FoFA. It’s almost a swear word in the financial services industry, with all the legislative changes associated with it.
If you have a lot of clients, rubbery data can be a problem. No one wants ASIC to come visit and slap them with an Enforceable Undertaking.
There have been changes and tweaks along the way but the upshot of it is there’s more compliance work now for planners to complete with their clients.
Let’s go through the main points;
If you have clients with superannuation or investment policies that started Before 1 July 2013, with trailing commissions or an Ongoing Service Agreement (OSA) you need to send them a Yearly Financial Disclosure Statement(FDS).
If you have clients with superannuation or investment policies that started After 1 July 2013 with fees or an Ongoing Service Agreement (OSA), they need both a Yearly FDS and an Opt-in letter.
Opt-in letters need to be sent every 2 years.
This legislation captures Self Managed Super Funds(SMSF’s). It does not apply to life insurance policies.
When a Book of Clients changes hands, the obligation to send FDS’ and Opt-in letters changes to the buyer. This is where it’s really important to make sure you have good, clean data and you know when policies commenced.
If you have a small book and are unsure about commencement dates you can nominate a single day, 1 July is a popular choice, then send all your letters out at once.
If you have a lot of clients spread across several providers, haven’t kept records up to date or have bought books of business, it’s in your best interests to get your files tidy. Compliance, the licensee and ASIC are all good reasons to put the data in order. One or all of them may insist, since sloppy files are a risk.
We have assisted planners with this work to bring their records up to date and fill in other blanks in client data. We are able to detail who needs an FDS, an Opt-In letter or nothing at all.
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