Platform providers and fund managers expecting to assist advisers and dealer groups with the Future of Financial Advice (FOFA) reforms' opt-in requirement have shelved their plans, after changes were made to the legislation last month.
Financial Services and Superannuation Minister Bill Shorten announced that opt-in will not be required where an adviser is a member of a professional body and has an approved code of conduct. ASIC will then have to provide a class order for exclusion.
It is expected that the majority of advisers will following this route thus platform providers and a few fund managers will be scrapping or reconsidering opt-in plans and solutions.
"When the Minister made the announcement that opt-in was no longer required it changed our direction significantly in what we were doing," Colonial First State (CFS) product and channel development manager Peter Chun told InvestorDaily.
"Opt-in has been seen as a very onerous requirement and to date we as a platform provider have been contemplating various models in terms of how we support planners addressing it.
"That onerous opt-in requirement is no longer our focus."
As a result, CFS will revisit its entire opt-in package, Chun said.
"The consent part was the very onerous aspect of it but given that it has [been removed] it has simplified our design and approach, though we haven't been able to advance the IT development any further," he said.
CFS is now prioritising developments for the fee disclosure statement requirement, he said.
"We're still looking to help those that wish to use the platform to fulfil this obligation to send out those fee statements but right now, there's still a lot uncertainty on the nature or the prescription on what needs to be disclosed," he said.
Russell Investments head of practice management John Nolan said he believes 90 to 95 per cent of advisers will seek opt-in exemption, not necessarily to avoid the requirement but because they are already going to be members of professional bodies.
Had the original opt-in arrangements been passed by the government, Russell did have plans to distinguish its grandfathered clients from those that weren't and then send out opt-in reminders on a monthly basis.
"When it looked like opt-in was going to apply to everybody we looked at our systems to see how we could help advisers keep track of a client's status and provide them with a prompt when the deadlines were approaching," he said.
"Given the likely ease of obtaining class order relief, we really don't anticipate making any changes to our system at this time."
Russell will instead by sending its advisers a reminder notice summarising the requirements of the law and an obligation to inform them if they are no longer meeting the requirements of opt-in or if they lose the exemption status. ASIC is yet to approve the code of conduct.
Nolan said he was looking forward to seeing what the first code of conduct will look like and believed most will look similar to one another.
"The devil will be in the detail as we don't know where ASIC will raise the bar to," he said.
"In the most extreme case they may only approve codes of conduct if they've actually got opt-in provisions in them. If that happens, ASIC is essentially making the professional bodies their policemen."
There must also be a disciplinary body behind the codes of conduct so that if advisers are suspected not to be following the conduct, the organisations that are monitoring them have to demonstrate that they're able to police them as well, Nolan said.
A Vanguard spokesperson told InvestorDaily that there was no expectation shown from advisers for assistance with the opt-in requirements of FOFA.
"We don't see a role for fund managers in this instance. We have certainly had conversations with advisers on the new requirements however where they would need or seek input is from their platform providers," she said.
BT Financial Group and Macquarie did not respond before the publication deadline, while Perpetual declined to comment.
