SOA checks may be necessary to ensure ‘quality of advice’

Addressing the Australian Institute of Superannuation Trustees’ Super Advice Symposium last week, APRA executive director of super Suzanne Smith conceded the communication with trustees sent last month had created “uncertainty” among some industry participants.

“In our engagement with trustees, we’ve made it clear that their role is not to second guess each piece of advice – rather, we think in some instances it’s appropriate for trustees to check services have been provided, so the trustee can meet their legal obligation to ensure only amounts that meet advice requirements are deducted from member accounts,” Ms Smith said.

“There is no expectation that trustees obtain a copy of every SOA produced, nor when an SOA and related documents are obtained, that they should be reviewed for quality, value or appropriateness. Instead it’s open to trustees to come up with an approach that ensures the quality of advice being provided to their members is as it should be.”

The comments come following the two regulators’ latest guidance drawing criticism from adviser industry associations, with AFA acting chief Phil Anderson saying the request to review SOAs was “unreasonable” and could amount to a breach of the Privacy Act.

Ms Smith said APRA and ASIC expected trustees to have “sensible controls in place” to ensure fees were being “appropriately disbursed” from member accounts.

“Some trustees undertake periodic assessment or review of advisers using an independent third party where appropriate,” she said.

“Expectations that controls exist in relation to payments is not unique to advice fee deductions. The most recent communication is aimed at supporting trustees to move forward with confidence and provide clarity on the behaviour and activity to prioritise and importantly those to avoid.”

Ms Smith said in APRA’s view, it was important for super trustees to consider how member advice arrangements factored into the risk appetite of the fund and whether the governance arrangements were adequate to “deliver these services safely and effectively”.

“Ultimately for trustees it is all about the member and ensuring the interests of members are being prioritised at all times, and where third party service providers are involved, that the trustee has confidence that there is shared intent of what the trustee is trying to achieve,” she said.