Given the plethora of policy measures the Federal Government had put in place to deal with the fall-out from the COVID-19 pandemic it was both sensible and appropriate that the Australian Securities and Investments Commission (ASIC) announced “relief measures” with respect to the provision of financial advice.
What surprised many, however, was the degree to which the regulator went beyond normal bounds in allowing the provision of advice by unlicensed people and entities – accountants, tax agents and superannuation fund trustees.
The ASIC announcement, released straight after the Easter break last week stated:
- “To assist the provision of affordable advice on early access to super, ASIC has:
- Allowed advice providers not to give a statement of advice (SOA) to clients when providing advice about early access to superannuation;
- Permitted registered tax agents to give advice to existing clients about early access to superannuation without needing to hold an Australian financial services (AFS) licence; andIssued a temporary no-action position for superannuation trustees to expand the scope of personal advice that may be provided by, or on behalf of, the superannuation trustee as ‘intra-fund advice’. (Intra-fund advice is provided free of charge to the recipient of the advice.)”
The ASIC announcement then went on to say that the relief and no-action position were temporary and subject to the important conditions, including:
Clients must be provided with a record of advice (ROA), which meets certain content requirements. An ROA is a shorter, simpler document that sets out the advice that is being provided;
The advice fee, if any, is capped at $300;
The advice provider must establish that the client is entitled to the early release of their superannuation; and
The client must have approached the advice provider for the advice.
What is important to recognise about the ASIC announcement was that it apparently followed consultations with some of the key financial planning and accounting organisations who lost no time in not only welcoming the regulator’s move but promising to work together to achieve an appropriate outcome.
Those bodies included the three major accounting bodies, the Financial Planning Association (FPA) and the SMSF Association. Little wonder, then, that a number of financial advisers expressed concern that, on the face of it, unlicensed tax agents and accountants would be able to provide advice.
Equally unsurprisingly, those advisers were concerned at the suggestion contained in the ASIC announcement that the provision of intra-fund advice came without cost to superannuation fund members when answers provided by some superannuation funds to the House of Representatives Standing Committee on Economics made clear that intra-fund advice did come at a cost carried by all members of a fund.
Notwithstanding the reservations of financial advisers about the implications of ASIC’s “relief package” it is hard to argue with the objective of ensuring that people who seek hardship early access to superannuation do so with their eyes open and that, so far as possible, advice clients and members of superannuation funds are assisted in avoiding the crystallisation of their investment losses.
The Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator Jane Hume has stressed the relief measures will be temporary. That will need to be reinforced when the crisis has passed.
It does not require a very long memory to recall that some elements of the superannuation industry have been arguing for an expansion of intra-fund advice, while some elements of the accounting profession have been arguing for a return to the days of so-called ‘accountants’ exemption’.
Measures can be temporary or they can be the thin end of a wedge.