In 2009 the Parliamentary Joint Committee on corporations and financial services examined the issues associated with the collapses of financial product and services providers such as Storm Financial, Opus Prime and other similar collapses.
In September 2011 ASIC reported that of the combined total of 4.6 million clients of the 20 largest Australian Financial Services Licencees providing financial product advice to retail clients only 1.5 million were identified as “active clients”. Section 962 K of the Corporations Act introduced a requirement for AFS licensees or their representatives to provide their clients written renewal notice every two years requiring them to “opt in” to renew their fee arrangements.
The industry has resisted this change saying that it imposes an unnecessary cost having regard to the other new requirements of the Corporations Act about scaled advice, the “best interests” duty and provisions banning conflicted remuneration and requiring annual fee disclosure.
In March 2012 a new bill was introduced giving ASIC the power to approve or to exempt financial advisors to retail clients from the “opt in” requirement where an alternative FoFA (Future of Financial Advice) code is approved by ASIC. A consultation paper 191 has now been released by ASIC inviting submissions relating to appropriate procedures and guidelines for the approval of Codes of Conduct for exemption from the “opt in” requirement.