Two days ago, ASIC revealed serious deficiencies in platform trustees’ oversight of advice fee deductions and investment patterns – but according to the Financial Services Council, the solution to these problems may have already arrived.
FSC chief executive Blake Briggs said that the association’s Standard 31: Wrap Superannuation Platform Trustee Investment and Adviser Governance Principles, which commences today, “substantially formalises” the recommendations made in ASIC’s most recent report.
“ASIC’s report reinforces the importance of strong governance and aligns with the direction the platform sector is taking through the FSC’s Standard and Better Practice Guidance. The FSC Standard will continue to be reviewed and updated as risks and regulatory expectations evolve,” Briggs said.
The FSC highlighted multiple obligations in the new standard that would directly address ASIC’s concerns. These include:
- Considering the appropriateness of implementing advice fee caps
- Adopting measures to protect members with low super balances
- Reviewing advice documents on a risk and random sample basis
- Making enquiries to understand the business models and supervisory controls of advice licensees before onboarding
- Monitoring of unusual patterns in rollovers, advice fee deductions and investment concentrations in illiquid assets
- Developing a documented due diligence process that includes consideration of policies relating to holding limits at the individual option level
- Maintaining a documented framework for the ongoing monitoring of advisers using the platform
“Australians should be protected from misconduct. Trustees, as part of the value chain, have a key role to play,” Briggs said.
He continued: “Other parts of the value chain also play important roles, including advice licensees, responsible entities of managed investment schemes, research houses and the regulators who monitor the sector and approve financial services licenses and approve the registration of managed investment schemes.
“Consumer protection should go hand in hand with protecting Australians’ freedom to choose and engage with their superannuation. Strong consumer protections and informed consumer choice go hand in hand in delivering better retirement outcomes.”
For the seven platform trustees with FSC membership, full compliance with the new standard is required from 1 January 2027. Collectively, the association said, those members represent around 90 per cent of platform funds under management.
One platform trustee that won’t be bound by the standard is Diversa Trustees, which recently dragged Praemium into its ongoing legal battle with ASIC. Diversa, which is being sued by the regulator over alleged due diligence and monitoring failures, issued notices of cross-claim to Praemium seeking compensation from Praemium, Powerwrap and OneVue Wealth Services (OVWS) in the event ASIC’s claim proves successful.
In an ASX statement, Praemium said that Diversa had not “foreshadowed” these claims, and that existing agreements require the trustee to “undertake a dispute resolution process before commencing proceedings, which has not yet been done.” As a result, Praemium said no steps will be taken until that process is complete.
The platform operator also noted that ASIC itself has yet to make any claims against Praemium, Powerwrap or OVWS.
