The Financial Services and Credit Panel (FSCP) has handed down a written reprimand to an adviser, anonymised as “Mr U”, after finding that he provided incorrect advice on a client’s non-concessional contributions cap.
“The relevant provider gave advice in April 2023 recommending a client make a superannuation non-concessional contribution of $299,000 for the 2022–23 financial year,” the FSCP said.
“When giving the advice, the relevant provider failed to identify and take into account that the client had previously made a lump-sum non-concessional contribution of $300,000 in the 2020–21 financial year, which reduced the client’s non-concessional contribution cap to nil for the next two financial years.
“As a result of accepting the advice, the client had to withdraw $330,221.68 from their superannuation and incurred additional tax liabilities of $5,552.58 on associated earnings.”
The sitting panel determined that it “believed that the relevant provider contravened sections 961B(1), 961G and 921E(3) specifically they did not demonstrate compliance with the Code of Ethics’ value of diligence and breached Standard 5”.
Under the written direction, Mr U must engage an independent person with financial services compliance expertise, provide their details to ASIC and have the individual audit their next 10 pieces of advice that include a recommendation in relation to superannuation contribution or recontribution that are designed to take advantage of certain tax and super provisions to maximise tax benefits.
The auditor must notify the adviser of any changes in writing and the individual must enact these. If the Australian Financial Services licensee disagrees with the recommended changes, they must keep a record detailing why they withhold approval and tell the auditor of those reasons.
The auditor must then submit a report within 30 days of completing the final audit.
Other than taking no action, a written reprimand is the lowest level of action available to the FSCP.
It follows a similar finding in December last year, with the FSCP reprimanding a relevant provider for providing incorrect advice on a client’s non-concessional contributions cap.
“The relevant provider gave advice in January 2023 recommending a client make a superannuation non-concessional contribution of $329,000 in the 2022–23 financial year when the client’s non-concessional cap for that year was $220,000,” the FSCP said.
“When giving the advice, the relevant provider failed to obtain or take into account the client’s superannuation assets in the client’s PSS pension fund. As a result, the client needed to withdraw $120,735 from their superannuation and pay tax on the associated earning of $13,570.”
“Mr U must engage an independent person with financial services compliance expertise, provide their details to ASIC”
So clearly the ASFL system is not working?
Having ATO portal access to the super information would go a long way to help eliminate this issue.
We desperately need access to the ATO portal to ensure this doesn’t continue to happen.
AFSL not liable in any way? They’re collecting fees from an incompetent adviser, after all.
Currently, most advisers are taking risks by trusting the contribution history notified by clients. The ATO portal is a central ‘tracking’ system – but advisers don’t have access to it. Life would be so much easier if, like accountants, advisers could be granted access to this important information.
The super statement would have shown the deposit..?
The ATO & Government failed to comply with the value of diligence to ensure Advisers have access to the required Super contributions, TBC & TSB data.
What punishment do the morons in Canberra get ?
The Government needs to give Financial Advisers access to the ATO Portal, which would readily show this data and help to avoid these mistakes being made.
More reason to allow retail advisers to access the MyGov ATO Super record of the client. It seems everyone can access it except retail advisers, who are being taxed to death by this Govt.
Doing God’s work over there at the FSCP…
Just make sure advisers never get access to the ATO portal! Who needs it?!