Dr Michaela Anderson
The Association of Superannuation Fundsof Australia (ASFA) is pushing for regulatory amendments which would allow superannuation funds to play a greater role in the provision of financial education to members.
In a submission to the Parliamentary Inquiry into the Structure and Operation of the Superannuation Industry, ASFA is recommending that a new definition of financial advice be developed that better enables funds to discuss the internal features of a fund and educate members about superannuation, including preservation and taxation issues.
However, while pointing out that many funds have now obtained Australian Financial Service Licences, the submission stops well short of suggesting that funds necessarily want to be in the business of providing advice.
“Any redefinition of advice, including general advice, needs to be targeted where there are genuine consumer protection issues at stake,” it said. “Encouragements to invest discretionary monies or switch products must be caught within the advice definition.”
“Similarly, communications suggesting specific investment choices where the costs and investment risks are borne by the customer/member should be considered advice.”
The submission — formulated by ASFA director of policy and research Dr Michaela Anderson — argues that despite numerous attempts at clarification by the Australian Securities and Investments Commission and others, the boundaries between information, general advice and personal advice remain uncertain.
“Notably the definition of ‘financial product advice’ is very broad and captures a considerable portion of communications between a superannuation fund trustee and a member,” the submission said. “This definition has affected superannuation fund trustees that want to educate and inform their members about superannuation generally and features of their fund.”
It said that all too often trustees had had to suspend or modify educational materials or activities for fear such initiatives constituted financial advice.
“ASFA considers that superannuation funds should be able to communicate with members on the features of the fund without such communications being considered advice,” the submission said. “… Overall, any communication aimed at explaining internal features of the fund should be permissible without such communications being considered advice.”
It said that, increasingly, superannuation fund trustees were acquiring Australian Financial Service Licences.
“As such, the concerns over the definition of advice are less to do with providing unlicensed advice than they are with offering advice and triggering the various requirements to provide appropriate disclosure documentation in a timely manner,” the submission said.
