The regulator’s guidance to superannuation trustees on advice fees contradicts what has been relayed to Senate Estimates, is excessive, and ignores the Privacy Act obligations, according to an association.
Association of Financial Advisers (AFA) chief executive, Phil Anderson, hit back at the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) after the two regulators issued a joint letter addressed to super trustees on oversight of advice fees charged to members’ super accounts.
Anderson pointed to wording from the regulators that seemed to warn “trustees about trusting financial advisers”.
The letter from the regulators said: “Reliance on attestations by financial advisers or advice licensees that services have been provided has limitations due to the potential for conflicts of interest, so cannot in all circumstances be relied upon.
“We do not consider it sufficient to rely solely on statements from financial advisers or members that the sole purpose test has been met.”
Anderson also said the letter demonstrated the regulators expected trustees to review statements of advice (SoAs) which contradicted answers provided by APRA to Senate Estimates and ignored the Privacy Act.
“In less than a month, APRA have gone from describing the situation in terms that they have not been prescriptive, to specifically stating that they have had expectations that trustees review SoAs,” Anderson said.
“In this letter, there is, at best, a cursory reference to privacy obligations. Is it really sufficient to have trustees communicate to their members that they may demand copies of documents that contain private personal information to prove that what clients have already consented to is okay?
“Not only do these requirements for trustees ignore the Privacy Act obligations, which is putting clients at risk, it is also excessive and will add significant administrative burden for financial advisers.”
Anderson said as recommendations of the Banking Royal Commission had been implemented why did the regulators need to demand more to be required.
“Well, we would argue that the Royal Commission looked at this issue from an institutional perspective, not a small business financial adviser perspective, and in any case only 10 individual advisers were reviewed through the Royal Commission hearings and fee-for-no service was not a focus of these individual adviser matters,” he said.
“Whilst it is important to acknowledge that super fund trustees have more obligations than banks, it is illustrative to consider what the equivalent requirement would be if banks needed to do something similar. Can you imagine banks requiring gyms or streaming services to get client consents for direct debits signed every year and providing evidence of usage of these services?
“Is this really necessary and should it be the role of Government agencies to demonstrate such lack of trust in financial advisers who provide a critical service to the Australian population? It is appropriate that financial advisers and super funds both argue against this excessive, unnecessary, and costly interference.”