In March, the government introduced to Parliament the first legislation coming out of the Quality of Advice Review (QAR).
Among the measures included in Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 was a change to the wording of section 99FA of the Superannuation Industry (Supervision) Act 1993 (SIS Act) that suggests trustees would be required to review clients’ statements of advice (SOA).
Speaking at an FAAA roadshow in Sydney earlier this month, chief executive Sarah Abood once again drew attention to the concerns around the amendments.
“There’s some concern that the new wording of this section, section 99FA, will require super trustees to audit every piece of financial advice where a consumer has asked the trustee to pay their advice fee,” Abood said.
“We don’t believe that that was the intent of the legislation. But we think it’s important that that be resolved because otherwise, we’ve got the issue that we might be robbing Peter to pay Paul here. That we’re saving red tape and cost in one area and we’re creating more somewhere else.”
Based on the results of ifa’s latest poll, this is a concern that is shared by an overwhelming majority of advisers who responded.
Asked whether they are concerned about super fund trustees being required to review SOAs, 86.2 per cent of the 217 respondents said they are, while just 11.5 per cent were unconcerned, and 2.3 per cent were unsure.
Also speaking at the FAAA Roadshow, ASIC commissioner Alan Kirkland assured that these concerns are unnecessary, and the corporate regulator does not see a need for superannuation trustees to verify every statement of advice.
“We’ve been trying to provide some early guidance in relation to the issue … around the obligation of superannuation trustees, to clarify that under those proposed reforms, as under the current law, it’s not our view that super trustees are required to check every statement of advice and we’ll continue to do our best to make that clear,” Kirkland said.
However, a week later, ASIC released an interestingly timed report that scolded super trustees over their handling of advice fee deductions.
Perhaps the strong response from ifa readers was to be expected, particularly given the sentiment has gotten so negative in some corners that the AIOFP is considering challenging the “legal validity” of the changes.
Executive director Peter Johnston said the group is even willing to test its position in “the High Court if necessary”.
“We have sought an initial legal opinion from Hamilton Locke partner Simon Carrodus around client privacy issues and concerns about superannuation trustees reviewing statements of advice that may contain product information and advice about other superannuation funds or a member’s non-superannuation products,” Johnston said.
“We will then be seeking a KC’s opinion to back-up our view that the legislation is flawed, unworkable and not in the best interests of consumers.”
I like Sarah Abood bringing out the old FPA line of…”don’t worry it’s early days yet” when she says don’t worry we’re sure super funds won’t need to check every piece of advice. That strategy,used frequently by old Ben, has served the FPA for decades.
Rightly so we’re concerned how much mistrust does our profession put up with, regulators government now looked down and assessed by p#ss weak unorganised 2nd tier administered product providers like industry funds. Please, what a joke and how useless can the rules be before everyone just reverts to unlicensed. Pi$$ weak
A licensee is required to ensure that advisers meet their regulatory obligations, such as the sole purpose test. Explain why you would have 2 bodies doing the same role?
Easy. Despite all of the rhetoric, the govt & regulators do not trust advisers and are solely focused on benefiting their supporters in the industry fund space.
A licence may check spt to ensure an adviser is justified in apportionment, but ultimately spt is a matter for trustees and APRA. That uh… the law.
Super Fund makes money from FUM right?
So who came up with this bright idea?
New Super Fund Trustee “Compliance Departments” acting as “New Regulators” going through every client file.
What could go wrong…
Yes, might become impossible to move FUM from a Fund – and probably not much available in the way of appeal?
Basically it appears that the Super Funds are being given regulatory powers to manage their business interests?
What could possibly go wrong indeed….
Complete madness and all involved should be ashamed IMO.
I guess on the upside – no need to maintain ASFLs and therefore, no role for ASIC. Perhaps it is time to defund ASIC – let the Super Funds do it?
I came across a lawyer this week that charged a disabled client $30,000 to organise the paperwork for a client’s TPD claim, which should not have cost more than $1,000 (or less). Perhaps we need to extend this arrangement to have the Trustee check the written advice provided by the Lawyers (who are now doing our job at an exorbitant rate). We have 90,000 practicing lawyers in this country (think HayneRC), but only 15,000 advisers. Work it out people.
That is outrageous! If only there was such a thing as a “qualified lawyer” (just like the soon to arrive “qualified adviser”) they could have done that for $300…
Ah yes. But legal professionals are supposedly ethical, professional & trustworthy, aren’t they?