AustralianSuper frequent flyer offer prompts concern

30 September 2019

New promotional activity on the Qantas website around AustralianSuper’s offer of 20,000 frequent flyer points for those who open a Super account before 31 December, this year, has served to anger financial advisers who are claiming it is a breach of anti-hawking provisions.

The AustralianSuper frequent flyer offer has been criticised by advisers before, but the latest promotion, which appears on the Frequent Flyer section of the Qantas website, has prompted them to raise concerns about whether some regulations have been breached.

The Qantas promotion states: “AustralianSuper has been independently rated the best performing super fund over 10 years. They could also help turn that dream holiday into a reality.
“Make the switch to AustralianSuper today and you’ll earn 20,000 bonus Qantas Points – points that can be put towards flights, upgrades, hotels, wine and more.  
“To be eligible you must open a Super account or Choice Income account via the button below before 31 December 2019 and contribute a minimum of $350 within 6 months.”

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One of the advisers to raise questions about the new promotion, West Australian planner, Steve Blizard, said he was surprised at the promotional activity particularly given the findings of the Royal Commission and regulator views on anti-hawking.

He said he would be interested hear the views of the regulators on the issue.

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Do all ASIC employees who choose to join their default super option in AustralianSuper receive the Qantas frequent flyer points offering and does ASIC use Qantas as it's preferred airline when travelling ?
If so, are ASIC employees able to accumulate Qantas frequent flyer points in their own name through accumulated travel.
Could there have been any incentives offered to ASIC when electing AustralianSuper as their default super fund regarding Qantas and travel arrangements ?
Many years ago, it was made very, very clear by the regulator that no financial adviser must offer any form of third party incentive, gift or reward in order to entice or encourage the consumer to either engage advice or implement a product.
You simply could not offer an unrelated reward as it was seen as coercion.
If AustralianSuper is allowed to offer this incentive to join their fund, is there any issue with an adviser offering a holiday, fuel vouchers, restaurant meals, etc etc if a consumer were to commit to an initial comprehensive discussion regarding their financial affairs for $350.00 ?

Is this potentially a breach of the Sole Purpose Test ?
It would be difficult to argue that using your Qantas points to load up on wine would be enhancing a member's retirement.
If you have enough points and have enough wine, you may just forget about your retirement.
They may be better off being able to cash in their accumulated points and making a non-concessional contribution to their super account instead !

Don't forget potential breach of 'early release of benefits' whereby members are not allowed access to any form of benefit associated with their superannuation balance prior meeting a condition of release.

Surely this is a direct breach of Sole Purpose on top of Hawking.. Lets be honest though, ASIC is too scared to take on the Industry Fund movement and the Union membership base. Over this weekend alone there were two very prominent Victorian sporting teams proudly displaying Industry Fund sponsorship on jerseys, is that in the best interest of members and a worthy use of members funds? On top of this, Industry Super Funds are one of the broadcast partners of the RWC and they still run the 'compare the pair' ads at any chance they get, I noted that the performance data they rely on is now well over 12 months old? If I used June 30, 2018 performance in a clients SOA I would have some serious explaining to do to my compliance manager! Surely there should be some sort of large, pompous tax payer funded enquiry into this behaviour....

It gets better. In discussing this issue, one person admitted that they took advantage of the offer, opened an account for the points and did the same for their wife. Then they plan to close the account, once the points had been received, & roll the small account back to their personal super fund again. Anyone ever heard about the Sole Purpose Test & how that is supposed to work???

The ATO requires super funds to be maintained for the sole purpose of providing retirement benefits to their members.
Every investment decision or management decision made by superannuation fund trustees must be consistent with this sole purpose.
Essentially, the intention of the sole purpose test is to ensure that fund trustees make decisions that are in
(THE BEST RETIREMENT INTERESTS) of their members, NOT their current interests (or those of related parties).
If any super fund transactions or decisions are deemed by the ATO to provide significant, non-incidental, direct or indirect benefit to fund trustees, members or related parties BEFORE RETIREMENT, the trustees are in breach of the sole purpose test.
So, is the issuing of Qantas frequent flyer points in the retirement interest of members and not their current interest and does the receipt of these constitute a direct or indirect benefit to members before retirement ????????

I was lead to believe that QANTAS gives ASIC Commissioners and senior staff FREE access to the QANTAS lounge etc?

