The Financial Service and Credit Panel (FSCP) has reprimanded a financial adviser over advice they provided in June 2022 recommending a client make a superannuation non-concessional contribution (NCC) of $145,000 for FY2022–23.
Anonymised as “Ms A”, the FSCP said the adviser failed to take into account that the client had previously received advice in February 2021 by another adviser authorised by the same AFS licensee as the relevant provider, which recommended the client make a lump-sum NCC of $299,000 in FY20–21.
That triggered a “bring-forward arrangement” which reduced the client’s NCC cap to $1,000 for the next two financial years.
As a result of following the advice, the client was notified by the ATO in September 2023 that she needed to withdraw $157,117.14 from her superannuation and that her 2022–23 income tax assessment would be amended to include her associated earnings amount of $17,134.
The sitting panel believed that the relevant provider contravened sections 961B(1), 961G and 921E(3), specifically they did not demonstrate compliance with the Code of Ethics’ value of diligence and breached Standard 5.
It is the latest in a string of action taken against financial advisers over super contribution errors.
In December last year, the FSCP reprimanded another relevant provider for providing incorrect advice on a client’s non-concessional contributions cap.
“The relevant provider gave advice in January 2023 recommending a client make a superannuation non-concessional contribution of $329,000 in the 2022–23 financial year when the client’s non-concessional cap for that year was $220,000,” the FSCP said.
“When giving the advice, the relevant provider failed to obtain or take into account the client’s superannuation assets in the client’s PSS pension fund. As a result, the client needed to withdraw $120,735 from their superannuation and pay tax on the associated earning of $13,570.”
This was followed by more reprimands in both April and May, also related to NCC errors.
One, “Mr U” gave advice in April 2023 recommending a client make a superannuation non-concessional contribution of $299,000 for FY22–23.
When giving the advice, the relevant provider failed to identify and take into account that the client had previously made a lump-sum non-concessional contribution of $300,000 in FY20–21, which reduced the client’s non-concessional contribution cap to nil for the next two financial years.
As a result of accepting the advice, the client had to withdraw $330,221.68 from their superannuation and incurred additional tax liabilities of $5,552.58 on associated earnings.
If your surgeon was expected to operate without clear access to your medicare record they’d be outrage! We’re expected to provide advice based on facts/data that we cannot access, how absurd….
this panel should be ashamed of themselves , spend time getting portal access
So the ATO portal for adviser is required then….
The wholesale hate of advisers is visceral
More than ATO portal access (which should be a no brainier, except that the bureaucracy has none); has anyone EVER considered that the system we’ve created might just be a little bit too complicated??
If professional advisers, who now have all of the very best of education requirements, more CPD than any other profession, Codes coming out of our ears, and the most prescriptive and authoritarian regulatory regime known to man, still make mistakes then maybe – just maybe – it’s the system that’s the problem!
Additionally, ‘reprimanding’ advisers over minor errors (that let’s face it, we’ve all made – we are all human, after all) is surely a self defeating waste of time.
They just keep on adding more complexity to superannuation. It certainly doesn’t add to any engagement for the average person, nor to manage their own affairs. Now people need to consult with either a quasi (unqualified) adviser, an algorithm, or a qualified adviser. And now the qualified advisers get shamed for making mistakes when they don’t have access to the appropriate tools required due to bureaucracy and ideology.
This shows time and time again that we should have access to the ATO portal, it is so dumb that we are expected to give advice with limited information.
Imagine if the Govt & ATO gave Adviser access to the critical data that Advisers need to advise clients.
That would of course be an absurd thing for Govt & ATO to do.
Can Canberra get any more stupid ??
FSCP pushing hard for adviser access to the ATO portal? This must be the third such reprimand in as many weeks.
Lets apply these same standards to judges , pollies and those that work at the FSCP please . I anm happy to do the reprimanding if needed
whoops.
I can’t help but think had the adviser/s had access to the ATO portal may well have avoided this situation…?
or, you know, read the research report that should have been collected from the super fund. Or the File Notes on their system. This is just plain lazy.
Having said that, access to the portal would be good as well…
If the client has a closed account that the adviser doesn’t know about, then things can get missed. I have found that with the ongoing mergers of smaller super funds that the info doesn’t always transfer across. There are lots of reasons it can happen, not just laziness. The portal is not always correct, but it is a good starting point and proof of research for compliance purposes.
Easy mistake and no help from the funds or the ATO portal.