AFA chief executive Brad Fox said the potential compliance trap corporate super advisers may find themselves in Monday is an example of why the reforms should be postponed, as pressure mounted from industry and the Coalition yesterday for a 12-month FOFA extension.
“We think some form of extension is necessary and the reason is that there are so many things still unknown,” Mr Fox said.
“The context is that government, ASIC, Treasury and the industry have all underestimated the challenge to be ready by Monday.
“It’s not through lack of resources at industry level – we still don’t have grandfathering regulations or corporate super guidance; this is a sector of the industry that has had the door shut.”
Under FOFA, a conflict arises for advisers specialising in corporate super where a practitioner undertakes a super fund selection tender and provides ongoing services paid for by the super fund. The traditional remuneration model of corporate super advisers is considered conflicted under the new regime.
Corporate Super Specialist Alliance president Douglas Latto told ifa that if regulations are not forthcoming from Treasury today or over the weekend, his members may be found non-compliant and may have to exit the industry altogether.
“This would leave a large gap in the market with no obvious alternative,” he said.
While hopeful of guidance from regulatory authorities, Mr Latto conceded that the lenghty period of silence on the matter and the events in Canberra over the past week may make the prospect less likely.
Shadow minister for financial services and superannuation Mathias Cormann joined his voice to the chorus of those calling for a FOFA extension yesterday.
“The implementation of FOFA and Stronger Super clearly should be extended by 12 months,” the senator said.
“The government’s disjointed and chaotic handling of complex FOFA and Stronger Super legislation means that financial services businesses across Australia will not be in a position to comply from next Monday.
“It is highly undesirable to have large numbers of financial services providers forced into a situation where they have no chance but to be non-compliant.”
Jay…I think you said it all…have a nice weekend
Matthew
you are entitled to your views should you support the communist side of the agenda, we are in a politically sensitive industry and if that what works for your business best of luck to you. Majority of our industry differ as we believe in choice and freedom, not be hancuffed. You must respect the majority of our view. Whoever you maybe Matthew Lock. I would easily jump up and down and blame the industry bodies 100% buddy when you have a side of politics that doesnt really listen compared to one that does.
Is anyone else out there tired of the politicisation of these industry blogs…Jay..your contribution adds little to the debate and sounds very much like a paid political slogan…your anonymity serves you well
does australia want this progessive party ? or a party that is good for Australians ?
I think the legislation has been put in place to put an end to those situations where advisers are sitting on trail commissions and doing nothing for it. And lets be honest there is a a lot of that. Unfortunately for some honest adviser businesses that also wipes out their current remuneration structure. Could a solution be that the adviser is paid directly by the employer to offer advice to their employees? Because in my opinion an employer should not be agreeing for advice fees (trail or other wise)to be taken out of an employees super fund for a service the employer thinks is beneficial or a nice to have.
Change is never easy but I like the move to more transparency in the industry.
Is there still a chance that kickbacks are allowed or is it just that they have to be disclosed?
Can someone please explain to me why conflicted remuneration means the end of ‘corporate super services’ including advice to members for which the adviser (licensee) will be paid.
Everyone who writes comments on this website should disclose their vested interest on each comment.
Believe it or not Matthew many corporate super clients actually want financial adviser involvement due to the services we provide.
Unfortunately the legislation wipes out all corporate super support, not just those advisers who were sitting on trails and not providing services.
Most members with small balances of say $10,000 will never get access to any useful financial advice, but through corporate super this has been possible. Now this segment of the market will be completely excluded from advice.
The other issue is that due to the failure to allow genuine grandfathering FOFA also wipes out significant revenue for many advisers without compensation. Those who think this is a reasonable outcome are presumably wage earners who have never been confronted by their employer and asked to take a $50k pay cut.
Financial Adviser
Remuneration paid by a trustee to a corporate super adviser would not be conflicted if the adviser did not recommend a particular trustee to the employer (RG246.25-26)
Remuneration paid to an adviser because of ‘Intra Fund Advice Fees’ would not be conflicted. There is no prohibition in respect of trustees ‘outsourcing’ its advice to members and paying the adviser a flat fee from the admin fees paid by the member. See also RG246.112-116.
Please don’t give half a story and leave out pertinent facts.
We now have many real live examples where mysuper costs will exceed those of CSSA clients. From Monday, consumers will pay MORE. The Government has been warned about this many times, so this is an INTENDED CONSEQUENCE. Well done Julia Rudd.
[quote name=”Matthew Lock”]Here we go againanother industry association dragging the chainDefinition from Wikipedia – A professional association (also called a professional body, professional organization, or professional society) is usually a non-profit organization seeking to further a particular profession, the interests of individuals engaged in that profession, and the public interest. Clearly both the AFA along with the FPA and FSC are doing a great job on the first 2 criteria but continuously failing on the last (the public interest)…isnt it about time these bodies stopped solely representing the interests of the minority of their members who have dead or dying business models and work together with the majority of their members and the regulator who want the …[/quote]
You clearly don’t understand the issues.
Here we go againanother industry association dragging the chainDefinition from Wikipedia – A professional association (also called a professional body, professional organization, or professional society) is usually a non-profit organization seeking to further a particular profession, the interests of individuals engaged in that profession, and the public interest. Clearly both the AFA along with the FPA and FSC are doing a great job on the first 2 criteria but continuously failing on the last (the public interest)…isnt it about time these bodies stopped solely representing the interests of the minority of their members who have dead or dying business models and work together with the majority of their members and the regulator who want the industry to evolve into a new advice professionthey have fought every step of the way to hold back the industry from becoming a profession and if they cant get on board they should move out of the way for a new association that will.
How to destroy businsess and productivity 101 (Shorten & Whitely, 2013) available at your local bookstore or online.