Administration & Management
Advice fees
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ASIC's consultation paper on advice fee consents (CP 329 Implementing the Royal Commission recommendations: Advice fee consents and independence disclosure) was issued on 10 March 2020, around the time when many organisations were introducing bans on interstate travel and starting to send office-workers home.

ASIC's paper may therefore have slipped under the radar for many. If it did, then be advised: the paper sets out ASIC's proposed rules for the consent forms that will need to be used in relation to advice fees; the rules appear to have been prepared in something of a hurry; and, we should hope that the coronavirus-related delay in introducing them provides an opportunity for ASIC to reconsider and revise them.

This paper offers some explanation, and some background.

Background

The question of whether a client has consented to the enjoyment of a benefit by their financial adviser has had a long and undistinguished history.

Three cases

In Daly v Sydney Stock Exchange (1986), a stockbroking firm did not inform Dr Daly of its precarious financial position when it recommended that he deposit his funds with the firm, instead of using those funds (as Dr Daly had initially intended) to buy shares. The High Court concluded that the firm breached its fiduciary obligations and had failed to obtain Dr Daly's fully-informed consent to the firm's interest in the advice provided.

Justice Brennan said that an adviser who is a fiduciary has a duty 'to reveal fully the adviser's financial interest' in the subject matter of the advice.

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