Super Consumers Australia (SCA) is the latest group to express its discontent with the next stage of the Delivering Better Financial Outcomes (DBFO) reforms, continuing its long-standing disapproval of financial advice being entangled with superannuation.
Just ahead of the federal election announcement in March, then-minister Stephen Jones released the portion of the reforms that was ready to go – despite some notable omissions.
One of the main points of contention following this release, as expressed in a range of submission to the subsequent consultation on the draft bill, was the expanded ability for super funds to provide retirement advice.
Financial Advice Association Australia (FAAA) chief executive Sarah Abood, for instance, called the apparent ability for trustees to collectively charge for comprehensive retirement advice was the FAAA’s “single biggest concern”.
“This is concerning on many levels. Firstly, the cost of collectively charged retirement advice is likely to be very much larger than the cost of collectively charged intra-fund advice,” Abood said in March.
“Thus, members of these funds will be paying much higher amounts for advice they are not actually receiving – including members who have sought, and paid for, their own personal financial advice but must still pay for the collectively charged advice provided to other members of the fund on top of that.”
In its recently released submission, the SCA similarly argued against the expanded role of super funds in the provision of retirement advice, saying it would only support the reforms on the condition that the government introduces a broader package of necessary reforms to safeguard Australia’s retirement framework.
“Australia’s retirement income system is not delivering an adequate standard of living for all retirees,” it said.
“For some people, this is driven by the complexity of converting their accumulated superannuation into an income, and a lack of accessible guidance and safe default products to make this easy. Other people simply do not have enough resources, and face disadvantage and poverty in retirement.
“Financial advice may be helpful for some people in planning for retirement – but without access to high quality, fit for purpose retirement products, the outcomes consumers ultimately achieve will not change. The accumulation phase of super has a suite of in-built safeguards, including default products, performance testing and compulsory saving.
“However, equivalent safeguards are almost entirely absent in the retirement phase. The value of any advice a member gets from a super fund about retirement products will be limited to the quality of the options actually available in that fund.”
Rubber stamp for product sales
Among its strongest positions is that what the bill allows essentially boils down to product sales, not financial advice.
Arguing that the proposal goes considerably beyond permitting “simple and cost-effective advice about retirement”, SCA said it permits advice about retirement products.
“Because most funds only offer one retirement product, this reform just rubber stamps funds using the intrafund advice model to drive product sales and trap members in poorly performing products,” the submission said.
“Advice about retirement products is only helpful if members have meaningful choice among a range of high-quality products – but that is not the current reality.”
According to SCA, 69 per cent of the funds that offer open retirement products only offer one product, adding this is generally an account-based pension.
“Funds cannot provide advice about retirement topics outside of super and they will not provide advice recommending a member take up a product offered by another fund. That means they are only providing advice about their own retirement products,” it said.
“The only possible recommendation a member could get through this model is to move into that one product, which might not be appropriate for every member (e.g. if they wanted longevity risk protection). That’s not advice – that’s sales.”
Additionally, the submission argued that there would be “significantly less consumer harm” related to this if there were a MySuper-like system in place to ensure that all retirement products were high quality.
“There is considerable consumer harm in a member getting conflicted advice to move into a poorly performing, expensive product – particularly given that it is impossible to get out of some retirement products after the cooling off period (typically products that have longevity protection),” SCA said.
Ultimately, the advocacy group said the system overall needs to be reformed, and access to advice won’t make it any safer.
“Australians should not have to become superannuation experts or seek comprehensive financial advice to receive decent outcomes in retirement,” it said.
“The accumulation phase of super has a suite of inbuilt safeguards, including default products (backed by the MySuper authorisation regime), performance testing and compulsory saving (the Superannuation Guarantee). However, equivalent safeguards are almost entirely absent in the retirement phase.
“The government needs to make the system safer by design, such that there are good options for financial advisers to recommend and so that people who do not get advice (because they do not want it or cannot afford it) are not left out in the cold.”
SCA has a long-standing opposition to super funds providing advice – or indeed allowing fees to be deducted from super to pay for advice.
In its submission to the Senate economic committee’s inquiry into the first DBFO bill last year, SCA stated it doesn’t “support the deduction of advice fees from superannuation accounts” at all.
“Super Consumers Australia has previously outlined that people may be more likely to value advice if they have to actively pay for it from their own pocket, rather than have fees deducted from their super account,” it said.
