The Association of Independently Owned Financial Professionals (AIOFP) has instructed Hamilton Locke partner Simon Carrodus to brief Kings Counsel Bernard F Quinn on the s99fa legislation and its current ramifications on the industry and consumers.
In a letter sent by the AIOFP to Treasurer Jim Chalmers, and seen by ifa, the association’s executive director Peter Johnston urges the government not to proceed with the legislation in its current form and informs the Treasurer that legal advice has been sought.
“The financial advice profession and many superannuation trustees are confused by the dogged determination displayed by minister Jones to not amend the proposed s99FA of the Superannuation Industry (Supervision) Act 1993 which provides for the payment of financial advice fees. This is despite the Australian Law Reform Commission and Law Council of Australia agreeing that s99FA fails to achieve the stated policy objective of clarifying advice fee payments to financial advisers,” Johnston writes.
“This position is further exacerbated when superannuation trustees are concerned with their legal liability to interpret statements of advice documents and having varying interpretations of the extent to which they will apply the legislation.
“To complete this myriad state of widespread confusion amongst stakeholders, professional financial advisers are concerned about breaching privacy laws in responding to requests from super trustees for client information as well as future regulatory action by ASIC.”
Johnston highlights that the advice profession is “flabbergasted” that despite “all this uncertainty and confusion”, Minister Jones seems “determined to proceed with the proposed s99FA legislation in its current form”.
This, Johnston adds, will only serve to drive up the cost of advice for consumers.
“In summary, we are concerned that misinterpretations of the power of superannuation trustees and the lack of statutory clarity will only drive up the cost of advice for consumers and further threaten the livelihood of professional financial advisers”.
Johnston then asks the Treasurer whether the government is prepared to wait for advice from Kings Counsel Bernard F Quinn before proceeding with the legislation in the current form.
Last month, Johnston told ifa that the AIOFP will be challenging the minister over the legal validity of the proposed amendments to section 99fa of the Superannuation Industry (Supervision) Act 1993.
“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 (SOAs) that may contain product information and advice about other superannuation funds or a member’s non-superannuation products.
“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.”
ifa also spoke to Carrodus at the time, who explained that issues lie in not just the newly drafted section 99fa of the SIS Act, but also the existing one.
“The privacy issue is a huge one. I just don’t see any reason why the super trustees need to review the whole SOA,” Carrodus said.
“If anything, they could review the first couple of pages, so the title page with the adviser and the client’s name on it, and the scope of the advice. I just don’t see why they need to review any more than that.
“Super trustees and the advice firms are mostly aligned on this. Super trustees don’t want to do be reviewing SOAs, they’re being forced to do it.”
‘Johnston highlights that the advice profession is “flabbergasted” that despite “all this uncertainty and confusion”, Minister Jones seems “determined to proceed with the proposed s99FA legislation in its current form”.
It’s in Jones’ political interest to proceed with the legislation as is, because this helps his mates at Industry Super and the SMC. The advice industry must go public with the consumer privacy concerns, to stop this legislation in its tracks. Politicians quickly lose their nerve when the public turns against them. Also, if the industry can start scoring such public wins, politicians will stop looking at us as a soft touch. Look at how the Pharmacy Guild and the Minerals Council get their way.
Start with clients – they vote right?
Well a letter from the AIOFP should do it then…
Well done to Johnston and the AIOFP for taking this strong approach. It’s clear these people don’t respond to reason, and they just want to bulldoze this amendment through. While privacy is one angle, I’m not sure it’s the best. Even giving the trustee the first couple of pages… what a glorious waste of time that is.
Why isn’t an attestation from the adviser, the client, or the AFSL—or all of the above—that the advice and its fee is wholly or partly about the member’s interest in the fund enough? Why is trust in all these constituents so low that a formal attestation is deemed worthless?
I don’t know what the legal argument would be, but there is something very anti-competitive here. The funds are conflicted, and their main source of “fund loss” is for-profit advisers telling their clients they can do better. Being able to choke the revenue source of those advisers is surely anti-competitive. This legislation seems designed to protect the interests of the super funds at the expense of independent advisers and, ultimately, consumers.
Why isn’t an attestation from the adviser, the client, or the AFSL—or all of the above—that the advice and its fee is wholly or partly about the member’s interest in the fund enough? Why is trust in all these constituents so low that a formal attestation is deemed worthless?
Retention of FUM? Financial Planners who are not directly employed by the Trustee are not controlled by the Trustee right? Now at least, they can be stopped?
According to Stephen Jones, everything is under control ????
How very odd ??