Yep I opened an account online, made a deposit and a month later earned 20,000 points...then I moved all super monies to my preferred super fund, using the new consolidation/ rollover laws. I did this for myself and partner. All up about 5-10 minutes work. A nice little trip to Sydney I received for this effort, thanks Aust Super. Funny how these are the same fund that states it's unethical to pay a commission to market & promote the super fund but you can pay frequent flyer points or put up some supporters in a box at a Melbourne Storm game. Only a matter of time before all super funds are doing this. Looking forward to my free toaster oven probably from Hesta next. Most likely in 5 years the advertising will be "we don't pay frequent flyer points or toaster ovens as all our profits go to members".....and this is a tax payer subsidized system. It's the future. Start offering those toaster ovens or you'll be extinct. Performance, customer service, who cares.

This practice is outrageous and must be regulated out of existence. Superannuation funds should be selling themselves on long term performance, environmental sustainability, low fees and costs, etc and not by using superficial inducements. We want people to take superannuation and retirement seriously.

This practice will lead to employers and unions being given backhanders.

Also QantasPoints are worth nothing these days.

So as you know I have been one of your strongest critics, but to my increasing surprise found myself agreeing to the entirety of you first paragraph.

And then your next line had me intrigued:

"This practice will lead to employers and unions being given backhanders"

Were you being sincere or taking the p*ss?

If serious, maybe we've found some viewpoints in common after all...

No - quite sincere. Funds will offer inducements to employers to encourage them to encourage their new employees to sign up for their fund and not another. Financial planners should be the ones to help with that decision.

There is seems to be plenty of inducements offered buy Industry Super (lets take the employers to the Tennis etc) out there and ASIC as far as I can tell has done NOTHING. Why? Seems to me ASIC is just after Financial Planners.

I wonder if you just keep on opening up a new account or 2 every month and then closing them down whether you could accumulate 100,000 frequent flyer points ?
This could be the sole purpose test for the sole purpose of scamming the points.

It has to be a new account.

On the AustralianSuper/Qantas Frequent Flyer link under the heading of Important Information it states:
Hang on...lets think about that.
A major super fund is offering new members only (not their existing members ), a benefit of receiving 20,000 Qantas Frequent Flyer points if they join their super fund (ie. a financial product) in a limited time frame up until 31st Dec, 2019 and they are stating that the offer of the frequent flyer points is not intended as an incentive or to influence a decision to join that super fund ?
Being a new member, rather than an existing member would indicate that you are most likely looking for the potential benefits or advantages of becoming a member, it therefore is entirely ridiculous to attempt to state the offer of the frequent flyer points is not intended to influence a decision.
It is clearly designed to influence an individual's decision to join AustralianSuper as an incentive which has nothing to do with the capacity of the super fund to accumulate retirement monies.
This is an offer of a direct member benefit provided before retirement and the ATO thinks this doesn't breach the Sole Purpose Test ?
This is the set of steak knives if you purchase the casserole dish within the next 30mins !
This is about the commodification of superannuation as a product which is now open for all realms of promotional activity, sponsorship deals and non associated benefits in the attempt to garner a greater volume of funds under management and therefore a greater volume of management fees.

Its fine as Australian Super/ Qantas have fudged this, I have met the criteria and still not been rewarded my 20,000 points as promised in the T&Cs. Its seems just a false pretence for innocents to switch/sign up to Australian Super.

The fine print states..." Bonus Qantas Points will be provided as a one off allocation approximately 2-3 months after the $350 contribution threshold is met.
The time frame to make the min $350 contribution is up to 6 months.
So, if you delayed the contribution to almost 6 months, it could potentially be up to nearly 9 months from the joining date as to the receipt of the Qantas points.
Interestingly, it also states " If for any reason this offer is not capable of running as planned, AustralianSuper reserves the right in it's sole discretion to cancel, terminate, modify or suspend this offer".
So, if you decide to join, make the contribution of $350 and then the program or offer is withdrawn before you receive your 20,000 points, what is the outcome for the member ?

Putting the sole purpose rules aside, I always thought the anti-hawking provisions related to pressure (boiler room) sales resulting from unsolicited telephone calls or meetings. Emails, letters and offers to the market through advertisements would not of themselves breach the anti-hawking provisions. Have I missed something? Has AustralianSuper or Qantas engaged in a telephone or door knock sales campaign as well?

The act of emailing the person (myself) is hawking. Even if we overlook the fact that this must be a violation of the Sole Purpose Test (to receive Qantas points before retirement] only if I looked it up on the net & inquired myself, would it not be regarded as hawking. But having the email SENT to me is no different to receiving a Phone Call. They are one & the same. This is a scam.

ASIC's RG 38 indicates (at paragraph A1.2) that email doesn't fall within the hawking prohibitions, so you may be barking up the wrong tree here Steve. I suspect that the Spam Act probably has a thing or two to say about this, though, so this might be worth investigating instead. As you were.

