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.
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.