Consumer trust isn’t something to be taken for granted, but reports from the UK, US and here at home are all pointing towards an uplift in trust levels around financial advice, which can only be a welcome development.
There are significant tailwinds behind the financial advice industry at the moment, but some major obstacles are still preventing advice practices from taking advantage of surging demand according to a new study from CFS.
AFCA confirms a new user pays model to cover costs
Following on from last week’s article titled, ‘Ombudsman seeks to simplify complaint treatment,’ The Australian Financial Complaints Authority (AFCA) today confirmed it will put into place a ‘user-pays’ funding model that is fair, transparent and equitable.
The AFCA board approved the new funding model that will effectively charge financial advisory firms the same or a lower fee, from 1 July this year.
The new fee model will include a single registration fee, a simplified complaints fee structure and five free complaints a year.
“Under the new model, which includes a single registration fee, around 90 per cent of members of the national ombudsman scheme will see a positive or neutral impact on total fees, while the remaining 10 per cent are expected to see an increase in costs which AFCA said this more accurately and fairly reflects their usage.”
All members will receive five free complaints per year. AFCA will charge an external dispute resolution scheme annual registration fee, of $375.55 for the coming financial year. The superannuation levy has been removed and super funds have been brought under the same fee structure as other scheme members.
The vast majority of financial advice firms will pay the above fee, whilst a small number of heavy impact firms will pay a fee that is adjusted to reflect volume. No fee would be charged for complaints found outside of AFCA’s jurisdiction and the five annual free complaints would be excluded when AFCA calculated the user charge for frequent users of the service. There would also be a single registration fee and simplified complaint fee structure.
Feedback for the fee model has been mainly positive. AFCA consulted with peak bodies and members to finalise an appropriate fee model that covers costs.
