ASIC denies knowledge of intra-fund extension

The Australian Securities and Investments Commission (ASIC) has denied any knowledge of proposals to extend the interpretation of intra-fund advice while acknowledging that it is currently being delivered by way of cross-subsidies within superannuation funds.

Appearing before the Parliamentary Joint Committee on Corporations and Financial Services, the regulator confirmed that the law as it currently stood in terms of the Superannuation Industry (Supervision) Act allowed for the continuation of the cross-subsidy.

ASIC Commissioner, Danielle Press, said that it would be a matter for the Government whether it moved to act on a recommendation from the Royal Commission to remove the cross-subsidy.

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“Intrafund advice is personal advice, but it is actually undefined. There is a section of the SIS Act that allows funds to cross-subsidise certain parts of advice,” Press said.

"By law it's personal advice. It takes into consideration your personal circumstances, but it is allowed to be cross subsidised by the SIS Act under 99F,” she said.

However, Press said that at the end of the day the removal of the cross-subsidy was a recommendation of the Commissioner, Kenneth Hayne, and that it was a matter for Government.

Queensland Liberal back-bencher and former financial adviser, Bert van Manen questioned why superannuation fund members who were not receiving advice were effectively paying for the advice delivered to others.

Press responded that that was the law as it currently stood.

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If they do then why the hell are commissions being banned... just a scam

Incorrect Ms Press- the Code of ethics FASEA just rewrote other parts of the law - no conflicted advice etc. Let alone Fees for no service !! You can't say this part of the law applies to this crowd. But oh, no this other part of the law, even though it is contradictory, only applies to this crowd over here!

'the Code of ethics FASEA just rewrote other parts of the law ' shows how little you know about the legislative process. Parliament makes the Acts and those Acts allow making regulations within legislative guidance. A Code of Ethics can not overrule an Act of Parliament nor a regulation made via an Act of Parliament.

Hedware, your comment seems a little harsh considering the point Bozo was making - which I believe is not valid. There are many good articles around today Hedware which I read thinking of what comments you might make - but this seems to be your only comment? I'll have another look under comments about Intra Fund advice being personal advice and guess what, the cost is charged to most members of a Fund even if they don't use that service. No disclosure, not ability to opt out, and no best interest duty. Should be interesting assuming ASIC investigates all the Industry Fund - if that is before my retirement.

Thanks. I was picking on one aspect of Bozo's comment which flawed the rest of his argument. In fact I tend to agree with Bozo's position on intra-fund advice and that it needs to be clarified. Also Bozo seems to know more about industry funds than I do but I know similar practices have happened on the for-profit side as well.

The FASEA Code of Ethics is law, it is the first code of ethics enshrined in law in the world, therefore it is an Act Of Parliament. Parts of FASEA, as law, contradict other parts of the law, this is where the confusion lies.

The Code is not an Act of Parliament but operates via the means of an Act of Parliament namely Corporations Act 2001.
'In 2017 the Commonwealth Parliament amended the Corporations Act 2001 to raise the education, training and ethical standards of financial advisers and financial planners, promote enhanced consumer trust and confidence in financial planners and financial advisers and refocus them from providing commercial services to acting as professionals.'
All relevant providers must comply with the FASEA Code of Ethics under section 921E of the Corporations Act 2001.
The Code is legally enforceable via the Corporations Act but it is still not strictly an Act of the Commonwealth Government.
Just helping you get your facts straight and correct, but I agree with you that the Code creates some conflicts with other Acts.
The FPA has a rather good explanation of the Code.

Ahh the old, its the law argument. Like ASIC asking products to turn off commission even though they are legal.

Wait - I just realised that I can just work out a figure, be it percentage or dollar based and charge it to every one of my clients whether they use my services or not. All I need to do is send them a letter saying that they can call me if they'd like. Does that letter need to say that my advice is limited to a single product (even the banks have opened up APLs) and that it might not actually be the best solution for them? That what I can do with insurance will leave them at risk? I also just realised I can raise that fee if I like, all I need to do is send another letter. I can also charge the clients when they take up advice anyway. Sounds like a good gig, doesn't it?

One of the area of the industry is over regulated, another is still the wild west. It's inequitable, and contrary to the interests of the community.

One of the new Federal MPs (who historically has been a very long term member of UniSuper) admitted to me yesterday they had never received advice from their fund, even though the fund has been charging that MP admin fees for advice. Ouch. Time to amend the SIS Act now.

Fantastic, so we can look forward to the Industry funds going through a Fees for no service remediation process going back 10 years, just like their Retail counterparts. Now, how will the Not for profit funds be able to find the money to repay these fees? Oh yeah, they'll have to take it from their clients accounts? Or go out of business.

Everyone and everybody is charging administrative fees these days. So do retail and not-for profit funds, wrap accounts, product managers, banks and many more in the financial services industry. These and their quantum can be questioned but usually they are billed separately from other fees such as advice fees. Your MP example just showed he/she didn't understand the difference.

the MP knows that this is the law currently, but was shocked to learn that their fund was legally able to charge fees them admin fees to pay for the advice someone will get, & have no opportunity to opt out. Get ready for a major law change... The con job is nearing an end.

i am hoping that the MP understands that some of the policies that he/she is party to may not be used by everyone - non car owners pay for roads used by car owners.
MP sounds a bit simple if that is the best he/she can do.

But it is not compulsory to own and maintain a car - you can opt out. Members of Industry Super can not opt out.

Asic are happy to get the whip out but only on certain people. If they were jockeys you would not back them as they would ride one horse hard and the other would come last every time as they would not even hold the reigns. Thankfully people are starting to understand the rort which is intra advice fees and paying inhouse advisers from these fees. I tell my clients about this and they are astounded by these revelations. Believe me ASIC does not want any heat on the industry funds, they know if there is it will make them work a lot harder as at the moment they just leave them alone!

ASIC is lazy and incompetent. Simple as that. They focus their hate and efforts on retail funds and financial planners, making them jump through onerous regulations and compliance and when asked why one other part of the industry seems to be completely untouched by them they rely on the defence, its the legislators fault. They then have the gall to say they treat union funds they same as everyone else.

Funds of all persuasions have been embedding cross subsidies in their universal admin fees forever. I for one have never called my funds call centre, which cost i, sure is baked into my admin fee. But im sure theres others that call al lthe time. Why should I pay for that? Do we move to a fee per minute user pays cost for that? Come on, time to get a bit real re all this fake outrage.

Not fake...very real outrage. No problems for admin fees for admin. Personal Advice has been singled out and regulated to the hilt to the point that many IFA's (including myself) are questioning their future. Industry Funds have deonised advice for many years but have quitley been building their own army of loyal footsoldiers. There will be and probably already is a 2 class system for advice...this that have will see IFA's those that have not will see their Industry Fund adviser (read tied agent). Over Regulate for ALL or just ban Vertical Integration.

What all of the $2.25 weekly admin fees charged members for a range of service(s) ?! yeh sure your client it outraged over this crazy fee which is less than a cup of coffee a week ..probably best working out a better value proposition as hanging your hat on this is probably ain’t going to work.

Actually, that is only part of the admin fees. All very fuzzy.

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