Super funds can only pass along the cost of intra-fund advice if it leaves members better off, according to ASIC.
Intra-fund advice is the scaled or limited scope personal advice that a super trustee can provide to members; section 99F of the Superannuation Industry Supervision Act (SIS) allows trustees trustee to directly or indirectly pass the cost of providing general advice or certain types of scaled or limited scope personal advice along to the members of the fund.
But the costs can only be passed along if it covers “certain limited topics” related to the member’s interest in the fund, is not ongoing advice, and leaves clients better off, ASIC said.
“Consumers who seek financial advice, including scaled advice under an intra-fund arrangement, expect that the advice provided will leave them in a better position,” ASIC said in response to a question on notice from Liberal MP Jason Falinski.
“When assessing whether an advice provider has complied with the best interests duty, we will consider whether a reasonable advice provider would believe that the client is likely to be in a better position if the client follows the advice provided.”
Any personal advice provided under the intra-fund arrangement has to comply with BID and the disclosure obligations in the Corporations Act.
The issue of intra-fund advice has been contentious in Australia’s financial services landscape, with many advisers concerned about how super funds manage conflicts of interest when providing advice on their own products.
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