The Australian Competition and Consumer Commission (ACCC) has said it would investigate superannuation funds who refuse to allow members to use their funds to pay for third-party financial advisers, but no one has actually bothered to complain.
Facing questions within the House of Representatives Standing Committee on Economics, the ACCC said it stood ready to investigate the issue if the matter of how superannuation funds treated external advisers was ever raised.
The competition regulator was responding to a question on notice from NSW Liberal backbencher, Jason Falinski, who noted that the committee had previously provided evidence to the ACCC of superannuation funds limiting a customer’s ability to use their superannuation funds to pay for financial advice from a third-party adviser and asking what, so far, had been done about it.
The ACCC said that, while it had a number of investigations on foot with respect to anti-competitive conduct in financial services, none related to financial advice within superannuation and using member funds to pay external advisers.
“The ACCC has not received any consumer complaints in relation to the superannuation fund issue previously presented,” it said.
“The ACCC has a number of active investigations into anti-competitive conduct in the financial services sector. The ACCC’s investigations are confidential,” the regulator said.
“The ACCC continues to consider competition issues across the financial services sector, including in the superannuation industry, through its engagement with other financial regulators and as part of its advocacy role.”
Comments
How pathetic. This is the same mob who thought it would be a good idea to allow the life insurance companies to collude on churn without any evidence of it actually existing at a problematic level. When these government bodies go after financial advisers, or ignore the wrongdoing of large financial institutions against us, it is the consumer who ultimately suffers the most.
This is why super trustees are not allowing external advice fees from super, not because they want to be anti-competitive, but because the governance now required is too hard and expensive. https://asic.gov.au/about-asic/news-centre/articles/asic-and-apra-publis...
Swings and roundabouts. Really about managing the long history of financial advisers loading up their fees for all kinds of advice from superannuation balances. Was a standard practice for a decade.
You are talking rubbish. Independent financial advisers are only paid a fee from a super fund if the client wishes to pay for it in that way. Compare this to industry funds who deduct financial advice fees secretly from members who aren't even accessing the service and for those that do, they get 'advice' (AKA a sales pitch) from someone who is a hopelessly conflicted paid employee, who has been hired for the sole purpose of attracting and retaining FUM.
Not sure what you are talking about Jim - perhaps you would explain?
So to summaries, ACCC is working on something - but can't tell you what (secrete) and we would work on something else - real keen and ready to go - just no one tell us.
How well are these people paid and does anyone know if they actually turn up for work?
So it's only a problem if someone complains? That's like saying you only commit a crime if you are caught.
Just like it is common knowledge that some union sites still require the workers to have CBUS...but obviously no one has complained. Talk about useless...
This Fed Govt deserves to be chomped to death by the Union Super Funds, by foolishly ramming Hayne2 through. They are inept.
I've been banging on about this for ages. Just last week I wrote to my local MP about this issue so I wonder if its just a coincidence that this has been raised now.
If only I knew to complain to the ACCC...I could have saved myself lots of time and energy :)
But seriously, this is a major problem in our industry. We have been asked to jump through hoops in recent times to be considered professionals yet super fund trustees continue to block our ability to be paid from super despite clients agreeing to pay us this way (it is often the preferred method of payment for cash-strapped clients looking for advice that is not conflicted).
Now that the ACCC is aware of this entrenched practice lets see what changes....I won't hold my breath.
By the way, out of 15 industry funds ONLY ONE allows for me to have my advice fee deducted from super.
I believe some funds require x amount of fum inflows to be considered a worthy adviser to be able to deduct fees from accounts.
Goblin, please submit your complaint to ACCC.
Apparently they await such a complaint to act on illegal anti competitive behaviour.
Be interesting to see if they actually investigate and do anything ? Like do bigger all. It’s Industry Super, they are allowed to do what ever the hell they like:-/
They did state 'no consumer complaints', so perhaps Goblin could initiate several smaller balance union industry funds for himself, then lodge the complaint. You know how bureaucrats love extra tedium,
This attitude is just typical of bodies like the ACCC. They are made aware that something is wrong, they acknowledge it is wrong and then they find an excuse when they have done absolutely nothing about it. It must be good to turn up to work each day and collect a pay cheque knowing you have no accountability.
If you want advice from your super provider then move to a super fund that provides it. Plenty do, you don't even have to look hard. AustralianSuper does this. Next thing Mike will be writing an article how he went into McDonalds and he couldn't order a Zinger burger.
Eddie, what wonder news - free "advice" from a Product Manufacturer - how do I get that?