“There was compelling evidence in the financial services royal commission and the ‘fees for no service’ actions brought by ASIC that there is a high risk people will be ripped off if fees can be charged from super with limited oversight.”
Grab the popcorn this move is about get interesting…!
Another attack by SCA on advice fees from super.
What a position to take in a cost of living and advice accessibility crisis regarding clients consenting to advice fees to be paid from their super under the sole purpose test.
… Clients might not value advice regarding their super and retirement if they had to pay out of pocket.
How about, clients might still very much value super and retirement advice but might not be able to afford it out of pocket.
I have heard this position over and over again from the SCA.
I believe that their position is incredibly poorly considered on this.
Come and talk to hundreds of thousands of clients who consent (in writing) every year to paying fees for advice relating to their super and retirement from their super fund.
Where is their voice? Anyone asked them?
Appalling claim.
Where is the supporting research from SCA regarding advice fees being charged from super (with member consent)?
Where is the impact study as to how many Australian’s would receive advice if they couldn’t use their super to pay for it?
Why should a member pay advice fees from their pocket with regard to their super which they may not be able to access for 40 years?
SCA is a joke, but they are right about DBFO 1.5 which is an even bigger joke.
Let’s Set the Record Straight on Industry Super Fund Advice
Articles like this often stir unnecessary concern, but as an adviser within an industry super fund, I can confidently say: you have nothing to worry about.
Our advice model is built on integrity, transparency, and member-first principles. There is no product pushing, no hidden commissions, and no ulterior motives—just a genuine commitment to helping members make informed decisions in their best interest.
We are highly trained, experienced, and held to strict compliance standards. Our advice is carefully scoped to address each member’s unique circumstances, and we take pride in delivering advice where we can. If we can, we provide guidance that empowers them to understand the complexities of their financial position which in turn leads them to you.
At the end of the day, we’re all striving for the same goal:
To provide the right advice – at the right time.
It’s time to shift the narrative. Industry fund advisers are not the exception—we are the standard for ethical, member-focused financial advice.
Please, please, please simply stop this indoctrinated & machine driven explanation of why you exist.
It is vertical integration & that is all it is.
Ask Garry Weaven why you exist & then it might all make sense…because Garry has certainly made a lot of dollars from that little model of retirement funding.!
What an absolute bunch of tosh.
It’s the so called new Sales Advice model that is more the concern.
Industry Super Funds have screamed like banshees for decades about Adviser Commissions.
ISF’s now think if they change the name to Collective Charging, then it is all sweet.
COLLECTIVE CHARGING = HIDDEN COMMISSIONS.
ISF, time to shift the narrative and tell the truth for a change.
Even if that is true (and I’ve seen many examples that contradict your assertions), this will all change very soon when DBFO tranche 1.5 greenlights your replacement by cheaper, unqualified sales jockeys?
Fair point, but:
1. Can you recommend insurance products that aren’t the group insurance policies? I am going through a farcical situation where the super fund won’t allow the member to pay for advice to change insurance products, even though the member would be better off.
2. If your super fund doesn’t have a lifetime pension, will you recommend they move to a fund that does?
3. Do you do fee comparisons with other funds?
I do not question your ability, but it is the limited framework that you are made to work within (and it is no different to other advisers that need to work with a narrow APL).
And if the member has two super funds one of which is not the one you represent but has better features, returns, service standards, risk profiles, etc., do you still recommend they rollover all their fund to your employers fund?
Do you work for a fund that offers their members a ‘balanced fund’ that is 70/80/90% exposure to growth assets? Or reclassifies growth assets as defensive assets? If so where is the ethics in that?
You cannot claim the high moral ground as the ‘standard for ethical behaviour’ if you work for the product provider – there will always be an ethical question mark in this arrangement, unless you direct all clients to other product providers and if you did, I suspect you would not be employed by that product provider for long.
I don’t doubt you are one of the token compliant advisers at your industry fund. But you are primarily there for show. You are not the primary source of advice for your fund’s members. Most of your fund’s advice is provided by unlicensed and unqualified call centre operators, workplace sales reps, and union officials. It is totally illegal, largely incompetent, and primarily designed to get more money into your fund regardless of members best interest.
