an additional authorisation at this time.
    • We’ll contact you if a new authorisation is required for any of your clients and help you keep track of this in FirstNet Adviser.

Things to consider

Many advisers have already commenced the process to seek an updated consent from their client to continue deducting advice fees from their account. You may also like to take the opportunity to manage the process early and proactively seek an updated consent from your clients using one of the above forms.

The list we’ve provided includes the Adviser Service Fee effective date and you should prioritise clients with the oldest effective date, as these clients will be amongst the first that we will be contacting.

 

What we’ll send to members who commenced paying fees prior to 1 July 2018

As we contact a group of members, they will receive a letter, authority form and information sheet.
They’ll have 90 days (with reminders at 30 and 60 days) from the date of the letter to return the enclosed authority form, providing their written consent for the fees to continue to be deducted from their account. We’ve included a reply paid envelope to make it easy for your client to return this form directly to us.

Like to know more?

To ensure that you’re prepared for the upcoming communications to your clients, we’ve prepared a quick reference guide. If you have any questions, please speak to your Local Business Development team or call Adviser Services on 13 18 36 (Monday - Friday, 8am - 7pm Sydney time).

Disclaimer

Adviser Use Only

Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (Colonial First State) is the issuer of FirstChoice Personal Super, FirstChoice Wholesale Personal Super, FirstChoice Pension, FirstChoice Wholesale Pension, FirstChoice Employer Super offered from the Colonial First State FirstChoice Superannuation Trust ABN 26 458 298 557. It also issues interests in the Rollover & Superannuation Fund (ROSCO) and Personal Pension Plan (PPP) offered from the Colonial First State Rollover & Superannuation Fund ABN 88 854 638 840. Colonial First State also issues interests in products made available under FirstChoice Investments and FirstChoice Wholesale Investments. Colonial First State is a wholly owned subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124, AFSL 234945 (the Bank). The Bank and its subsidiaries do not guarantee the performance of FirstChoice products or the repayment of capital for your investment.

Colonial First State Custom Solutions is the registered business name of Avanteos Investments Limited ABN 20 096 259 979, AFS Licence 245531 (AIL). AIL is the trustee of the Avanteos Superannuation Trust ABN 38 876 896 681 which includes FirstWrap Plus Super and Pension, and is the operator of The Avanteos Wrap Account Service which includes FirstWrap Plus Investments. AIL is owned ultimately by Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 (the Bank). The Bank and its subsidiaries do not guarantee the performance of AIL products or the repayment of capital by AIL. This is based on the understanding of current regulatory requirements and laws as at December 2019. While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), to the maximum extent permitted by law, no person including Colonial First State or any member of the Commonwealth Bank group of companies, accepts responsibility for any loss suffered by any person arising from reliance on this information. This document contains general information strictly for adviser use only and is not to be handed to any investor. It does not take into account any person’s individual objectives, financial situation, needs or taxation circumstances. You should read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) before making any recommendations. Investors should read the relevant PDS or IDPS Guide before making an investment decision and consider talking to a financial adviser. Investors can obtain FirstChoice PDSs from colonialfirststate.com.au or by calling 13 13 36 and FirstWrap PDSs and IDPSs from their adviser or firstwrap.com.au.

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