The Australian Institute of Superannuation Trustees (AIST) has disclosed that “many” superannuation funds are content with the Quality of Advice Review’s (QAR) recommendations, which eliminate the need to provide members with excessive documents and guarantee a more streamline advice process.
In a piece published to AIST’s website, senior policy manager David Haynes said that QAR could allow funds to offer “personal advice” to members throughout their retirement journey, which is currently not feasible.
“This should help contact centres and super fund websites to be able to both answer a wider range of members’ questions and to be able to do so without getting bogged down in paperwork”, Mr Haynes said.
Providing advice, he noted, would be “further enhanced” if funds have “more scope” to provide intra-fund advice.
But Mr Haynes did acknowledge concerns regarding consumer protections and suggested a “couple of things” that could ensure customers are not taken advantage of.
“Firstly, the existing ‘best interest duty’ might provide more protections than the ‘good advice’ obligation proposed by Michelle Levy, particularly if the existing safe harbour provisions are removed,” Mr Haynes said.
Namely, in her final QAR report, reviewer Michelle Levy proposed that funds providing personal advice should fulfil the good advice duty, rather than the best interest duty which would still be applicable to financial advisers.
Second, Mr Haynes said people providing personal advice in contact centres should meet “minimum standards”.
“We’re waiting on the government to announce the consultation on the review’s recommendations, so there will be plenty of opportunity for discussion about these issues,” he noted.
“The government has said they are not going to be having a review of a review, but it will be interesting to see if they intend to consider and progress all of the recommendations at the same time, or if they opt for a staged approach — my money is on the latter,” Mr Haynes added.
Last week, Financial Services Minister Stephen Jones gave a firm indication that he is leaning towards heeding Michelle Levy’s recommendation to bring back superannuation funds to financial advice, but hinted that he is unsure about her ‘good advice’ recommendation.
Speaking at an Industry Super Australia event, Mr Jones said: “There are 16,000 licenced financial advisers in the country, so the numbers don’t square. So, we’ve got to find a way to deliver information and advice to members who are approaching retirement.
“Whether you like it or not, one of the first phone numbers that they call is their superannuation fund. At the moment, law that has been passed by the previous parliaments, supported by me, puts an obligation on funds to put in place a strategy for their members for their retirement phase. And at the very same moment, we put in all of these obstacles, which make it almost impossible for the funds to do anything about that. So, I’m keen on squaring that off,” he explained.
To read more click here.
How about we just remove product issuers from the advice space and let professional financial advisers provide advice. If product salespeople want to sell their products, that’s fine too, as long as they are not using the guise of providing financial advice.
If I go to NAB for a home loan I only expect to get sold a NAB home loan. If I go to Toyota for a car I only expect a Toyota, not independent professional transport advice.
Financial Advisers by their nature should be independent and not aligned or remunerated by a product issuer. Those that are aligned or remunerated by product issuers are salespeople, not financial advisers.
What we really need is a National Longevity Strategy which informs and harmonises all the disparate efforts aimed at making the best of increasing longevity. There are at least five major interests in this space – Super and Tax, Pensions and Home Equity, Employment, Health, and Aged Care. If better co-ordinated, there would be massive savings for the community and a much more meaningful and healthy life framework for individuals. This would be much more meaningful than the ongoing tinkering with Super and advice, however well intentioned.