Compliance Alert: Fees for No Service Back in Focus

The Financial Services and Credit Panel (FSCP) brought renewed focus to a familiar – but critical – issue in financial advice: fees charged where services were not fully delivered.

What stands out isn’t just the outcomes themselves, but how ordinary many of the situations were. These were not extreme cases of misconduct. Instead, they reflected everyday risks – missed reviews, administrative oversights, and isolated errors.

Let’s look at the three recent cases closely:

⚖️Case 1: The Missed Review That Still Carried a Fee

‍In the first case, an Adviser continued charging ongoing fees even though annual reviews were not completed within the agreed timeframes.

There was no suggestion of deliberate wrongdoing. However, the expectation was clear: if clients are paying for ongoing service, key deliverables – like reviews – must happen when promised.

Outcome: A written direction was issued.
What it tells us: Missing a core service milestone can quickly turn into a “fees for no service” issue, even when intentions are good.

⚖️Case 2: When an “Admin Error” Lasts 17 Months

This case highlights how small process gaps can grow into significant compliance issues.

An Adviser charged fees despite delivering only limited services. More importantly, fee deductions continued for 17 months after the client agreement had expired.

The situation was explained as an administrative oversight – but the duration made it hard to overlook.

Outcome: A formal reprimand.
What it tells us: Administrative errors are not viewed as harmless – they signal weaknesses in systems that should prevent this from happening at all.

⚖️Case 3: The One-Off Mistake That Still Led to Consequences

‍In this instance, there was just a single occurrence: fees were charged where no service was delivered.

‍The Adviser identified the issue, took steps to fix it, and remediated the client. By most standards, this could be seen as a well-managed error. However, the FSCP still took action.

Outcome: Written direction and mandatory ethics CPD.
What it tells us: Even isolated mistakes matter. From a client’s perspective, the experience – not the frequency – is what counts.

🔍What These Cases Have in Common

While each case is different, a consistent message runs through them.

‍1. Even small lapses are taken seriously

The difference between “isolated” and “systemic” doesn’t always change the outcome. If a client pays for a service and doesn’t receive it, it’s likely to attract attention.

‍2. Systems are the first line of defence

‍Many of these issues weren’t about intent – they were about process. The expectation is clear: Advisers must have controls in place that prevent, detect, and correct errors early.

3. Ongoing fees require ongoing value

Charging a recurring fee creates an ongoing obligation. If key services – like annual reviews – aren’t delivered, the arrangement starts to break down.

‍4. Agreements have a clear endpoint

Continuing to charge after an agreement expires isn’t a grey area. It’s a straightforward breach and one that is easily avoidable with proper tracking. ‍

5. Ethics are not abstract

‍Across all cases, the underlying theme ties back to professional standards – particularly integrity and ensuring fair value for clients. These principles are being applied in practical, measurable ways.

👉Read more about the recent FSCP decisions here: FSCP Outcomes Register | ASIC

Minimum Controls to Prevent Fees-For-No-Service Issues📝

Advisers should conduct basic preventive and monitoring controls. The following are suggested minimum controls to help mitigate FFNS risks:

• Record review due date, last review, and agreement expiry in CRM

• Set automated reminders (90/60/30 days + overdue alerts)

• Ensure fees are linked to active agreements

• Track agreement expiry with alerts before and at expiry

• Document every service delivered (if it’s not recorded, it didn’t happen)

‍We have added to our development list a potential enhancement in iC2 to enable automated alerts for upcoming and overdue reviews, noting that automated alerts for agreement renewals are already in place, supporting stronger FFNS controls.

‍In the meantime, Advisers should check whether their current CRM already provides this functionality (e.g., automated reminders, alerts, reporting) and ensure it is properly configured and actively used, rather than relying on future system changes.

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🧠Final Thought: It’s All About Alignment

‍ ‍At the heart of these cases is something simple but critical – alignment.

• What was promised

• What was delivered

• When it was delivered

• What the client paid

‍It’s not just whether a service happens – it’s when it happens. A delayed review can matter just as much as a missed one.

When everything lines up, risk is low. But even small gaps can quickly turn into bigger issues.

💡The real takeaway?
This isn’t just about avoiding mistakes – it’s about building systems and habits that make those mistakes far less likely in the first place.

Because in today’s environment, it’s not just your intentions that matter – it’s the outcomes, and the client experience behind them.

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