Speaking before the Senate Economics Legislation Committee inquiry into the FOFA amendments late last week, FSC senior policy manager Cecillia Storniolo said intra-fund advice is charged by superannuation trustees through the administration fee and is effectively a commission.
“It is a bundled advice fee that members (including default MySuper members) are unable to opt out of,” said Ms Storniolo.
“Put simply, if you don’t seek intra-fund advice, you still pay. It is a bundled advice fee which is cross-subsidised and hidden from members. It is a commission,” she said.
While Ms Storniolo did not single out any particular lobby group directly, she said it is “hypocritical” to suggest that commissions should be banned under FOFA (including for general advice) – as has been called for by Industry Super Australia on numerous occasions – when intra-fund advice is charged “in a non-transparent manner”.
“[The FSC] strongly suggests the committee think carefully about intra-fund advice when it turns its mind to the matter of general advice and conflicted remuneration,” said Ms Storniolo.
Turning to the controversial issue of general advice, she said it “should not be called advice at all” and should cost the consumer “nothing”.
“General advice is a service consumers access generally from bank branches and call centres,” she said.
“Providers of this service should be able to be paid salary and performance pay bonuses for providing good and/or exceptional service to consumers,” said Ms Storniolo.
“We understand the consternation raised by some that the general advice exemption included in the Bill enables a reversion to pre-FOFA conflicted remuneration practices. We contend that the need for the exemption is not for that objective.
“The FSC has examined the drafting in the Bill and recommends that the committee consider limiting the exemption to ensure that financial planners are not able to earn a commission as a result of the exemption,” she said.
Why doesn’t anyone talk about the COMMISSION PAID BY GROUP INSURERS
The ISA funds are happy to take that commission, and are effectively acting as agents of the Group Insurer
This has been a three year moronic exercise in debating a payment methodoligy. Are we grilling real estate agents the same way ? Mortgage Brokers ?
Its IDIOTIC, its like a debate about cash vs card, Visa V mastercard. If the cleint is told UPFRONT via a binding service agreement and GIVEN A CHOICE of how to renumerate the adviser, then why is this an issue ? Most clients are happy to pay indirectly for advice. BOth upfront and ongoing. They want it disclosed and simple to understand. Its only the vested interests ( union funds ) and the cult of Stackpool who are denying the client the CHOICE.
And there I was thinking that abolishing commissions would remove “get paid mentality anyway” . Guess someone with conscience within the IFA is fessing up to the truth. What they say is NOT what they do–sounds like Animal Farm all over again where we are all equal except if you are an ISN who think otherwise. Just bring in the same rules for all so we can all lie and cheat OR be fair dinkim and honest like real planners.
How about going one step further were the client has no choice but to use industry based fund, due to field the employed in.
or where they do give your a choice if you use the Industry fund you get a higher employer cont. if you choose your own you get the SGC only. Very fair??
And finally someone starts to nail the Hypocrites at ISA/Union funds for what they do. About time someone started to shine the light on the cross subsidisation and secret dealings of ISA/Union funds. If you dont use their services you still pay. Isnt that the wholly grail ISA/Union funds have railed against and low and behold they are the biggest recipients of it. How many members pay for services they don’t get or use. How else do they offer ‘Free Advice’. The poor mug who dosnt use the service pays for the people who do. Who would have thought. Doh!