Additional licensing required for gearing in super advice
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Those advising on gearing in super will need to ensure they are licensed to deal in derivatives by the end of September under draft regulations released yesterday.
The Federal Government announced changes to the rules around borrowing in super two weeks ago and yesterday released draft regulations for the provision of advice in that area.
Multiport technical services director Philip La Greca said from 29 September, 2010, superannuation borrowing arrangements would be classified as a financial product in Corporations Law. However, to give advice on these arrangements it would not be sufficient to have an Australian Financial Services Licence (AFSL) — licensees would also need authorisations for advising on and dealing in derivatives.
“[The Government] has decided that because it’s a complex product where the investment performance of the arrangement is attached to an underlying asset, it’s actually a derivative,” La Greca said.
La Greca said most advisers traditionally do not have derivatives capabilities on their licence. He said those wishing to advise in this area must now amend their licence conditions, or become covered by an appropriate licensee to continue to provide advice on gearing in super.
There is a two-week period for feedback on the draft regulations, which are expected to be implemented from 29 September. La Greca said the changes being introduced would give consumers more protection, particularly in the areas of disclosure, indemnity insurance and complaints resolution.
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