When Financial Services Minister Stephen Jones announced the first tranche of draft legislation on the back of the Quality of Advice Review in November 2023, it featured the surprise inclusion of recommendation 7, which sought to clarify the legal basis for superannuation trustees paying a member’s financial advice fees from their superannuation account.
In its submission to Treasury, ASFA said it is “committed to supporting the government’s announced ‘Delivering Better Financial Outcomes’ package and to ensuring Australians have access to quality and affordable advice”.
The association said it is supportive of increasing the number of advisers providing advice to superannuation fund members by setting suitable qualifications and standards for non-relevant providers, as well as the expansion of the allowable types of advice that can be collectively charged to support retirement planning.
“The proposed new section 99FA of SIS is broadly intended to implement recommendation 7 of the review to facilitate better access to superannuation and retirement advice by clarifying the legal basis of existing practices in which superannuation trustees pay advice fees from a member’s super account at the request of a member,” the ASFA submission said.
“With reference to one-off advice fee deductions, the intention appears that ASIC will have the power to approve the format of a form/request by the member to have one-off advice fees deducted from their superannuation account. This is contained in the proposed changes to sub-section 99FA(2) of the SIS Act.
“The legislative intent is to ensure there is consistency in approach to content across the industry. ASFA supports the aim of industry consistency.
“However, the operative provision, as proposed, appears too narrow to achieve the proposed ASIC approval in an effective form.”
ASFA pointed to sub-section 99FA(3), which says the Australian Securities and Investments Commission (ASIC) may approve a form relating to a member’s request or consent for “the cost of providing the advice to be paid by the trustee and charged against the member’s interest in the fund”.
“Industry assumes the intent is for ASIC to specify how the ‘form’ comes together to reflect each of the components of proposed sub-section 99FA(2) of SIS,” ASFA said.
“We suggest this section be amended to make it clear that the approval of a form would include all relevant matters under sub-section (2).
“In addition, the use of ‘may’ in proposed sub-section 99FA(3) of SIS reads as though a licensee may apply to ASIC for individual approval to use a particular form.”
A better approach, according to ASFA, would be for ASIC to either approve or publish a form that can be applied across the industry for consistency.
“This would not preclude the use of a bespoke or existing ‘form’ created or used by a provider as long as the content requirements are met,” ASFA added.
The association also said that the recommendation that the Corporations Act be amended to the effect that a product issuer is entitled to rely on a prescribed form of consent in relation to ongoing fee arrangements “would be a useful assurance for superannuation fund trustees administering the deduction of fees on superannuation accounts where the relevant obligations are met”.
“However, this change has not been reflected in the proposed drafting. ASFA considers Treasury should modify the proposed provisions to permit product issuers to rely on a client’s consent under the Corporations Act,” ASFA said.
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