The finance watchdog’s commissioners, including chair James Shipton and deputy chairs Daniel Crennan and Karen Chester, spoke on a panel at the ASIC Annual Forum in Sydney last week.
ASIC will be policing super as a result of the royal commission, working with APRA in a dual regulation ‘twin peaks’ model.
The body’s legislative reforms around super launching its full capacity as a regulator for the sector have all yet to be approved. To date, ASIC gained power in enforcing penalties in March.
Ms Chester said the regulator is considering two areas in its regulation of super, including the structure of financial advice business models.
“One of them is retirement products, perhaps what role could government bear in making sure that they’re objective and cordial advice,” Ms Chester said.
“We’re moving into a world where business models within financial institutions are changing.
“At the moment there is an important distinction between personal and general advice and this is going to matter a lot to land that public policy issue, when we’re looking down the barrel at a lot of people with low balances retiring.”
In March, the regulator published a report saying that consumers confuse general and personal advice, with nearly 40 per cent of survey respondents being unaware that advisers are not required by law to act in their best interests.
When asked about how ASIC is planning to proceed for people with low super account balances and whether they’ll make it viable for them to seek advice, commissioner Danielle Press said the regulator had to be ‘careful’.
“Wealth managers say the average super fund balance in Australia is very low, $69,500 for women and $112,000 for men,” Company Director magazine editor-in-chief Narelle Hooper said in her moderation of the panel.
“In the post-Hayne world, that makes it uneconomic to offer financial advice with upfront fees. Is ASIC open to allow people with low balances to seek advice?”
Ms Press said averages shouldn’t be conflated with balances, giving an example of an 18-year-old and a 65-year-old and saying the 18-year-old would have a lower balance but ‘probably’ would not need advice, in contrast to the older member.
“I think we’ve got to be really careful about advice,” Ms Press said.
“When is it important and how is it offered? My view is technology will help as people engage in it.
“Certainly, the landscape for advice is changing. We at ASIC are supportive of having a strong advice system but it needs to be fair.”
Ms Chester added that two-thirds of super members aren’t making the choice about super until they get to closer to retirement.
ASIC are so quick to turn on advisers and rip the shreds out of their remuneration but take 20 years to make a change to a little word which would make things easily understandable to consumers. How conflicted is that? what a bunch of oxygen thieves we have to deal with.
and while you’re at it: also consider “roboadvice” and “barefoot investor/Scott Paper advice”. All I want is a level playing field.
great to be regulated by rocket scientists. Easy – stop using the term general advice and change this to general information.
Pretty simple really ASIC, it’s either
1) Real Personal Advice and requires fact finds, SoA’s, best interest, etc.
Or its
2) General Product Information – this is not Advice. It is product information and has nothing to do with the product being the right one for the person it is being sold too and they are not being advised.
General Advice ASIC = PRODUCT INFORMATION !!!!!!!!!!!!!!!!!!!!
Looks like ASIC will eventually prohibit upfront advice fees being charged to super funds in the “interest of the member” but completely ignore the long term value this provides to members. Fast Forward 10 years and millions of people nearing retirement missed out on valuable advice and retirem broke all because ASIC wanted to save them 2 grand 10 years ago. The real agenda here is ASIC wants to cap upfront advice fees to $200 in an attempt to wipe out the remainder of retirement planning advisers just like they did with risk advisers. Wonder which industry super fund Hayne got his pockets greased by to make that recommendation?
The only dilemma here is that ASIC needs to overcome their personal bias against financial advisers in favour or industry funds. Here’s a novel idea -treat all advisers the same!!!! It’s not that hard
Get rid of the conflicted intra -fund advice model, the corps act allows for a trustee to subsidise advice for all members if it is regarding their personal circumstances and only in relation to the fund. This is crucial that people understand the difference and that advice fees should only be charged when advice is being given
New Buzz words from ASIC , “Cordial Advice ” “, be really careful about advice” . Good work people ,everyone is confused , so let’s not do anything formal . Set up a few committees and have a Sydney based forum, a talk fest, public service like , if you like so that we don’t have to do anything really …. a bit like we have been doing for the last 10 years , with your heads in the sand !!!!! Please don’t make any rational decisions like define what is and isnt .