The amended supplementary explanatory memorandum, published on Thursday, details amendments being made to the bill in order to address concerns raised by stakeholders at the most recent Senate economics legislation committee hearings.
These concerns include the possibility that the bill, as first drafted, could be interpreted as requiring trustees to assess each piece of advice, rather than being able to take a risk-based compliance approach.
In order to quell the alarm, Financial Services Minister Stephen Jones has moved parliamentary amendments to omit language in paragraph 99FA(1)(a) which would require that the financial product advice in respect of which costs are charged is wholly or partly about the member’s interest in the fund; and repeal paragraph 99FA(1)(b), which would require that the amount charged does not exceed the cost of providing financial product advice about the member’s interest in the fund.
“These changes are intended to give trustees assurance that the bill does not alter the current regulatory approach and that they may continue to utilise robust risk-based assurance processes,” the supplementary explanatory memorandum reads.
Expounding on this, it further explains that those two requirements replicate existing requirements in the SIS Act.
“Trustees are subject to the sole purpose test in section 62 of the SIS Act, which requires trustees to ensure that the fund is maintained to provide benefits to the member. In addition, trustees have a duty to act in the best financial interests of the member under paragraph 52(2)(c) of the SIS Act.
“These broader obligations already apply to trustees exercising their discretion to charge relevant fees for personal advice to the member in accordance with section 99FA (the original section and as amended). It is expected that in complying with section 99FA, as amended by these parliamentary amendments, trustees would continue to ensure the relevant advice and costs relate to the member’s interest in the fund in order to satisfy their broader obligations.”
The document highlights that, “considering those broader obligations”, trustees still maintain the discretion on whether to pay the cost of financial product advice at the request or consent of a member.
“As such, removal of the references to the member’s interest in the fund does not, and is not intended to, impact the existing regulatory requirements and consumer safeguards applicable under the SIS Act in relation to financial advice,” the explanatory document adds.
It also clarifies that minor amendments have been made to language about providing advice, to more clearly address the range of situations in which financial product advice may be provided or procured.
Moreover, the document asserts that trustees are expected to continue to take a robust, risk-based approach to comply with their obligations under section 99FA as amended and the SIS Act more broadly.
In a statement on Thursday morning, the Financial Services Council (FSC) welcomed the government’s amendments, with chief executive Blake Briggs saying the FSC now supports the passing of the bill.
“The government’s amendments will provide superannuation trustees greater legal certainty when deducting advice fees on behalf of superannuation consumers and will reduce the regulatory impact on financial advisers and advice businesses,” Briggs said.
“The amendments and supporting explanatory memorandum make it clear that trustees’ current risk-based approaches to assessing advice fee deductions remain appropriate.
“The Assistant Treasurer has continued to consult with industry and the FSC recognises the collaborative approach he has taken to work towards the common goal of making financial advice more affordable and accessible for consumers.
“The FSC supports the amended bill passing the Parliament, which will serve as an initial down payment before the next tranche of reforms that will expand access to lower cost financial advice for millions of Australians.”
More to come.
In other words, super funds continue to have more control over worker’s/members hard earned monies.
Hopefully, the Dis-honorable Minister for Clown town, will now step down. We’ve got allegations of corruption within Treasury by the AIOFP, Advice fees going up due to the removal of GST credits, the term Qualified Adviser, CSLR levy, adverse findings about ASIC, additional complaint reporting obligations, the requirements to be registered in addition to licensed, and the mess that is fee renewals that exist no place in the world but Australia, not to mention Advisers numbers down by 31% since the peak…..
He ain’t fixing the hot mess of Advice. What an epic failure this guy is.
All of this is inconsequential if you just dont use industry super funds…
So much time and effort spent whining when such a simple solution exists.
Still havent come acrioss a industry super that genuinely places members ahead of its own intersts, perhaps the only exception being UniSUper. So why use them at all? I have clienst with $5k in industry super for insurance who have everything else, elsewhere. ONLY way I’d utilise industry super.
I’d go further than that.
How could you possibly be meeting your best interest duty using industry funds ?
They are incredibly opaque, on so many levels.
Oh – and wait till you see how they drag their feet on death claims. Unbelievable.
All this questions about if it relates to the members interest, what about all the union donations coming from super? how does that help the members????
