Just days out from the final report of the Royal Commission, Industry Super Australia (ISA) has told a key parliamentary committee that it should not be assumed that financial advisers can be trusted to give superannuation fund members advice on selecting post retirement products.
In a submission to the Senate Economics Legislation Committee, ISA pointed to both the Royal Commission interim report and the recent findings of the Productivity Commission to argue that it should not be assumed that retirees will be able to rely on financial advice in making their post-retirement product selections.
It stated: “In short, the current financial advice regime cannot be relied upon to protect consumers”.
“It might be argued that retirees will be able to make effective choices between different pooled products after 1 July 2019 by utilising financial advice,” the ISA submission said but then pointed to the Productivity Commission’s recent final inquiry report which it said “provides support for the view that the current regulatory framework for financial advice cannot be relied upon to connect retirees to the best income products”.
“It observes that: ‘Despite the Future of Financial Advice reforms, conflicted financial advice remains an egregious problem (especially within vertically integrated organisations)’,” the submission said.
The ISA submission said the interim findings of the Royal Commission had also “highlighted a number of recurring problems with advice provided by advisors employed or franchised by for-profit product providers”.
“In particular the Royal Commission found that the routine provision of advice that was in the best interests of the advisor and product provider – rather than the client,” it said. “FOFA has proven ineffectual partly because it does not actually require advisers to act on the best interests of their clients, permitting advisers to recommend in-house products when other products may be more appropriate.”
Comments
It's funny that the union funds don't understand that they are the worse offenders when talking about vertical integration. They love to quote that bank and AMP advisers recommend in house products 60-70% of the time however if you get "advice" from an union fund they will recommend their product 100% of the time. It seems that years of having a different set of rules to run by, or having crave outs thanks to their ALP mates has resulted in them completely missing the obvious.
2019 is shaping up to be another year of being under attack from those with hidden agendas which have nothing to do with the well-being of Australians. And with a likely ALP government in power for the foreseeable future, why would I continue to provide good advice to those who need it most? I'll be regulated and enforced out of business. And my clients will be the losers.
Dear ISA comrades, can you please explain to me how cross-subsidised intra-fund advice where industry fund financial planners only recommend the in-house product not be considered “vertically integrated” and therefore by ISA’s definition be also considered untrustworthy??
The integrity and honesty of the ISA is above reproach, they are morally pure in every aspect. To question this means there is something wrong with you. Your perceptions must be misaligned. But don't worry I am sure Bill Shorten, under the direction of the unions and the ISA (Hedware) will pursue the introduction of a compulsory unconscious bias training policy here like Justin Trudeau has in Canada. You obviously have unconscious misaligned biases that need to be corrected so that you can be freed from your dishonest free market and financial planning thoughts. Only then will you see the glory of the socialist utopia without question. If think that is far fetched feel free to google Canada unconscious bias training Justin Trudeau.
Can ISA please explain how everyone fits into the same default risk profile? A new previous unidentified evolutions phenomenon "homogeneousities"? BTW a platform menu does not = "in-house" rather an ability to not slot everyone into the same pigeon hole
If advisers can't be trusted then the industry super funds should sack all in-house financial advisers and not provide any advice to their members..
If Labor get into power, the ISA and the Industry Super Funds will have free reign to do and say as they please without reproach or consequence and Labor's cash flow will go through the roof when the "donations" from Industry Funds double to buy their loyalty, build their capital which will in turn result in Labor benefiting even more from pilfering members retirement monies. Donations in any form ( Directors Fees or not) from any superannuation fund to any political party must immediately be banned and cease.
Anyone who can attempt to justify this isn't a breach of the Sole Purpose Test or is in the best interests of the members is already part of the problem.
Labor in Govt will result in the ISA resembling a pack of sharks in a feeding frenzy...they will be out of control and drunk with power.
How ISA can make such a broad and defamatory statement like that and not be taken to task is unbelievable, especially when it implies" all advisers", not "some". Union super funds are far from being squeaky clean and should count their blessings that they were not called before the seemingly bias and questionable Royal Commission to supply the same level of information other funds were required to provide. The platform they have been given by mainstream media to build their power and pedal misinformation (returns without explaining risk) to gain control of people's super is beyond belief. Whilst both the advice and super sectors need to right the wrongs of the past, what is becoming concerning and potentially has more serious long term implications for consumers (and the economy) is the end of the free market, with Government control, over-regulation and lack of choice becoming the new norm. Liberal and Labor, due to weak politics are both to blame, but Comrade Shorten as the likely next President of the Socialist Republic of Australia must be overjoyed with how things are starting to pan out. RIP the Australia we once knew!
The Royal Commission relied on information obtained from ASIC audits over several years. In addition to the ASIC audit information super funds were asked to provide some information including Industry Super Funds but Industry Super Funds only provided limited information and the RC did not take them to task on this matter. Industry Super Funds were given a free pass by the RC because ASIC has never audited advice provided by industry super funds. Peter Kell was specifically asked that question during a PC hearing and he confirmed that ASIC has never audited Industry Super Funds. Now that's how Capture Theory works. Financial advisers will cease to exist in Australia within twelve months. The unions next target is Self Managed Super Funds.
Have the ISA ever heard of the words Libel & Slander? This is basically what they are doing by stating that a group, being Financial Planners, can never be trusted to act in the best interests of their clients, based on the actions of a small number of financial planners. Simply because good financial planners have the intelligence to advise a plan to enable to clients to enjoy a far better lifestyle than what would be possible using an Industry (Union) Fund does not mean that they are not acting in the clients best interests.
Contrary to what the brainwashed ISA members think, Best Interest does not just equal Industry Funds. Especially when those funds are handing money to the ALP via their payments to affiliated unions. Classic case CBUS-> CFMMEU -> ALP. Need I say more.
GET UNIONS OUT OF SUPER NOW.
Their own 2015 Royal Commission report labelled them 'liars, cheats, thugs, bullies, perjurers, and a breeding ground for corruption and self interest to prosper'. They are there simply due to Keating's Labor 1980's shonky backroom deals that have no relevance to today. They need to be removed immediately and the nexus of self interest and cashflow from super to unions and back to Labor has to be ended immediately.
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