ASIC confirms scrutiny of industry funds advice

Conflicts of interest impacting the quality of financial advice are not restricted to retail superannuation funds, according to the Australian Securities and Investments Commission (ASIC).

In a recently-delivered address, ASIC Commissioner Sean Hughes confirmed that the regulator was currently looking at advice delivered by superannuation funds to their members.

He said ASIC had commenced the project with a survey of 25 funds and would move on to looking at some examples of personal advice with a view to completing the exercise in about a year’s time.

Related News:

“As part of the project, we are particularly interested in whether conflicts affected the quality of advice,” Hughes said. “Conflicts are not restricted to retail super funds and can arise in different ways across the industry.”

The ASIC commissioner noted that the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry had recommended a prohibition on the deduction of advice fees from MySuper accounts and a limited on the deduction of fees from choice accounts.

As well, he noted that the Royal Commission to repeal the grandfathering provisions for conflicted remuneration by 1 January, 2021.

“We think there is scope for trustees to improve their oversight practices in this area, including having regard to the sole purpose and best interest requirements in the law,” Hughes said.

Elsewhere in his address, the ASIC commission flagged that the regulator intended to “heighten the intensity of our regulatory scrutiny in superannuation”.


Recommended for you




Sounds like ASIC have a wet lettuce leaf in their holster and they're gonna use it.

Richard Hedware, let's see if this is just a perfunctory 'let's pretend we're doing an investigation' going through the actions by ASIC or whether, as we all know, they'll uncover the real dirt that lies within. Mind you, one could say it is at least 8 years overdue and would question the motivation of ASIC behind that fact alone.

Have to wonder why they gave ISA a lot more time and advance warning on this than any other advice organisation or superfund? Maybe to ensure they had ample time to delete or alter files, hide the really bad stuff and clean up their books. Interested to see what eventuates

It will be interesting to see if they pursue the ISA for making false and misleading statements in relation to 'balanced fund' returns, given the underlying asset allocation is often 'high growth'?!

Still waiting for the AFA and FPA to take them to task on this.

Nothing will come of this. ASIC are a toothless tiger when it comes to industry funds

Rubber please meet stamp.... there is absolutely NO CHANCE that ASIC will take action against any industry fund for their intrafund advice which is blatantly conflicted nor the “general advice” which is actually personal advice

sadly ASIC only goes after individuals that it can damage , the big end of town buys ASIC lunch and thereby ASIC does nothing with the Banks and AMP, they can not shut them down but they can shut down small organisations who do not have the financial resources to take ASIC to court, ASIC should bury their heads in in shame

Hopefully they have a good look at the risk profiling work the Advisers have been doing i.e. determining someone is a Balanced investor so they get put in the Balanced option which actually has an 80% allocation to Growth assets. Could potentially be a huge issue for them.

ASIC will find no issue with 99% of the advise being to the inhouse product.
ASIC will find no issue with the asset allocation of the underlying "Balanced" investment option and no issue with how the client was assessed for this risk profile.
ASIC will find no conflicts of interest.
ASIC will find no issue with fee for no service as intra fund advice is allowed to charge everyone and service only a few.
ASIC will find no issue with loss of benefits with people moving super to the Industry Fund - they will assume all other super are inferior to Industry Super and their comrades can do no wrong.
ASIC will find no issue with the sole purpose test.
I suspect it will be a great report - for Industry Super. Any issues that are found will simply be addressed by a change of legislation to make sure it is exempt.
With the arguments ASIC has used with regard to conflicts of interest and advice to related product, it will be a great read to see how they dress this one up.

Love to see how much resources and budget ASIC will spend on ISA advice versus that other diabolical, world ending client devastating ultra criminal activity other advisers allegedly do; you know the other super important investigation ASIC are undertaking: whether we signed a BDBN form in the same room at the same time as a client or not!

ASIC is corrupt and politically aligned, period.

@ Walker,
Don't hold your breath waiting for the FPA to attack ISA.
Two former CEO's of the FPA have been guests of an ISA symposium in Melbourne.
This was their way of recognising new recruits to the FPA whilst the ISA were still running compare the pair advertisements in the media.denigrating financial planners in general.
I pointed this out to an existing & would be "Board" member of the FPA who is supposed to represent the rank and file, but they had no idea this was still happening.

These are the people who have form that don't support their members, who capitulate to every government whim, so why would you expect anything more ?

We have a bloke at the top of the food chain of the FPA who lasted 18mths as a financial planner couldn't hack it and has been clipping the ticket ever since.

If ASIC's findings determine that conflicts do NOT affect the quality of advice, the argument to remove grandfathered commission payments or remove risk insurance commissions is destroyed entirely.
The Industry Fund's advice processes can only be CONFLICTED as they will not consider any other retail or Industry Fund option for their member.
They will always recommend the member either stays in the current fund, contributes more to the current fund, takes out insurance under the current fund and whilst transferring to the pension option at retirement within the current fund.
This is not an argument about whether conflict exists or not, as it clearly exists every single time.
The person providing the advice (be it general or personal) is paid by the product provider- being the Industry Super fund that employs them therefore a conflict of interest exists.
Consequently, their allegiance lies entirely with the entity that pays them and to support that entity.
If ASIC find that the advice being provided to Industry Fund members is adequate even though a conflict clearly exists, the push to eradicate grandfathered commissions on the basis of conflict is unjustifiable and finished as the advisers currently receiving these payments are governed by the Best Interest Duty and will determine through analysis with the client whether their current strategy is appropriate or whether a more suitable option exists.

Add new comment