And the corporate governance of industry funds is also not in members’ interests, what with all those ALP mates on the board (e.g. Wayne Swan as chair of CBUS, Nicola Roxon as chair of HESTA).
“they may continue to utilise robust risk-based assurance processes,” the supplementary explanatory memorandum reads.”
“The document highlights that, “considering those broader obligations”, trustees still maintain the discretion on whether to pay the cost of financial product advice at the request or consent of a member.”
Nothing will change though, who is to say that a super fund wouldn’t check every SoA still?
The industry does not need a quasi regulator scrutinising professional adviser fees. There are enough consumer protections already for financial advice.
My old mum, bless her cotton picking socks, used to say about character:
“Never judge a man by what he says, but by what he does”
Minister Jones staunchly resisted on at least two occasions the changes that he has now introduced, just yesterday, July3.
Which by huge coincidence, happened to be the day that the Senate released a report recommending the dismantling of ASIC.
Another Mr Jones “hey, look over there” activity. Honestly, one cannot believe that he’s arrived at this outcome because he cared about advisers. He needed a distraction, and this change is just a distraction, which he should have undertaken months ago when it was, at least initially, drawn to his attention.
Maybe the Treasury officers who appeared at the last Senate hearing denying they had heard criticism that same day from a lawyers Association that the Section 99 changes being proposed by the Minister were not good enough.
One wonders if he will actually read yesterday’s Senate report and read its recommendations as to the ongoing existence of the dreaded ASIC advisor Levy.
Must we wait till he needs another political distraction?
Wow so the FSC recommends the passing of the bill!! Checking the members of the FSC NONE have any experience in financial services, NONE have any qalificayions in Financial Services, a couple have econimics, one seems to be an accountnant. Once a agin we have unqualified in experienced peiple making decisions about an industry they don’t understand or want to understand simply just make it up as you go!!! Is there a burden on them to act in best interest of the community? What a farce this is!
Can’t agree with a word of what you say above “anonymous”.
The FSC represents many of us in the Advice world. I am a member and have been an Adviser for over 20 years and am now Head of Compliance for my firm. You are ill informed on this occasion.
Yeah I’ll join the pile on here. The FSC are rather sharp. I’m glad they’re in our trench.
Are you deliberately making spelling errors? This isn’t Facebook!
A win for Financial Advisers and clients!
Never should have got here to begin with, but at least a change in course!
Jones deserves no credit here whatsoever…
Michelle Levy’s QAR directive aimed to “sure up” members’ ability to use their super funds to pay for advice relating to their superannuation as a whole. This should not be somehow limited to a pro rata of their funds held in that particular fund. This just means advisers will need to create further Advice Fee Consents, one of the things that this tranche of legislation was supposed to address.
This has achieved nothing expect waste many advisers, associations and stakeholders time.
The lunatics are running the asylum. If you don’t laugh you would cry….
Yeah, I’ve had many nights of disrupted sleep over the last while about what the impact of s99FA could be on my future.
Not fun and certainly not over.
But we’ll take it.
So who is checking the $$$$ amounts the Super trustees take via Admin Fees for the potential provision of Advice?
The ASIC keystone cops are! Nothing to see here move right along…
What about all the money flowing out of Industry Super Funds for spurious purposes ?
Will that continue ?
Would anyone meet best interest obligations directing funds into an Industry Fund ?
It’s all very opaque.
Credit to Jones for being pragmatic, putting ego and ideology aside and pulling back from the brink of what would have been an all-out civil war between the non-profit super funds and commercial, largely self-employed advisers. His amendments to section 99FA show a willingness to listen to stakeholders and ensure a balanced approach.
There is no doubt that the ideological factions within the “dodgy advisers – SMC” and their “non-profit” sponsors will be back in the future to have another go at choking advisers, but that might not be for another decade when memories have faded. For now, the barbarians have been kept at the gate, and a mountain of sand was not poured into the system.
Well said!
Hear, hear Peter
No credit to Mr Jones whatsoever. He was pushing the agenda of his union fund masters very hard and was only stopped because of the actions and pressure put on him by various lobbying bodies. Make no mistake he did not want to reverse this, the issue just got too hot (and public). But don’t worry he will be working closely with the union funds to find another way of pushing all financial advisers out of business.