Small advice practices face having to shell out thousands of dollars to comply with Federal Government plans to reduce compliance burdens.
A cross-section of planners surveyed by the FPA say allowing client information to be incorporated by reference into a statement of advice (SOA) will cost up to $3000 to set up procedures and a per annum cost of $3000 to maintain the information online.
In March, the Government announced a series of amendments to corporate and financial services regulations as part of an ongoing review of compliance hurdles.
“Uncertainty surrounds the ongoing costs for the initial change in procedures and other relevant costs,” FPA chief executive Jo-Anne Bloch wrote in a submission to Treasury last week.
“Many smaller licensees are concerned about the added costs of cross-referencing information documentation – particularly those of little significance – for indefinite periods of time as implied by the regulation in its present form.”
If planners have to cross-reference all previous SOAs or records of advice, it would make long term, ongoing advisory relationships very difficult, Puzzle Financial Advice licensee Bruce Baker said.
“This level of document cross-referencing suggested in these draft regs [regulations] is simply unmanageable in a 10-year relationship that might include 20 to 40 client-advisor exchanges per year,” Baker said.
“This entry in the latest regs has been a major and nasty surprise – [it’s] a very retrograde step.”
In contrast, the FPA survey found that the average cost of producing an SOA could be reduced by $400 per SOA. The time it takes to produce one could be reduced between 4 to 6 hours under the government’s plans.
The FPA says advisers produce on average 120 SOAs per year, of which the cost for a basic SOA is $1,500 and a comprehensive SOA is $3000. A basic one takes six hours to produce while more complex documents take around 12 hours.
