In an instrument issued on Friday and distributed to the press today, ASIC has confirmed it will provide relief to financial advisers, giving them up to 30 days to provide an SOA for personal advice provided to retail clients about a superannuation product.
The relief will apply to superannuation-related personal advice where the advice is requested and provided before 1 July 2017.
“Financial advisers are still required to meet all other obligations under the Corporations Act, including the conduct and disclosure obligations, in providing such advice,” said a statement from ASIC.
“The relief is intended to assist consumers to access advice about the changes in the superannuation laws during this unusually busy period, while maintaining consumer protection.”
The requirement for members to commute their pensions to fit within the $1.6 million caps is due to changes in the tax laws, the advice is essentially tax advice, and ASIC should have given a blanket exemption from having to prepare an SOA, ONLY where a commutation to fit within the new rules is the only action taken. This would have been incredibly practical and appropriate.
These changes are being forced upon all members involuntary, they are not making the decision to commute voluntarily, and they are doing it because to not commute causes very unpleasant tax consequences.
This is essentially tax advice and does not require any action to be made to underlying investments and therefore should not be cause for any concerns where a commutation only is actioned and would have ensured that everyone who was required to receive help got it.
This just highlights the absurdity that structures like a superfund are deemed to be a financial product.
To make the requirement for preparing an SOA for these commutation changes only, even more ludicrous is the ATO sent out a letter to all superfund members that the ATO thinks may need to act, telling the member that;
“If, as at 30 June 2017, your total balance:……exceeds $1.6 million you need to move the excess back into an accumulation account or out of your super by 1 July 2017.”
Here the ATO is telling members that they need to commute their pension to bring it within the $1.6 million limits. Therefore if the ATO can say that to members, and I am sure the ATO does not have an AFSL, then everyone should be able to provide the same advice.
It will be interesting to see if ASIC go after anyone, as if they do, they will need to go after the ATO as well. That will be interesting to see.
Pure commutation advice for the purposes of getting under the $1.6 million cap I would classify as tax advice.
Welcome relief, but if the SoA is designed to give surety to a client should the public be less protected at this time of year, or does the drop in temperature ensure that advisers are more ethical than at other times of the year.
The SoA has nothing to do with surety to a client. Clients never read them! They are far too long and complicated. The SoA is designed to keep lawyers and compliance bureaucrats in jobs.
Oh joy. That ought to bring the cost of compliance & red tape down to only $3000 per soa.
Wow.. Thanks ASIC!!! Thanks for the fantastic 4 days notice. You guys are so efficient!
Ummm…that’s actually up to 26 days’ notice. Mr Sarcastic.
“where the advice is requested and provided before 1 July 2017”
So how was that 26 days notice?