FSCP reprimands another adviser over super contribution errors

The Financial Services and Credit Panel (FSCP) believed the individual contravened sections 961B(1), 961G and 921E(3), specifically they did not demonstrate compliance with the Code of Ethics’ value of diligence and Standard 5.

In its determination, the panel said the relevant provider gave advice in June 2022 recommending a client make a superannuation non-concessional contribution of $110,000 for FY2021–22 and $301,681 (total) for FY22–23.

When giving the advice, the relevant provider failed to take into account that as at 5 May 2022, the client was in year two of a three-year “bring-forward arrangement” and her remaining balance (of the NCC cap) was $124.65.

As a result of following the advice, the client was notified by the Australian Taxation Office (ATO) on 30 November 2022, that she made an excess NCC of $109,775.35 in 2021–22. In addition, the client was notified by the ATO on 19 November 2023, that she needed to withdraw $312,301.21 from her superannuation and that her 2022–23 income tax assessment would be amended to include her associated earnings amount of $39,174.

Alternatively, her excess NCC would be taxed at 47 per cent and the ATO would send her an excess NCC tax assessment for $131,131.55.

Under the written direction, the individual 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 to the advice in writing and the individual must enact these. If their AFS 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 to ASIC within 30 days of completing the final audit.