The federal government has laid out its plans for introducing an annual opt-in requirement for financial planners in an attempt to address the mounting confusion in the industry about the application of the new rule.
The proposed opt-in requirement would apply only to new business from 1 July 2012, the government said.
This means financial planners will not be required to systematically work through their client base and contact every existing client as has been previously suggested by industry participants.
"It is new business from 1 July 2012, so it is new products for existing customers or new customers with existing products," a spokesperson for Financial Services, Superannuation and Corporate Law Minister Chris Bowen said.
"They won't need to go through their existing client contract book and go through the time-consuming process of having to go back and look at old clients," the spokesperson said.
The government did explore the possibility of making the annual opt-in requirement applicable to the entire client base, but found this would be unlawful.
"It is partly a constitutional issue that the government has," the spokesperson said.
"If it is an existing contract agreed to today between a client and a financial planner, to suggest that when 1 July 2012 comes around that you can infuse new rights into those contracts ... there is obviously a problem with that."
Although the opt-in rules will have to be written into advice contracts from 1 July 2012 onwards, the government is considering the introduction of a clause that would only trigger the annual review after a specific period of time.
The government will continue to speak with industry participants on the finer details of the new rules.
"To be fair, around the adviser charging as well as other aspects, there is going to be some consultation later this year and then next year when we will look at legislating," the spokesperson said.
The announcement of the annual opt-in requirement in April this year has caused much anxiety among financial planners. Some feel it would make it nearly impossible to service clients with relatively simple needs.
