Under the first Delivering Better Financial Outcomes (DBFO) bill, introduced into Parliament in March, there are revised requirements for superannuation fund trustees processing financial advice fees.
Namely, the legislation sets out a number of requirements that need to be satisfied before a trustee can charge the cost of advice against the member’s interest in the fund.
In its initial response to the proposed legislation, the Financial Advice Association Australia (FAAA) highlighted this measure as a main area of concern.
Speaking at an FAAA roadshow in Sydney on Friday, chief executive Sarah Abood once again drew attention to the concerns around the amendments the DBFO bill would make to the Superannuation Industry (Supervision) Act (SIS Act).
“There’s some concern that the new wording of this section, section 99FA, will require super trustees to audit every piece of financial advice where a consumer has asked the trustee to pay their advice fee,” Abood said.
“We don’t believe that that was the intent of the legislation. But we think it’s important that that be resolved because otherwise, we’ve got the issue that we might be robbing Peter to pay Paul here. That we’re saving red tape and cost in one area and we’re creating more somewhere else.”
Also speaking at the event, ASIC commissioner Alan Kirkland assured that the corporate regulator does not see a need for superannuation trustees to verify every statement of advice (SOA).
“We’ve been trying to provide some early guidance in relation to the issue … around the obligation of superannuation trustees, to clarify that under those proposed reforms, as under the current law, it’s not our view that super trustees are required to check every statement of advice and we’ll continue to do our best to make that clear,” Kirkland said.
However, Kirkland did note that ASIC’s role is not to make policy decisions or design legislation, but it does “assist Treasury through that process”.
“We also then provide regulatory guidance once legislative reform has passed. And the point of that regulatory guidance is to help people and the entities we regulate to understand how to comply with the law,” he said.
“I know a lot of you will be interested in whether we’re going to be producing updated or expanded regulatory guidance once the Delivering Better Financial Outcomes reforms are passed through the Parliament.
“That’s something we’ll make a decision on once those reforms have passed in full and we’ll be consulting with stakeholders like the FAAA to understand where there might be a need for us to better elaborate how we think the law applies and where our areas of focus are likely to be.”
Problems with s99FA
However, FAAA general manager policy, advocacy and standards Phil Anderson, who also spoke at the roadshow event in Sydney, said that s99FA took super fund trustee obligations to “another level”.
Under the proposed new version of s99FA of the SIS Act, “the trustee or the trustees of a regulated superannuation fund must not charge against the members interest in the fund the cost of providing financial product advice, unless the financial product advice is personal advice and is wholly or partly about the member’s interest in the fund and the amount charged does not exceed the cost of providing financial product advice about the member’s interest in the fund”.
According to Anderson, advisers are often providing advice that “goes above and beyond the member’s interest in the fund”.
“That’s saying that the super trustee needs to know what advice you are providing and the extent to which that advice relates to your client’s interest in the fund to make sure that the fund is not paying for advice that is unrelated to their interest in the fund,” he explained.
“How exactly do they do that? That’s where we’ve come to the situation where some of the funds are asking for copies of SOAs and you guys have got to go through and redact personal information that you don’t think should end up with a trustee.
“It’s been quite an unworkable model and we do think there needs to be a better solution. So, we’re strongly opposed to trustees looking at advice documents that contain personal information. This is a privacy issue. We believe that it’s also an administratively inefficient process.”
Anderson also put forward alternative proposals for super trustees, such as a sample-based method, or a licensee or adviser attestation model.
“Maybe we need to have to move away from focusing on SOAs to focusing on letters of engagement that don’t contain that personal information,” he said.
“Another key point that we make, and we make this strongly, is that for any client who has already met a condition of release and transferred their money to retirement phase, they are entitled to take that money out when they wish. If that’s the case, then why should trustees need to check that it met the sole purpose test?”
Is it also ASIC’s view that it’s ok HostPlus continue to spend members monies as an Official Partner of the AFL & AFLW ??
By financially supporting a football organisation and football teams, how is this justified as benefiting the HostPlus members and how does it still satisfy the Sole Purpose Test ?
This has all been raised many many times over a number of years and yet these funds always continue to claim ” it’s all for the members” and yet the sponsorship monies are ” all for the AFL” !
If you are a HostPlus member and detest AFL or AFLW, I suggest you would not be accepting your Super fund was pouring substantial monies into sporting sponsorship rather than spending it on improving services to it’s members.
Why would ANY Advice Professional believe a word that comes from ASIC, not to mention why on earth are they involved in forming legislation? Their role is regulate not make up the rules, based on bias and ignoring the Profession. Surely Jones is upset they’re stealing his gig and provided 0 assistance in the poorly and innacurately worded draft to date?
“it’s not our view that super trustees are required to check every statement of advice and we’ll continue to do our best to make that clear,” Kirkland said. Yep, just like SoA’s aren’t supposed to be 100 pages long Mr Kirkland.
