Consumer groups back retention of best interests duty

In a joint statement, the consumer groups celebrated the retention of the best interests duty for financial advisers, calling the proposed good advice duty “weak”.

“The Quality of Advice Review had proposed a weak ‘good advice’ duty for some forms of financial advice,” said Gerard Brody, acting director of Super Consumers Australia.

“It’s a win that the federal government has rejected this radical attack on consumer protection, and has instead upheld the best interests duty.

“The best interests duty is vital in light of conflicts of interest which have riddled the financial advice sector. Australians deserve independent and high-quality advice.”

CHOICE and Super Consumers also welcomed proposals to reduce paperwork for financial advisers, provided that there is a “clear, concise and helpful” record of advice.

However, the groups were more restrained when addressing the expansion of banks, super funds, and insurers providing financial advice.

“Conflicts of interest remain real in any financial advice model which is provided by banks, super funds or insurers,” said Mr Brody.

“What we don’t want is product sales dressed up as ‘advice’. We look forward to participating in future consultations to make sure the standards are sufficient.”

The bodies also provided a joint submission to the first tranche of the Delivering Better Financial Outcomes reforms, supporting the clarification of rules around charging fees from superannuation.

“We support these reforms on the basis that they provide greater legal certainty about existing advice fee deductions from superannuation without broadening the scope of fees that advisers can deduct. We also support giving consumers clarity about the tax consequences of paying for advice out of their super account,” Super Consumers Australia and CHOICE said in the submission.

“We agree that advice fee deductions from super accounts should only be permitted to pay for personal advice about the member’s interest in the fund, and not to pay for general advice or for personal advice on other topics.”

On Wednesday, Financial Services Minister Stephen Jones announced that Super Consumers Australia has received $5 million in funding as a consumer advocate in the superannuation sector as part of the 2023-24 budget.

The grant provides $5 million over five years from 2023-24, funded from the APRA-administered Superannuation Supervisory Levy.

“We want consumers to have a strong voice on their super,” Mr Jones said.

“Having an independent advocate to government and industry will deliver better outcomes for members.

“We want people to retire with more money, so we're making sure the super system is as strong as it can be.

“Congratulations to Super Consumers who have already been doing great work to drive better member outcomes and I look forward to their continued advocacy.”