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.
Anything possible avenue for additional red tap specifically directed at anyone but Industry Super seems to be completely embraced and implemented with complete authority – so it seems.
This “discretionary” approach will allow super funds to favour their conflicted inhouse advisers, while putting barriers in the way of independent advisers. It will be similar to the contrived barriers union funds put in the way of independent advisers who have authorisation to enquire on a client’s account.
Once again, the consumer loses out.
Seems to be the design.
The kabaal of corruption continues: ASIC, FASEA, APRA, ISF, Freidenburg, Hume….etc, etc
The funds members, no mention of the fact we advised the clients to go into these funds in the first place and actually have the overarching relationship with them. So a third party will check on the services and advice provided. More people with less education judging our work. No one else would stand for this, they would be marching on canberra by now!
Just when you think you have heard it all…..
You do realise that industry funds that may not be suitable for a client will decline the SOA just to retain their members. If that’s not breach of the best interest, I don’t know what is!
Yes, interesting conflict of interest.
Just wandering if the law has changed? If not then the Super Trustees have broken the law because for all these years never looked at SoA before. Get real you twats…….
I’m sorry, but how would checking a SOA prove that the services were actually delivered? They have completely lost the plot.
They haven’t lost the plot. It is to drive us out of business and for super funds to hate dealing with us.
For that it works beautifully.
Just another example of the ongoing bullying we are subjected to at the hands of the regulators or Government. We continue to pay for the sins of those departed (banks) and its about time the Government, ASIC and in this case APRA were called out publicly for this over zealous behaviour and relentless bullying. We already have layer upon layer of regulation, jump through all the hoops thrown at us and client engagement and transparency has never been greater. Yet we are still treated as if we are all crooks and our clients as if they are dumb and not capable of making informed decisions! Its clear where the advice sector is heading if we dont take a public stance and say enough is enough! Surely what we have been subjected to also borders on being unconstitutional!
Agree and would like to add that this bullying only serves to harm confidence of consumers in obtaining independent financial advice and therefore negatively counters so much of what the regulator and other parties with their own interests purport that they are trying to achieve (ie … more Australian’s getting good quality advice and better off financially that would reduce the unsustainable and enormous federal government costs in welfare pensions, allowances, subsidising of medicines, medical services, in hospital services, housing, accommodation and on and on and on and on ……
This is complete nonsense. ASIC got their way with 12 month fee consent, which must be reported to the super fund. That should be the end of it. Their relentless attacks on financial planners needs to STOP.
This is nothing more than the regulator trying to cover up the fact that it has not supervised trustee’s adquately and is now trying to give the appearance of doing so. This will of course increase fees to clients and I am sure that the regulator will need to be aware to this. So in essence the client instruction in regard to their investment decisions can be over-ridden by the trustee if the trustee doesn not like the advice provided.
I suggest that the first time this happens it will be time to take this matter to ASIC to say “well what does the advice industry regulated by you now do as it appears you are now looking a little bit irrelevent with APRA now getting into defining advice standards as trustees will want this detailed so as to avoid being sued by clients for losses.
Also, your neighbors, friends and family, colleagues, local member, publican, solicitor, post office, your GP, and the garbage collector etc should check your SOAs. It’s incumbent on all of us to insure that there’s no filthy SOA’s infecting our valued community … and please wherever possible, please dob in an adviser if you think the SOA is just not good enough or ethical enough.
So ASIC charge industry directly for chasing non participants like people without an AFSL?
However somehow super fund trustees are meant to do ASIC’s job of policing advisers and not get paid for it.
Good luck reading those 50 page SOA’s…with ZERO qualifications to do so. Dumb and Dumber…
Actually it is easy- the super trustee says the advice is inadequate- I will say -no worries, I will the clients funds to aniother super fund- end of matter..
As I read somewhere else – do pharmacists access medical records before dispensing medicine…
This heaps liability on all trustees for all advisers and all their statements of advice. If the trustees get it wrong, then their controls were not ‘sensible’ but insufficient.
On the surface it shows that advisers are not trusted at all. Not only are the regulators (how many 7?) not enough, it now needs another party, scared for their liabilities, second-guessing every adviser’s work, even if they don’t check all advisers or all SoA.
No, this is a simple device to take advisers out of the business of giving ongoing investment advice to low- and medium earners as it will make it simply too expensive to give such advice in future.
Now we know the endgame for advisers.
What is the endgame for low and medium-end customers?
Funnelled into high margin Union and Retail funds where Politian’s, oops I mean execs, can get fat on their fee revenue.
What an outrageous breach of privacy, not to mention cost and imposition.
How is this in line with ASIC’s mandate to reduce costs?
“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 certainty is killing me!
When is a representative body going to stand up and say that’s enough red tape. Wondering if I can get a Drug Company to sign off on my Doctor’s Advice. Perhaps I should send my House Plans into Bunnings for their approval as well.
Ridiculous. It’s like asking a drug company to monitor the doctors using their products – parking inspectors to monitor our police force – kids in school to monitor their teachers. Ridiculous.
Our kids policing our teachers sounds like a worthy idea now you mention it.
Schools seem to be training kids to be activists instead of teaching them the skills needed to make a go of life.
Perhaps we could hold the government to the same standard and have an independent check on the Sports Rort, The Carpark Rort and the recently mentioned $880 M discretionary fund set up by the Government to help businesses with projects to be announced before the next election. Ethics, transparency and honesty.
For the last election Josh Frydenberg received a large upgrade to local tennis courts worth $$M as well as $65m in carparks for stations in his area. https://joshfrydenberg.com.au/delivering-for-kooyong-2-2/
I don’t think every every electorate got that.
So let me get this right. An adviser who legally has to work in the client’s best intertests, has years of experience and trainign and is covered by PI insurance needs more scrutiny. But when industry fund sales reps with a 2 day course change a client who is in accumulatuon phase to an industry fund and the balanced investment option with the automatic insurance cover, they see no problem. I suppose its ok because the IFA sales reps are paid bonuses from everyone’s super investment pool not just from the client who’s financial security and future they have ruined.
I would think that every piece of advice recommending moving to and Insustry Fund would breach the best interests duty. Industry Funds have poor investment returns and poor insurance.
What an absolutely nightmare waiting to happen
This is a joke right?? Let super funds manage their own responsibilities instead of trying to force them to be a regulator. It’s the responsibility of all advisers and licencees to ensure the advice is appropriate and fees represent value. Just another example of how trying to fix something that isn’t broken results in higher fees for the client. Isn’t that the opposite of what is intended? Someone has to pay for all the additional red tape, and the end consumer is always the one who foots the bill to these ridiculous ideas!
Why assume they are trying to fix something – I think they are trying to eliminate all competition for Industry Super?
What a joke. This mob want trustees to check on whether financial advice is appropriate if funded by Super and then you have Government senators like Bragg who yesterday put out a questionnaire asking what people felt about being allowed another bite at the cherry for early access due to covid. The legislators and the regulators have no idea
The Federal Liberal government is clearly trying to close down independently aligned financial advice practices. Jane Hume worked for Australian Super as a Policy Adviser prior to politics. Frydenberg a Big bank.
Serious question: Do we actually have any idea if the ALP is going to be any better for advisers? Or are we just political fodder for both sides of the chamber?
Simply ridiculous.