ASIC delivers regulatory roadmap on advice within super

Financial planning organisations have just four weeks to respond to the Australian Securities and Investments Commission’s (ASIC’s) proposals to impose strong regulations around the provision of advice within superannuation including an assumption that advice within MySuper will be banned.

The regulator has released Consultation Paper 329 which is based on the Government’s exposure draft legislation and deals with the implementation of the Royal Commission recommendations on advice fee consents and independence disclosure.

The discussion paper makes clear the almost unfettered primacy of intra-fund advice in terms of superannuation citing the fact that the Royal Commission had detected no wrong-doing where intra-fund advice was concerned.

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But, on the plus side for advisers, ASIC has signalled an element of flexibility around gaining fee consents from their clients including allowing advisers to seek a client’s consent for deducting ongoing fees in the same document as the renewal notice.

“Alternatively, a fee recipient may seek a client’s written consent in a separate consent form—for example, when an ongoing fee arrangement is set up for the first time or when a client decides to pay ongoing fees from a new account,” the ASIC discussion paper said.

Equally importantly, where it comes to advisers dealing with superannuation funds, ASIC has signalled that it will be sufficient for superannuation fund trustees to sight consent forms from third parties such as financial advisers.

However, the ASIC discussion paper carries with it the warning that receipt of a copy of a consent does not automatically entitle a trustee to pass on the cost of providing financial product advice to the member and exhorts them to observe their convents and duties especially with respect to consent to deduct ongoing fees.

While ASIC’s consultation paper reflects the direction of the Government’s exposure draft legislation on the question of virtually eliminating the payment of advice fees from MySuper accounts, it stands in stark contrast the views of the major financial planning organisations and the major superannuation fund organisations.

Groups such as the Financial Planning Association (FPA), the Association of Financial Advisers (AFA) and the Association of Superannuation Funds of Australia have all warned that denying MySuper fund members the ability to access advice within super risks forcing them into choice products.

ASIC has acknowledged the possibility that the Government’s legislation will change and has signalled that its regulatory response will also change accordingly.




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FASEA and ASIC, despite all their flaws, have been doing good work to eliminate conflicts of interest and then Hayne comes along and creates a conflict bigger than anything that previously existed! ie. an adviser won't get paid unless a client is rolled out of a MySuper account. Honestly, what was he thinking.

ASIC stop pussyfooting around. the time is now to bring in more regulations for financial planners. while the financial markets collapse, oil war ensues and economies around the world are being ferociously devastated, we need more regulations for financial advice.

you MUST play your part in bringing on the biggest collapse in modern history.

ACT now!

All those (including the FPA) who thought that the war was simply won by being a "Profession" - looks like ASIC is saying "Intra Fund Advice" is quite simply, the best model to deliver advice. And guess what, you don't need to be a Professional Financial Planner to deliver General Advice - so the "lets become a profession" now seems like a nice academic thought bubble. Never mind, at least the product manufacturers still get their income and can deliver advice without Initial meeting. Terms of Engagement, Fact Finder, Risk Profile, Insurance analysis, research into other products, BID, SOA, Authority to proceed, Informed Consent, FASEA, Annual review (not to early and not to late remember), Opt In, met the Sole Purpose Test, etc etc etc. Just charge all members and answer the phone when someone calls - send a few newsletters (or have then on the Website) and all is grand. Well done. What profession?

Perfectly articulated.

we need even more regulations. this is hardly anything and we are already doing it anyway. more more more

how about asic dictate the amount we charge per hour. may be $22.00 same as a mcdonalds worker

how about asic dictate that we have to get our SoA's and RoA's reviewed by a second (external adviser)

and that second external adviser's advice review has to be reviewed by a third (external adviser)

and we have to pay for the external, external review

and that we have to be bald, and short and fat - I was born handsome and smart, I can't help when clients and others alike drool at my movie star good looks

Well it is blatantly obvious that the the Royal Commission, ASIC and the Government don't want self employed financial planners who provide choice to clients. It's time sell my business and then sell my soul to Industry Super Funds because they can do what i can but without the burden of the red tape or the issue of research, comparison and best interest we deal with. Thanks Scotty from marketing and Joshy, we don't need to worry about Corona virus to kill industries with you at the helm.

What an absolute and abysmal mess this has turned in to.
The over regulation/legislation and ridiculous and costly double and triple handling of documentation is entirely counter productive and will result in a large cohort of Australians never seeking or receiving quality advice.
This is the tragedy in the whole process as the intended outcome and spin is all about delivering better advice outcomes for the consumer. The real outcome will be increased costs, a rapidly declining number of experienced advisers not being replaced by new entrants and the lack of access to best interest advice provided by a trusted professional with which the client will have an ongoing relationship.
There have been many comments over the last few years stating that over regulation for regulation sake can be counter productive and stifle efficiency and this is exactly what is happening right now.
There are so many fingers in the pie, so many factions, so much ideology rather than reality it is strangling and reducing advisers ability to provide cost effective advice to their clients and potential clients.
Is this a good outcome?........no, it is not.