Good comment. There is growing opinion that this Haynes Recommendation is unnecessary, as it will have a negative impact (like a number of other Haynes recommendations). But never fear, Frydenburg is determined to implement them all, like a lemming jumping over a cliff. Give it a few years, the greater bulk of the population will simply ignore most of it, due to massive lack of advice available to low income earners soon to hit the market place. The real issue here is the breach of the Sole Purpose Test. If no action is taken, just watch other start doing it.

What is Haynes Recommendation?

So an uninitiated email...perhaps multiple uninitiated emails over a period of time attempting to coerce an individual to purchase a financial product does not constitute hawking, whereas a single or multiple phone contact does ??
What about the uninitiated delivery of a carrier pigeon with a message tied to it's leg ?
This is becoming ridiculous.

They call you about 6 months after the allocation of the points to let you know about their other services like ME bank, financial Advice etc etc.

Qantas, very much like the Canstars, Finders et al receive a referral fee from AustralianSuper, and they reward QFF members a portion of this in FF Points. If anything, it's Qantas' fault, not AustralianSuper's. Just take advantage of it for yourselves while you can.

It is my super
It is my money
It is my choice to have frequent flyer points
What right do financial planners have in limiting my benefits? Royal commission has proved you financial planners only work in your own interest. The frequent flyer points are a benefit to me which I get to use while financial planners do not want me to have frequent flyer points, reduce my super in fees and charges and go on holidays at my detriment. Remember it is my super and is my money not yours you greedy financial planner parasites. Thank you Australian Super for making your super to be rewarding to your members. Compare the pair. Australian Super member goes on holiday with family while member with other super fund is condemned to begging and dumpster diving as their super has been stolen by financial planner fees and charges while their financial planner goes to Europe on holiday. Shame on you financial planners. I will remember to buy some salt from my local supermarket to keep financial planner parasites away from my super!!!

The issue is more about employers getting inducements from funds to encourage employers to push their employees into the fund with the best inducements (and not necessarily the best performance/service/etc for their employees.
This is not to say that financial planners are not safe from being induced to push clients towards certain funds with benefits.

Yes, when your publicly listed "advice" company has a major Union Super fund as it's major shareholder, that is vertically integrated advice, no matter how you cut it. While the major banks have been spinning off their advice arms, the Union Super Funds certainly haven't been. See the total hypocrisy here?

If I can save money and get benefits why not?
Are you only thinking in your own interest just in the fees you can charge me
Seems nothing has changed since royal commission.

You're clearly an uneducated buffoon who has no real clue about much in life, least of all anything to do around SIS legislation. Go to Europe all you like, and while you're there please do Australia a favour and apply for residency, it can only increase the median IQ of our country if you do.

Wow financial planners really need to get out of your thought bubble.

So it's okay for financial planners to be rewarded but for Qantas (who has an AFSL) to be rewarded for referring a member, it's illegal?

The money that is used to pay Qantas comes from the marketing budget. The marketing budget comes from the members' management fees, which is totally separate from the members' investments. This is what is called Affiliate Marketing in marketing jargon. How do you think all those comparison sites make money?

RE: SIS - If you're complaining about marketing spend that is funded by the expressly agreed to management fees and referring to SIS legislation, then you should be complaining at every instance of interaction you have with any super fund. Let alone any emails that you get, or that sales rep that might buy you coffee, wine and dine you etc because that all comes from the management fees. Gosh, let's not even forget the operating costs of having a website, the designers, the developers etc. Oh and what about those occasional letters that I receive? And the plastic member card? That's all marketing.

RE: Hawking - no idea on how email communications work, every email blast that you receive needs to have been agreed to at some point. So that Qantas or AusSuper email you get every now and then, you have agreed to receive it in the past and voluntarily provided your email address at some point. That's why marketing teams have Terms & Conditions. If you don't like it unsubscribe.
Email addresses are known as PII (or Personally Identifiable Information) - again marketing jargon - and this is extremely heavily regulated by the government.
If you haven't provided your email address and they're sending you generic email blasts (which is not personalised to you), then THAT is illegal. Make a privacy complaint to the OAIC. And no, that cold email you get from a sales rep, and found your email address by googling doesn't count - that's publicly available information and this is considered personalised communication. Generally, marketing departments are smarter than that, and financial services marketing in Australia is one of the most heavily regulated in the world.

RE: Employer inducements - Get this in the right context. This is aimed at consumers who make a voluntary choice to become AusSuper members. How's an employer going to be benefitting or incentivised from this?

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