Until the incompetent ASIC are removed from Financial Services this is going to continue sadly…
However, Kirkland did note that ASIC’s role is not to make policy decisions or design legislation, but it does “assist Treasury through that process”.
And records of this are all available for public review?
Assist like the farcical debacle of the initial QoAR draft proposal ignoring ALL stakeholders from 2 years of roundtables. Maybe stick to your lane, regulate objectively and take ownership of your contribution to a broken system, the joke of the professional services community globally?
So instead of sending in an SoA, I send in an SOA. Thanks making things simple and clear
Asics views don’t matter in draft legislation phase. So sick of their overreach bias and anti adviser agenda. No wonder scammers are winning
The requirement will be sufficiently vague enough for union super funds to selectively block their clients from obtaining independent advice, and for ASIC to persecute advisers over administrative matters that cause no client detriment.
QAR outcomes are effectively being written by unions and ASIC, to favour the vested interests of union super, and the prejudices of ASIC.
Spot on
Real Advisers Get screwed yet again
Yes, wouldn’t be surprised if fund trustees start using this legislation to block partial rollovers and protect their FUM. So much for Jones’ commitment of cutting red tape.
The simple understanding of ANY legislation is that whatever the nimble minister says wont’s happen, the opposite will. Then when found out, the blame game occurs. It wasn’t us..it was them….what a joke. Keeping costs down for the average punter…..no these fools need a reason to justify their jobs. Never fixing anything rather fixing something until its broken. Our curse are incompetent fools in charge. They are narcissistic, psychopaths and uncaring…for the most part.
ASIC couldn’t help themselves. They are clearly the ones to blame for poisoning the legislation, which was supposed to reduce red-tape and compliance costs. They are now trying to down play the impact, but once this legislation is in place, make no mistake, they will use it to maximum effect, as a tool to disrupt and damage financial planners. I don’t care what they say. I look at the history of what they have done, over and over again. This legislation needs to be fought hard and the only way to win is to expose Labor politically. Jones promised a reduction in red-tape and that promise turns into a bare-faced lie if this terrible legislation gets up.
so what happens when an SoA is checked by the licensee, approved by the client and then the super fund cock-blocks it because it doesn’t meet their compliance stadards? Does the adviser have to change the SoA to be compliant with the super fund but not compliant with their own business or the AFS???
Which SOA are we talking about, the normal SOA or the new designation this article “statement of account”. It seems to me that in this article maybe the answer. The adviser completes and SoA and attaches and SOA for the Trustee!!
Parliamentary Legislators influenced by Treasury forgot to check with APRA which issues guidelines to superannuation trustee. Politicians should read APRA Superannuation Practice Guide SPG530 dated 2013 and revised July 2023. The only role of an adviser is to advise Trustees regarding the whole super fund and completely ignores financial advisers giving RG244 scaled (individual tailored) advice to individual members, so that trustees apply SPG530 guideline in the hierarchy of Laws over financial advisers RG244. This is hilarious funny in respect of the conflict of Laws – Section 99FA to check SOAs issued under RG244 Client Best Interests duties but APRA SPG530 requires SOAs and ROAs to be completely ignored in preference for SPG530 in the first instance. This is totally ridiculous and laughable on the Albanese Government.
A corporate Lawyer would say SPG530 is not Law but only a Guideline, but Trustees behave to minimise regulatory risk and protect their reputations, so Trustees organisational behaviour over financial advisers is as if SPG530 is Law, so you cannot be lawyer smart in superannuation practice. No trustee wants APRA breathing down their necks. If you ask APRA about Section 99FA, they will rebuff and say, nothing to do with us – it is Trustees’ obligations to comply with conflicts in Laws and regulations. This is totally ridiculous and laughable on the Albanese Government.
To all you people on Parliament Hill, Commonwealth Law Reform Commission of Judges said financial laws are in a mess. Legislation needs to be reviewed and corrected with comments from Judges, otherwise errors in Law are going to be subjected to complaints from practitioners before Federal Court Judges.
Its very simple to me. If fees for the year are above 1.3% then maybe the Trustee has the right to question it. Stating it is above industry standard. Or maybe if the original application stated fees were going to be 1.1% per year and the fees are higher, then there is reason for the trustee to query it. Why make it so dam complex.
In effect, ASIC and Industry Super are saying there is NO CHANGE. What’s the point?
If the intent of the Legislation is NOT to make Trustees Quadruple check Advice, after the AFSL, Adviser & Client have all already approved the Advice.
Then change the Legislation so it is clear that the Trustee is NOT to check the Advice but approve the Client Authority to Pay for the Advice from the CLIENTS OWN SUPER MONEY.
ASIC Cannot be trusted.
Industry Super Fund Trustees Cannot be trusted.