In a supplementary submission to the government’s Retirement Income Review, Super Consumers Australia director Xavier O’Halloran said the COVID-19 pandemic had exposed a number of problems with the super and financial advice sectors.
The FPA was named as a culprit of causing poor consumer outcomes, after it formed an ROA template including modelling of lost future earnings if people decided to withdraw their super early.
But Super Consumers said the modelling is “likely to mislead any consumers who view it”.
“The FPA template fails to account for the impact of inflation in its modelling, a critical error that goes against ASIC guidance for these types of models in superannuation,” Mr O’Halloran wrote in the submission.
“The result is people will be led to believe the impact of withdrawing is far greater than reality. For younger people the FPA’s projected losses are more than double what someone is likely to experience in real terms.
“It is unclear whether this modelling was done to discourage people from early release, thus keeping more assets under management of the adviser, or was just of a poor quality. Either way it points to an ongoing problem with the quality and independence of the financial advice sector.”
When asked about the submission, a spokesperson for the FPA told ifa the body has attempted to contact Super Consumers.
“The FPA is yet to receive any response from SCA and would be more than happy to have this conversation at any time,” the spokesperson said.
But Mr O’Halloran told ifa the consumer group has previously spoken with the FPA, with the association reportedly saying it expected advisers to adapt the template to individual clients’ circumstances.
Super Consumers contrasted its own modelling and information for consumers to the FPA’s template, saying its information was available weeks before people could make an early access request and it was “balanced”.
According to the group, “at least one” major super fund used the modelling.
“It is important people have reliable modelling on the retirement impacts of these types of decisions and it is a function we are set up to provide,” the submission read.
The FPA has previously hit back at Super Consumers after it called for people to contact a financial counsellor instead of a planner if they were in financial distress.
The consumer body also pushed for the government to make a decision on establishing a super consumer advocate in its submission, after it allocated funding from the federal budget last year and then held an expressions of interest call-out in December and January.
The process had been implemented after the Productivity Commission recommended an independent and adequately resourced consumer body in its superannuation efficiency and competitiveness review.
Super Consumers has recommended the government “urgently fund” a super consumer advocate, with Mr O’Halloran expressing concern about the future of consumer advocacy and superannuation advice and pointing to the body’s impending doom without a long-term funding solution.
As it stands, Super Consumers, which is partnered with Choice, will see its funds dry up from July 2021.
Well done Super Consumers. The FPA need to be held to account. We saw them and their members at the Royal Commission and we know their partnership program means they only represent the big end of town. Hopefully the FASEA exam and higher education standards will cull a few dodgy as, FPA members.
The whole reason for him complaining has nothing to do with the information in the template. It is about money.
“Super Consumers has recommended the government “urgently fund” a super consumer advocate”
I’m sure the average consumer knows about the reducing value of money over time. This is simply nitpicking
What a lame argument. Everyone knows modelling can be twisted to look whichever way. The stark reality is that the FPA were arming advisers so that they could explain to the 1/3 of clients who were drawing out super for gambling were doing something dumb… Irrespective of inflation.
gambling is not dumb if you win…
In my 30 years I’ve never heard of the FPA speaking out against an institution (for fear of biting the hand that feeds them) and so now there members are leaving in droves, they’ve gone after what they thought was an easy target but turns out they’ve been bitten. Funny.
A child farting in a barrel to create noise.
Yet another fake consumer group. CALC, Choice, and this mob are all just political activists trying to milk the handouts and board appointments designated for “consumer representatives”. It is a total scam. These charlatans need to be rapidly removed from all government agencies and funding.
Not only that but advice now has to take into account any impacts that may arise to other members of the clients family both now and into the future!!….so let’s take a 30 year old that has a 2 year old child and wants to take $10,000 from their super account. Are we meant to not only project the financial impact over 35 years for the individual but also estimate or acknowledge the impact on the dependent child over the same period, make mention of the reduced benefit received by that dependent child in the event of the member’s death, estimate the potentially increased Centrelink benefits in retirement in 35-40 years based on a reduced retirement benefit and not charge more than $300??………hahahahahahahahahahahahahah.
Should we also be questioning and recording the purpose the client provides for wanting access to their super monies.
If the client states prostitution, drugs and alcohol are we obliged to file note that we have advised the client this may have a detrimental impact on their retirement income stream and that it may be likely the police may visit them at some stage in the future ??
What a complete and utter joke this has all become….hijacked by left wing ideologues and political activists.
These people need to go and get a real job…the problem is they wouldn’t survive for 5 mins.
“Social security can never go broke!” – Donald Trump
Stick to organizing cup cakes at an industry event FPA. That’s about all they are good for. Given their FASEA proposal called for CFP education to be 20 points and Bachelor Degree in Finance to be practically worthless I would expect nothing less with Mr Magoo at the helm. This is after all, is from a body that can’t even negotiate an extension to an exam during a Pandemic.
My experience is the FPA would just ring up their mates “AMP or even now some Super fund with an adviser pool, maybe Stateplus or whatever and say what do you think about this policy and this proposed document?” Those firms are all about FUM and nothing but FUM and they’ve been caught out.
The FPA are at it again. causing trouble.
With a maximum $300 fee set by the Fed Govt, no one in their right mind would prepare a Statement of Advice for $300. Just call the ATO Hotline & they will do it for you. These activists groups are off with the fairies.
I have feeling this advocacy group is underestimating the problem.
Super Consumers wants some attention so they can get some funding, that can be the only reason behind this. I looked at the FPA RoA and very simply compounds a $10,000 at a net 6% pa. to arrive at a future value figure.
Sure it doesn’t take into account inflation, but does Super Consumers know what the inflation rate is going to be over the next 40 years? They should exit the advocacy business and start managing a hedge fund if they do….
Looked at the LI profile for Xavier and did not see any Business or Financial Planning qualifications.
Is the profile up to date?
It shows BSc Politics Hons, GradDip Journalism and Juris Doctor.
Please let me know what academic credentials or professional experience he is relying upon to make this statement.
He attempted an ethics course once in 1980…
Commenced Uni 2003, so unlikely.
A great example of why advisers should have avoided providing any advice on Covid withdrawals.
The best bit about this article is, “Mr O’Halloran expressing concern about the future of consumer advocacy and superannuation advice and pointing to the body’s impending doom without a long-term funding solution.”
Lets be honest. There were probably very little advisers who completed this advice for $300.
The issue with any forecasting/projecting that regulators and obviously this group don’t seem to understand is that it’s all based on extreme variable components. Inflation can change, returns can change, fees can change, taxes can change. We’ve found that if we forecast anything using actual data (averages or historicals) we’re criticised by compliance and even the regulators for painting too positive a picture. If we use conservative figures, we’re criticised by the clients for not being aggressive enough. Forecasts should be a “close as possible at this point in time” matter, with figures used disclosed and discussed. They’re not a guarantee.
Is this the same FPA who has a 5 year plan to fix the industry after overseeing the last 20 years of debacle?
agree.
Cust curious. If there’s an ‘ifa.com.au’ equivalent for accountants and lawyers do they see similar messes throughout their industry or is it just not spoken about. Everyday I’m reading bad stuff about our industry, very little positive.
David you nailed it – would doctors act this way? The bickering and animosity in these comments day in day out. How could anyone read them and say there’s a profession I’d like to be part of?
Agree. Not a “Profession” – when Dealer Groups – to get ARs to attend a Conference – think they have to have a fancy dress theme for the “Grand Ball” and then hand out “awards” like confetti.
Has the feeling of an Amway convention on speed! Not at all like a Profession.