The Australian Securities and Investments Commission (ASIC) has defended its handling of intra-fund and limited advice delivered by superannuation funds in the face of questioning within a key Parliamentary Committee.
Asked to explain why ASIC had not taken action against superannuation fund limited personal advice given the compliance rates outlined in the regulator’s Report 639, ASIC declared “We do not consider limited advice to be a dangerous form of advice”.
NSW Liberal back-bencher, Jason Falinski had filed questions on notice to ASIC within the Parliamentary Joint Committee on Corporations and Financial Services in which he compared the level of action initiated by ASIC around advice inside superannuation when compared to the action it took around its Report 413 involving life insurance advice.
Falinski referred to limited personal advice as being a “very dangerous form of advice” and suggested it was doing consumer harm and asked what action ASIC was taking to shut it down.
He also suggested that because ASIC had taken pre-emptive action against real estate agents and questioned why ASIC had not taken similar action with respect to limited personal advice provided by superannuation funds.
Answering the questions, ASIC said it was “very supportive of the provision of good quality limited advice”.
“We do not consider limited advice to be a dangerous form of advice,” the regulator aid.
ASIC said that it also did not believe that the delivery of limited personal advice by superannuation funds was “analogous to the possible inadvertent provision of unlicensed financial advice by some real estate agents”.
The ASIC answer also dismissed an admonition in Falinski’s questioning that it give a commitment to exercising its regulatory duties “without favour and in an impartial way”.
“ASIC always undertakes its regulatory duties in a diligent and appropriate matter,” the regulator’s answer said.
Comments
I think the key word here from ASIC has to be "quality". So when a phone call out of the blue coercing a bank or industry fund customer to combine their supers, or an easy to click button online produces the same result and the client loses hundreds of thousands of dollars of valuable and potentially irreplaceable insurance, that's quality? I smell corruption here somewhere and it looks so firmly entrenched I fear we're stuck with it.
ASIC is so deeply currupted with a pro-Industry fund/anti-adviser culture, they are no longer capable of carrying out their duties as a government regulator in the financial advice sector. They have failed over and over yet Hume insults us by giving that rotten organisation the task of fixing the problem. What a joke. They ARE the problem!
Totally agree.
It’s called REGULATORY CAPTURE CORRUPTION.
ASICs complete and utter bias and support all things Industry Super Vs it’s Total hate and destruction of Real Advisers, is a disgustingly perfect example of this CORRUPTION.
It must be addressed but fear it will not.
Hmmm, I wonder who will best benefit from this decision. Should not take to long to work it out.
A fish rots from the head down.
"Very supportive of good quality limited advice"
Potentially an oxymoron. Provide limited advice and you're at risk of it being assessed as not good quality especially given the FASEA standards.
As an adviser this where we need clearer guidance. I'm happy to provide limtied advice once I know what the expectations of quality are...and that we can meet those expectations at a commercial rate which means we can be a sustainable business.
At this point the expectations of quality limited advice seem to be at odds with the expectations on the cost of providing it. A perfect example was the Covid relief advice. $300 simply doesn't cover the cost of quality, but it might cover the cost of quick form surface check limited advice where the advice can be provided in the same appointment. If deeper research is required it's a non-commercial proposition.
Given that when ASIC did the initial work on creating the Intra-Fund Legislation Carve Out in the first place, the 2008 Regulatory Impact Statement made it quite clear that this was discriminatory against other advice sources, which ASIC dismissed. In time, this has proven to be correct. ASIC is simply corrupt and biased in favour of Industry Funds, full stop. They are a disgrace.
So if I exclude an area of advice (and ignore FASEA requirements) and then label all my advice as LIMITED Advice I assume ASIC will not look at it in the same manner as comprehensive advice???? Just because it has now been defined by the regulator as "not dangerous"!
ASIC Report 639 (Page 6 & 7) outlines a review of 233 fund member client folders, of which 36 percent of the files did not demonstrate full compliance with the best interests duty and related obligations, and 15 percent of the files indicated that the member was at risk of suffering financial or non-financial detriment as a result of the advice provided by the advisers employed by the super funds. The main reasons for this compliance failure was the super fund employed advisers failed to identify the subject matter of the advice & the members objectives, financial needs and needs, and they failed to conduct a reasonable investigation into financial products and base all judgements on the member’s relevant circumstances. 40 percent of the (10) funds investigated were Industry Super Funds. IN LIGHT of ASIC's own report, perhaps they need to go back & read their own report, which indicates otherwise to what they are now reporting to this particular Parliamentary Committee. Or is ASIC just making it all up as they go along? https://asic.gov.au/regulatory-resources/find-a-document/reports/rep-639...
So what they are saying is 'all advisers are equal, but some are more equal than others!'. Hmm, where have I heard something like that before? It is time for all Licensees and the professional bodies to stand up to this corrupt bureaucracy and issue a resounding vote of no-confidence in our regulator. The Government needs to wipe the slate clean and start a new regulatory body to oversee financial planners. There is no other way around this. ASIC don't even seem to understand the term 'limited advice'. If it wasn't obvious in their affordable advice consultation document, then it is starkly clear with these ridiculous comments. If ASIC isn't removed from financial advice regulation very soon, the profession will quickly evolve into a small group of advisers providing high cost advice to the rich, and an army of conflicted telephone-based sales/customer retention officers masquerading as affordable adviser providers directly employed by product providers. That would be an utterly unacceptable outcome for Australian consumers.
I can just see super funds pumping out even more standard cookie cutter advice documents and ignoring all aspects of BID and FASEA. Whilst the principles of FASEA and BID will ultimately be used as a compliance weapon against all other advisers, even if they would benefit from scoped advice. Un-level playing fields don't create professions and creating more carve outs don't work.
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