ASIC’s SOA relief measures are a welcome announcement for financially struggling consumers, but are unlikely to be economically viable for advisers to take up in most cases, according to an advice industry body.
AFA general manager of policy and professionalism, Phil Anderson, told ifa that the measures – which allowed super release advice costing up to $300 to be given without an SOA – were a logical step for the regulator considering the large numbers of consumers in financial stress as a result of the COVID-19 crisis.
“We are conscious of the large number of people that are impacted by this and we are obviously very conscious of what is a realistic charge for advice on this,” Mr Anderson said.
“If you’re only getting $10,000 out of super, it’s not practical for a charge of anything greater than the figure [ASIC] have landed on to be applied, but it’s very difficult to provide advice at that fee level.
“If it’s new clients it’s going to be tough for an adviser to have someone walk in off the street and say ‘I need advice on whether I should get super out’ – if they are going to provide personal advice, they need to find out their personal circumstances and that is a costly exercise.”
Mr Anderson said given these circumstances, it was sensible for regulatory relief to also be extended to accountants and intra-fund advisers, despite the fact they were not ordinarily licensed to provide full personal advice.
“We are not overly uncomfortable about it being extended to tax agents who will already have some knowledge of the client, including their cash flow and so on,” he said.
“There’s a no-action statement [in the measures] to give certainty to super funds giving that advice because they are another potential supplier of that advice.
“At the end of the day, whilst we would always be opposed in normal circumstances to anyone being able to provide advice when they are not authorised, in the current circumstances it’s a reasonable measure to ensure as many people as possible can get access to some form of advice.”
Mr Anderson added while the measures were not economically viable for most advisers, many could still choose to take up the provision of low-cost super release advice as a pro bono community service.
Industry welcomes red tape removal
A number of other financial services industry bodies have welcomed the regulatory relief measures, which were announced yesterday and also include further time to provide SOAs to a client after time-critical advice is given, and the use of an ROA for existing clients whose circumstances have changed or who are seeing a different adviser within the practice.
“There has been an increasing demand for advice around early access to super since the government announced Australians could access up to two parcels of $10,000 in superannuation tax-free as part of their second stimulus package,” the joint bodies said.
“This move has removed significant red tape and ensured a simple, streamlined process is in place so those facing financial hardship during this time get the right advice.”
SMSF Association chief executive John Maroney said given the effect that early super access could have on a client’s financial goals, it was important they be able to speak to their adviser before potentially accessing the funds.
“The decision to access superannuation early is a significant one with a long-term impact on individuals’ retirement savings, so for them to be able to speak to an accountant or adviser for a small fee to get the advice they need without sacrificing safeguards is welcomed,” Mr Maroney said.
FPA chief executive Dante De Gori said the move would provide more comfort to consumers in knowing they could consult an adviser before signing up to the early access scheme.
“This is welcome and timely relief from ASIC to assist our members in supporting as many Australian’s as possible through the financial crisis caused by this pandemic, and demonstrates ASIC acting on sensible calls from professional associations,” Mr De Gori said.
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