The Royal Commission found no issue with Intrafund advice because it didn't investigate it. Since then we've had ASIC Report 639 which found that just 56% of intrafund advice was compliant!!!!! This Govt has lost the plot. They commission an investigation and then blatantly ignore the results.

Daer Brett, I would respectfully suggest that the Royal Commission found no issue with Intrafund advice because the regulations governing Intrafund advice allow just about anything without the current advice requirements.

WAKEY WAKEY COLONIAL FIRST STATE - YOU ARE KILLING YOUR NEW BUSINESS FLOW: Equally importantly, where it comes to advisers dealing with superannuation funds, ASIC has signalled that it will be sufficient for superannuation fund trustees to sight consent forms from THIRD PARTIES such as financial advisers. IE We DONT need to use inhouse CFS forms.

Hey Steve, the ability for super funds to sight the Adviser's ongoing consent form is a proposal that will hopefully form part of the new legislation, it doesn't apply today. Don't blame super funds because ASIC currently requires them gain consent directly from the client.

Brett H. ASIC does not require any changes as of today. This is all legislation that is yet to be tabled and a likley start date will be 1 July 2020. CFS made its own call - nothing to do with regulation

Hey Paul, ASIC sent a letter to all super fund trustees outlining what their expectations were as far as trustees being satisfied that fees being deducted from super accounts were appropriate, that the member is fully aware of the fees, and that services are in fact being provided to the member. Hopefully it's a non-issue as the new legislation looks like it will do away with this requirement, but I'm just making the point that CFS isn't the only fund doing this.

Sure they made a call based on explicit and specific RC recommendations, subsequent regulator guidance in a letter that went to all RSE’s and in accordance with extant trustee obligations. A decision that other prudent trustees are now replicating.

Actually they made the call on guidance at best and after being thrashed in the media for poor practices in their internal networks. Stop trying to paint this as legislated.
You will note today that ASIC has come out with a discussion paper explicitly stating 'flexibility around gaining fee consents from their clients including allowing advisers to seek a client’s consent for deducting ongoing fees in the same document as the renewal notice.
“Alternatively, a fee recipient may seek a client’s written consent in a separate consent form—for example, when an ongoing fee arrangement is set up for the first time or when a client decides to pay ongoing fees from a new account,” the ASIC discussion paper said.
From the same article “Equally importantly, where it comes to advisers dealing with superannuation funds, ASIC has signalled that it will be sufficient for superannuation fund trustees to sight consent forms from third parties such as financial advisers.”
Prudent RE's, with which we deal, have held any decision pending the legislation as the RC recommendations are simply that, a recommendation. You might look at previous RCs to determine the extent with which they are put into law, Bushfire and Trade Unions come to mind.
The Dunning-Kruger effect indeed

I wonder why you didn’t also quote this: “Receipt of a consent or copy of the consent does not automatically entitle a trustee to pass on the cost of providing financial product advice to the member. Trustees must observe their covenants and duties in the SIS act including their best interest duty and sole purpose test”.

What is “satisfactory” and in the interest of Advisers too afraid to charge professional fees is hardly the standard of a prudent trustee.

And you still try and muddy the actual issue by throwing mud around hoping to get a rise. There is no legislation and prudent Trustees will be making submissions to ASIC and how this is to be managed.
You are a perfect example of the Dunning-Kruger effect so aptly named by your by-line ‘A cognitive bias of illusory superiority and comes from the inability of people to recognise their lack of ability'

and a number of large super fund trustees also think that CFS has lost the plot, and have zero intention of jumping the gun on legislation that hasn't been handed down yet. The other funds cannot believe their stupidity. Just CEO arse covering, with no consideration for taking the argument back to ASIC, who have zero idea of minimising red tape if they fell over it.

CFS is addicted to lots of old fashioned paper based forms. They make them as long and complicated as possible, then insist on them being printed out and physically signed. They are so trapped in the 1980s I suspect their male staff all dress in double breasted suits, and the females have shoulder pads and big hair.

One of the many reasons we're ditching that disastrous dinosaur of a platform for our clients.

Hey John, interested as to what platform you are moving to? while FirstChoice is definitely a little outdated it's still cheaper than anything with comparable investment choice.

I’d suggest reading the consultation paper in conjunction with the SIS act. There is a little more to it than the truncated view presented in the article. No product provider in their right mind is going to deal with thousands of different versions of the consent from every AFSL. I suspect if you deal with a prudent trustee, you will be using their forms. Will an industry standard form be produced? Doubt it.

Seems like some trustees will. CFS just lives in their own little detached from reality bubble.

You do if the trustee says you have to. They control the member withdrawals, not you. Are you a qualified adviser? With such rudimentary knowledge of superannuation I assume not.

Easier still, just set up a SMSF, and get out of all of these ridiculous funds - the SMSF Trustees can make up their own forms...lol . Too many retail funds have totally lost the plot. Weak as dishwater.

When ASIC comes calling for an audit, tell them you have corona virus.

They will then get you for not co operating with the regulator. It's the modern day Witches Chair.

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