WHAT does full disclosure mean when it comes to financial fees, asks a Hunter resident who was surprised to find he'd been charged $8000 more than he was expecting, and which was not disclosed in his annual fee disclosure statement.
Bruce Jensen has complained to the Australian Financial Complaints Authority (AFCA) after taking the issue up with financial manager, Peter Durbin, founder and managing director of Oracle Advisory Group.
AFCA found that the firm had complied with the guidelines set out by the Australian Securities Commission, but Mr Jensen maintains that his fees were not disclosed in a way which made it clear to him as a consumer what he was paying for and when, and not in way which complied with 'the intent' of the relevant legislation.
Fee disclosure statement guidelines were supposed to give you an idea of whether or not you are getting value for money, Mr Jensen said. "They have worked it out so that they've covered all bases, but I don't think it goes along with the intent of the legislation," he said.
Mr Jensen said he signed a contract with Charlestown-based Oracle Advisory Group "three or four years ago" covering account keeping and management fees, as well as platform fees. They were not included in his annual statement which only included annual financial advisor fees, he said.
"For me to know this and get a realistic sense of the value of fees, I am supposed to remember some contract that I signed with 4000 clauses back four years ago," he said.
Mr Durbin refuted the claims saying he does "everything that's required", that his fees were disclosed upfront and that it was done "appropriately and correctly" as per AFCA's decision, as well as in line with the intention of the legislation.
"On an ongoing basis, what an advisor has to ask a client is to sign a fee consent every 12 months for financial advice, which is the financial planning role, and that was disclosed to Bruce," he said.
'Fund manager fees', platform fees and product fees were not sent to a client on an annual basis, he said.
"There's just not one advisor in the world that does that. He feels that the other should have been disclosed in the annual fee, that is not a requirement of the law," he said.
"That is contained in a statement of advice, say 40-50 pages long, with maybe three pages of disclosure, - the advice fees, there might be platform fees, there might be transaction fees ... to the nth degree, it has to be in percentage terms and dollar, and the client signs an authority to proceed.
"That was done when Bruce originally went into those investments, and that would be several years ago.
"The disclosure that we have to go through is a much higher bar than an industry fund. I am not going to comment on what the law should or shouldn't be, we have applied with it, in writing. Bruce doesn't agree with what the current law is and he is taking it out on us."
The law has since changed, however, following the Financial Services Royal Commission, with new 'obligations on fee recipients' to renew an ongoing fee arrangement annually, to provide a fee disclosure statement, and to obtain a client's written consent to deduct ongoing fees introduced to take effect from July 1, 2021.
