In a recent article for ASFA members, ASIC superannuation senior executive leader Jane Eccleston said as part of a joint investigation with the ATO, the regulator had uncovered a number of advisers charging high fees to reunite consumers with unclaimed super amounts sitting in unused funds.
“We have seen advisers charge a 4 per cent fee based on the consolidation amount,” Ms Eccleston said.
“This results in consumers unnecessarily paying for a search and consolidation service which they could get from the ATO for free. In some cases, the whole of the lost superannuation recovered ends up paid out in fees.”
Ms Eccleston said the surveillance had uncovered a range of “concerning conduct” around super consolidation services, including third parties inappropriately using member data in the ATO’s SuperMatch2 platform for super funds; poor quality general and personal advice; and advisers moving unclaimed super amounts into a third account, from which they deducted their own fees before passing the amount to the consumer.
Further, ASIC identified advisers charging ongoing asset-based fees following a consolidation service for a client, as well as inappropriately encouraging members to apply for early release and targeting funds that “appear to be more lenient in granting the release of funds”.
Ms Eccleston said the regulator was concerned that such advisers could use the current crisis “as part of their pitch to consumers to carry out broader superannuation activities”, such as early release and consolidation.
However, the regulator said responsibility also lay with super fund trustees to ensure they kept closer oversight of how member data was being used within the ATO’s platform, and were applying appropriate scrutiny to deductions of fees from member accounts.
So if the client had $10k in super and paid a 4% fee, that is $400. I like how ASIC doesn’t provide any context, just to support their stance.
They should know why it costs so much for advice cause they created most of this mess.
ASIC will encourage people to consolidate super via the MyGov site. Many will and will lose their insurances without knowing it. But at least they will save fees. That is a better outcome than seeing an adviser that explains the risks, compares funds and gives the client peace of mind. The adviser only has to spend time qitwh the client, produce an SOA, pay staff, pay for software, education, rent and be liable if the TV tells the client something different or they get unqualified assistance. ASIC is the only one that can fix this but they would rather beat up the advisers.
I like that the appropriate scrutiny should be applied by the trustees who are doing the same thing via limited advice. Its still shit advice just as often as its good advice but at least the member doesn’t have to pay for it because its hidden in the administration fee other members pay — the advice model of the future as designed by ASIC. These people are muppets. Also if they have seen the inappropriate advice I’m sure the better approach would be to take action against those advisers involved rather than get a newspaper article.
The cost of a New SOA is 3k-4K minimum in any event, so if there was new advice on super consolidation of $100k there’s your 4% fee love.. it’s because you have made it too expensive to produce the advice and implement and now complain it costs too much for the consumer?! What world are we living in now…
Too sad and too true ‘Get Real’. This govt and the special interest groups that cause this should be ashamed at the obvious but unintended consequences and should fix the mess with full input from advisers. Disgusting that they don’t. Perfect example of the government’s abject disregard for the concept of ‘client best interest’. They work in their OWN best interest and nobody else’s interest. I’m sickened we let the bas***ds get away with it time and time again.
She doesn’t explain if the fee is only for providing this service or if this is just one of many things they do for the client. And as far as 4%, there are many industries (thinking lawyers) that charge 20% plus.
This article contains contradictory statements.
1. We have seen advisers charge a 4 per cent fee based on the consolidation amount,”
2. In some cases, the whole of the lost superannuation recovered ends up paid out in fees.”
If finding super was so easy as Ms Eccleston claims why do people bother paying for it?
The answer I would suggest is that members of the public find MyGov difficult to use & they are willing to pay a fee for the service because they don’t have the time or the skills to do it themselves.
Perhaps Jane could exit the ASIC Ivory Tower and converse with the public that don’t have honours degrees in Psychology and Law? A great sample would be the very same people that have paid for these services.
My business doesn’t charge to find lost super but we can absolutely understand the frustration the public has in using government services and MYGov particularly. If Mc Eccleston isn’t aware of the need then how can she properly serve the public that have the need?
Regulation is not the answer, making government services user friendly is. That means deregulation!
Just to be clear I’m not doing this but ASIC saying ‘seeing fees as high as 4%’. Seriously go and have a look at the Government charging between 4-5% stamp duty when buying a house, and they do nothing for that transaction. No win no fee lawyers if they win will charge between 20 – 30% fee. Go and pick on someone else you weasels.
WELL SAID Dave! Weasels indeed!
spot on Dave. of course, if the balance is low, the fee as a percentage is going to be high!
Typical ASIC. Blast the industry based on the actions of a few rather than take action against them.
I could sell my home for free but instead I outsource to a professional because they know what to do and I do not have the time to do it myself, in doing so accept that I pay a fee. I could also make a sandwich at home for minimal cost but I decide to buy my lunch as it tastes better and in doing so I pay a higher cost… ASIC needs to stop treating the consumer like a simpleton.
Well said Nev – why isn’t this obvious to all and why do we let ASIC and the Govt get away with this idiocy?!