ASIC’s Report 639 examined the ways in which superannuation funds help members obtain financial advice through a survey, and the quality of personal advice obtained through the funds through an advice review.
The report surveyed 25 superannuation funds about how they help members obtain financial advice, and reviewed a sample of the personal advice provided.
It looked at a cross-section of the Australian superannuation industry and surveyed 11 retail funds, 10 industry funds, two corporate funds and two public sector funds.
Overall, ASIC found that the quality of personal advice provided to members was generally appropriate.
How super funds provide advice
According to responses provided by trustees of the superannuation funds, ASIC noted that:
- the most popular advice topics sought by members were member investment choice, contributions and retirement planning;
- general advice made up 75 per cent of advice accessed by members from the funds;
- four of the 25 funds surveyed did not offer personal advice to members;
- across all the funds that offer advice services to members, the most common delivery channels for providing advice to members were in‑house call centres and advice providers employed by a related party;
- across all funds, the key conflicts of interest identified by trustees were vertical integration, relationships with third-party advice providers, and bonuses paid to advice providers; and
- the majority of superannuation funds intend to increase their use of digital tools in the coming year.
The quality of advice from super funds
ASIC looked at the quality of advice being provided to members of 21 of the 25 funds. The other four funds were not included because they responded that they did not provide personal advice to members.
The review aimed to test whether advice providers complied with the best interests duty and related obligations when giving advice to members. In some of the cases, the fund was not the advice provider.
Overall, ASIC found that:
- 49 per cent of the files demonstrated full compliance with the best interests duty and related obligations;
- 36 per cent of the files did not demonstrate full compliance with the best interests duty and related obligations, but the file did not indicate that the member was at risk of suffering financial or non-financial detriment as a result of following the advice provided; and
- 15 per cent of the files did not comply with the best interests duty and related obligations and there was an indication that the member was at risk of suffering financial or non-financial detriment as a result of following the advice provided.
According to ASIC, the main reasons for files not complying with the best interests duty and related obligations were:
- the advice provider failed to identify the subject matter of the advice and the member’s objectives, financial situation and needs; and
- the advice provider failed to conduct a reasonable investigation into financial products and base all judgements on the member’s relevant circumstances.
‘It’s pleasing to see’, says ASIC commissioner
ASIC commissioner Danielle Press said super funds have a very important role to play in meeting the financial advice needs of members wanting to build their retirement income.
“It was pleasing to see that the personal advice reviewed was generally appropriate for members,” Ms Press said.
“We recognise that inappropriate superannuation advice can have a significant detrimental impact on members’ future financial security. Where we did see some risk of detriment, we will be following up with the advice provider and requiring that they review and remediate the affected member.
“More broadly, proper oversight of advice fee deductions from superannuation accounts for all advice, not just advice provided by superannuation trustees, is an area of ongoing focus for ASIC working with APRA.”
Ms Press further acknowledged there would be general interest in whether retail or industry funds provided better quality advice. The report found that the quality of advice to be similar across retail and industry funds.
However, due to the different sample sizes we used in its work, Ms Press said it is not possible to properly compare the overall quality of advice based on all fund types, and had to present its findings on an aggregate basis.
“We will continue to monitor developments in advice services offered by funds through our regular engagement with trustees and take action as required,” she said.
The super funds that took part in the ASIC report were:
Industry funds
Australian Meat Industry Superannuation
AustralianSuper
Equipsuper
First Super
Employees Superannuation
LUCRF
Statewide Superannuation
SunSuper
UniSuper
United Super
Retail funds
Avanteos Investments Limited as trustee for the Avanteos Superannuation Trust
Challenger Retirement and Investment Services
Equity Trustees Superannuation
Fiducian Portfolio Services
IOOF Investment Management Limited as trustee for the IOOF Portfolio Services Super
Mercer Superannuation (Australia)
Nulis Nominees (Australia)
Perpetual Superannuation
Suncorp Portfolio Services
Tidswell Financial Services Ltd as trustee for the Tidswell Master Superannuation Plan
Zurich Australian Superannuation
Public Sector funds
FSS Trustee Corporation
VicSuper
Corporate funds
Qantas Superannuation
Telstra Super
So given 49% is now apparently a pass mark, does this mean I’d get the same thumbs up if ASIC audited my practice and we scored similarly? Likewise, 49% will get me a pass for the FASEA exam I’m assuming now also yes?
Only 200 files are you kidding me!!! So ASIC spent one month looking at the entire industry superfund cohort and yet are banning individual planners for something that happened three years ago??? What the hell FPA AFA where the bloody hell are you??
Got ya…. April fools… right?!
Such a kick in the guts. These guys are untouchable. They laugh in the face of ASIC quoting their $1.50 per week admin fees. Agree with all the comments here confirming that any other “adviser” would be shut down with those figures. Very much seems like…. “Dear Super fund what a great job your team did, ps my Government job and $85K salary is looking dodgy, any chance I could be your new head of compliance next year? ” kind regards ASIC Compliance Officer, PS I do vote Labour as well and I’m quite happy with political donations..
