A new report from the corporate regulator has revealed that the quality of personal advice provided to members of superannuation funds was overall deemed “generally appropriate”.
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 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:
According to ASIC, the main reasons for files not complying with the best interests duty and related obligations were:
‘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:
Australian Meat Industry Superannuation
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)
Suncorp Portfolio Services
Tidswell Financial Services Ltd as trustee for the Tidswell Master Superannuation Plan
Zurich Australian Superannuation
Public Sector funds
FSS Trustee Corporation
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