Jonesy’s DBFO is all about legalising this illegal advice your Industry fund employer already provides. When that happens, your Industry fund employer will have no more need for honest, competent, showcase advisers like you.
Sounds like sales, paid for by the manufacturer of the product. Doing a good job of selling the in house product – perhaps, but “we are the standard for ethical,…..” not so sure about that. “Member focused financial advice” – well, that sounds like someone stilling in a nice office bought and paid for by the manufacture selling the members product and calling it Financial Advice? Looks to me like conflicted advice – but definitions vary greatly in Australia.
Nah it’s not confusing, it’s simple.
100% conflicted and shouldn’t even be called advice.
HAHAHAHAHAHA
Vertically integrated tripe is not advice. I fear you are ignorant of actual advice, instead of salaried sales and ethical egoism. At the least, your comments demonstrate you are entirely naive of the hurt, imbalance, unfair taxes and double standards and regulatory bullying the Independent and non-aligned Advice Practice faces. It doesn’t exist anywhere else in the world and is a uniquely Australian problem you are the beneficiary of.
Let’s set the record straight, you are in sales, not advice.
The wording of this post indicates that the writer sincerely believes it. This person obviously does not realise that the large super funds are in the same situation as the large insurance companies were in when they were gifted the prime position when financial advice was regulated in 2001. They were “trusted”, mainly mutual entities who nevertheless set up a system that licensed advisers to direct investments into their own platforms and their own investments. That set the ground for the Royal Commission that revealed the conflicted model.
The large super funds are simply a different group of large institutions seeking the right to license people whose toolkit is restricted to their own products and to call that “advice”.
The Australian legislation repeated the UK legislation, along with its flaws. The UK has attempted to deal with this very issue by creating a Restricted Advisers, who can only provide advice on the products to which they are tied.
I came to financial advice after decades as a Chartered Accountant, with an ethos drilled in that it was an accountant’s obligation to have broad knowledge to give clients the best solution for their circumstances and if they did not have the expertise, to refer it to someone who did. The super funds will be like a builder whose toolkit contains only a hammer, so every situation becomes a nail.
I can forgive this writer for being ignorant of this situation. I cannot forgive our legislators and Treasury bureaucrats who refuse to address the real issue, the definition of advice in Section 766B. It defines what should have been defined as product information as General Advice, which means that anyone providing it is defined by legislation (but not common sense) as an adviser. Change that and these thorny problems disappear. Super funds could authorise people to provide information on options in “a genuine commitment to helping members make informed decisions”, but given that that the information provided is restricted to what is in their toolkit, it cannot be in their best interests if the informant cannot assess whether their circumstances require a screwdriver, not a hammer.
Ohh! and in response to the “hidden commissions”, there are none. The only commissions advisers (the real ones) can receive are on insurances that now not only have to be disclosed, have to be signed off by the client. The commissions that were banned were methods devised by institutions to compensate advisers without having them on payroll. The new institutions, the large super funds, are struggling with a variety of ways to recoup the cost of their “advisers” that have the smell of conflict or unfairness on members not using their services.
Read the joint communications by APRA and ASIC and the main target of questioning debits to member accounts for financial advice referred primarily to super funds who engaged advisers to work on retaining members, then recouping their costs from member accounts.
If the legislation is not changed to redefine advice and product information, we can expect another Royal Commission to identify issues that can only be addressed by changing the foundational misrepresentation of product information as financial advice.
Sure bud. A fairly recent appointment as Head of Advice to an Industry Fund had: a) no FP qualifications whatsoever and b) no advice experience.
If I cant call the fund and ask to give me a fee comparison of all other funds its sales…not advice. If I cant ask them about purchasing property with my super …its sales, not advice….if I cant discuss whether there is better options…butcoin..gold …property… its sales…not advice..
Industry Super Funds FUM sales via Uneducated, Unqualified BackPacker call centers, selling only Single product, No Best Interest Duty and ALL PAID FOR VIA HIDDEN COMMISSIONS, charged to Every Member when most Members will pay Hidden Commissions for NO Service.
And just to top it off for utter stupidity, have the younger members of Industry Super Funds paying for more wealth retirees Sales Advice, so not only the youngens can’t afford a home, they now get to pay for the Boomers retirement sales advice.
It is so WRONG on SOOOOOOOOOOOOOOOOOO many levels.