This may be what many consumers want, but it is not how the law works. Companies like AMP, CBA and Westpac have all worked on the assumption that someone who seeks their advice would be wanting and expecting a recommendation for one of their products. And all of these companies have been savaged by the regulators for doing so. Advisers have a legal obligation to act in the best interests of their clients regardless of whether their client has an expectation or preference for the brand of product the adviser works for.
In theory the same law applies to union funds like Australian Super, but in practice union funds have been allowed to consistently break the law, thanks to regulator bias.
If you want a sales pitch from a conflicted, brainwashed employee whose sole purpose is selling the funds virtues and retaining FUM, and is paid from fees deducted from unsuspecting member accounts who aren't receiving advice and from whom their permission has not been obtained, then sure go to an industry super fund. If you want quality financial advice, which takes a broader view and is paid by you in a transparent and ethical manner, go to a financial planner from a privately owned firm without any ownership links to product providers. There is really no comparison and if Kenneth Hayne wasn't brainwashed by ASIC in the lead up to the Royal Commission, he might have done his job properly and banned the intra-fund 'advice' rort.
I think you're missing the point Eddie. Super fund trustees that block registered financial advisers from letting clients pay the advice fee from super are basically breaking the law. The ACCC acknowledges that this is anti-competetive behaviour but do nothing about it.
Did i miss something? Where did the ACCC acknowledge it is anti-competitive behaviour? They said they were willing to investigate it, that hardly means they acknowledge it as anti-competitive. The issue is that trustees got raked over the coals during the RC for allowing advice fees to be deducted from accounts with no proof that any service was actually being provided. As the anonymous person above commented, ASIC expect fund to make sure:
1. the members are fully aware of the fees being deducted and have authorised it.
2. services are actually being delivered to the member
3. the deduction is consistent with the sole purpose test
4. the deduction is in the best interest of members (ie they should check the member is getting value from the advice)
That's not easy unless you set up processes with the advisers.
Personally i think they should set up these processes as much as possible but i understand why they don't let every Tom, Dick and Harry deduct fees from a member's account.
Valid comments, but Industry Funds have been playing this game for a long time. Their anti-competitive behaviour is ingrained into their culture. The issues you describe, while correct, are an example of gross overreach from ASIC and APRA. If members wish to obtain financial advice which will improve and/or protect their financial position (thus improving or protecting their longer term retirement outcome) and have the cost deducted from their super and paid to a licensed, external financial adviser, they should be able to do that. End of story.
This strict interpretation of the Sole Purpose Test and requiring the fund to check if the service was provided and whether it was good value is very bad policy. Let's be honest, this has been orchestrated deliberately to damage vulnerable financial advisers in small business and make it easy for industry funds to use their own in-house, conflicted and brain-washed sales teams who masquerade as financial advisers so they can grow and retain funds under management. This is 'regulatory capture' at it's finest. Only a regulator with a toxic, hatred for financial advisers and a love for industry funds, would make decisions which result in such bizarre and perverse outcomes. ASIC's review into affordable advice will be another extension of their rotten, corrupted behaviour, with hints already given that they will expand the intra-fund advice rort and do nothing to help independent financial advisers who provide ongoing advice.
Well said Giggity. Why the Liberals have supported this I still can't figure. Never mind, won't vote Liberals ever again.
It's called reading between the lines Tom.
It's called making up a story to suit your narrative, something that happens a lot in these comments sections.
They clearly state that they are investigating (other) instances of anti-competetive behaviour when asked about this particular issue. This implies that they acknowledge that this also an instance of anti-competetive behaviour- they just havent investigated it because noone has complained. Sometimes you don't have to spell things out mate. That's the way I read it - you're welcome to have your own opinion.
Can someone please justify why I cannot have advice fees paid via an industry fund? This is what the Hayne RC should have investigated (if only he actually understood this concept)
Because money in "Industry" funds belongs to the unions. Not you. Not your client. The unions worked really hard for that money with misleading & deceptive advertising, political & regulatory influence, and illegal financial advice. Get your grubby hands off it.
An observation - the clients already pay for "advice" through the member fees, even if they don't use it, as the membership fees pay the salaried advisers there that work for the fund itself. So if a client wanted to pay me for example for a review every 12 months, then they would be paying for advice twice. Unless the fund rebates the part of the admin fee that can be identified as being used to pay the inhouse advisers. Yes, its a wicked web they weave
I actually asked the ACCC to investigate platform/shelf space fees and discounts for platforms fees IF you also used underlying houses products, I think this is called 3rd line enforcement and is as far as I know illegal. They declined saying it was in ASIC or APRA's court. Just bounce the ball around, easier than doing work.
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