The corporate regulator has uncovered a range of poor advice issues relating to the provision of super consolidation services, including inappropriate deduction of fees and use of member data.
In a recent article for ASFA members, ASIC superannuation senior executive leader Jane Eccleston said as part of a joint investigation with the ATO, the regulator had uncovered a number of advisers charging high fees to reunite consumers with unclaimed super amounts sitting in unused funds.
“We have seen advisers charge a 4 per cent fee based on the consolidation amount,” Ms Eccleston said.
“This results in consumers unnecessarily paying for a search and consolidation service which they could get from the ATO for free. In some cases, the whole of the lost superannuation recovered ends up paid out in fees.”
Ms Eccleston said the surveillance had uncovered a range of “concerning conduct” around super consolidation services, including third parties inappropriately using member data in the ATO’s SuperMatch2 platform for super funds; poor quality general and personal advice; and advisers moving unclaimed super amounts into a third account, from which they deducted their own fees before passing the amount to the consumer.
Further, ASIC identified advisers charging ongoing asset-based fees following a consolidation service for a client, as well as inappropriately encouraging members to apply for early release and targeting funds that “appear to be more lenient in granting the release of funds”.
Ms Eccleston said the regulator was concerned that such advisers could use the current crisis “as part of their pitch to consumers to carry out broader superannuation activities”, such as early release and consolidation.
However, the regulator said responsibility also lay with super fund trustees to ensure they kept closer oversight of how member data was being used within the ATO’s platform, and were applying appropriate scrutiny to deductions of fees from member accounts.
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