Over to you FPA / AFA, I look forward to you advocating strongly for Financial Planners (your paying members) in light of ASIC yet again producing another seriously biased report. Here is a tip for your press release, just cut and past some of the great comments below and make ASIC accountable, just for once.
so 49% is the new pass mark – I’m sick to death of the vendetta against small financial planning firms
General advice made up 75 per cent of advice accessed by members from the funds; MOST IMPORTANTLY – No need to act in the client’s best interests. no concern….
Also ASIC…..
“The corporate regulator has uncovered widespread confusion among consumers about the classifications of “general” and “personal” advice, which could become problematic for the major banks as they exit their wealth operations because attempts to sell products under a “general advice” label could be misleading to customers.”
It’s pleasing to see’, says ASIC commissioner not even trying to hide anything now! ASIC commissioner Danielle Press who also has skin in the game regarding general advice, Six-park gives general/robo advice wow https://www.adviservoice.com.au/2018/07/six-park-welcomes-danielle-press-to-the-board/
https://www.sixpark.com.au/
ETHICS ever called into question ASIC and Danielle Press – WTF ???
lol I watched that sixpark video… It states $50 per year, however they’re also charging asset based fees if you read into it on a sliding scale starting at 0.50%!… It also seems to me that they’re providing advice without any statement of advice…
What a joke! ASIC review only 200 files of targeted risk advisers, create fictitious report 413 and cause complete disaster to the risk insurance world over around 30% non compliant TARGETED ADVISERS and only 200 files.
They review 25 Funds and find over 50% non compliance but its all good for them and all good for general advice.
If anyone wants to know where ASIC’s loyalties lie, here we have it.
When ASIC did the same through shadow shopping financial advisers, they found that only 3% was good, 25% was really bad – reportable in fact – and the rest was unsatisfactory
Getting 49% right and 85% no evidence of harm is clearly much better, so they are moving on. If advisers get to 75% compliant then such a report would probably have a different conclusion …
If advisers pick up their game, others will have to do so as well. In the meantime …
What a joke. 49% of files are compliant and ASIC classes that as “generally appropriate’. And no problem with 75% of advice being general advice.
If those numbers were applicable to my business id probably be subject to a banning order!
“the most popular advice topics sought by members were member investment choice, contributions and retirement planning;
general advice made up 75 per cent of advice accessed by members from the funds.”
I wouldn’t have thought you would need to know or take into consideration any of the clients personal circumstances to discuss the above, so it’s all fine…NOT…..WTF
Typical ASIC pushing the burrow against anything for Real Financial Advisers.
Any ASIC report for real advisers with 51% fail rate would end in new red tape regulation, new red tape education and loads of media of how dreadful Real Financial Advisers are.
Yet highly conflicted Intra Fund Advice paid for by hidden commissions from all members when bugger all members use the service and 51% get Advice that is NOT IN THEIR BEST INTEREST – and ASIC Love it !!!!!!!
ASIC – ever heard of a level playing field ???????????
A freaking joke ASIC – you really are so unbelievably biased against anything Real Financial Adviser. Pathetic
big business have their grubby hands all over this.. to the detriment of small business. The quicker everyone wakes up to this the better. As for ASIC, this report just shows how biased and out of touch you are – just a bloody joke
ASIC slammed SMSF advice, in which 10% had a consumer detriment, but they are pleased with super funds where 15% resulted in a detriment!!! Just another example of a regulator which is more interested in pushing their own ideological agenda than properly regulating financial advice for the benefit of consumers.
My goodness. Despite all the know problems with intra fund advice ASIC come up with this to support it ? At the same time they are banning advisers for years for not ticking all their audit boxes. Unbelievable !
What were the individual results from AustralianSuper ?
As the default fund for ASIC employees, it would be interesting to see how this fund scored compared to the others.
Providing aggregate results was necessary or just convenient ?
When ASIC ran a very similar survey a few years ago on financial planners the results were similar. Ie only 15% of the files could prove they placed the client in a better position. But the narrative from those stories were very different to these findings. At the time it was how shocking that most advice provided by planners was inappropriate as they couldn’t prove they they put the clients interests first and they failed to meet the BID requirements.
tick a box… it was never going to be critical of their services.. right?!
How on earth is any of this type of advice meant to fit into the new code of ethics. Secondly, at what point did a pass mark of 49% compliance with the ‘law’ become the pass mark with the regulator commenting it as “pleasing”.
The world of advice is officially broken.
More than half failed BID and ASIC are happy?
Surely ASIC aren’t guilty of double standards?
The main question to ask your super fund is “Dear Super fund, is there a better fund available than yours” lets see how all of them answer that question!!
Only 49% passed BID and this is a good result? ASIC isn’t even trying to hide their bias and protection of their union funds mates anymore. How can over half of the files fail and ASIC pat the super funds on the back. Would they be saying the same if this was financial planners providing the advice?
So according to the article 51% of the files failed the best interest duty yet ASIC was satisfied with the outcome. How much did ASIC receive under the table to arrive to that official position?