FSC warns on ‘chilling effect’ of advice deduction legislation
Advisers could find themselves unable to receive the fair market price of advice as the Delivering Better Financial Outcomes legislation states superannuation trustees can reject deductions that are not charged on a cost basis.
In its submission responding to the legislation, the Financial Services Council (FSC) discussed the matter and said the legislation should not be passed until this issue is resolved.
The legislation sets out multiple requirements that need to be satisfied before a trustee can charge the cost of advice against a member’s interest in the fund. This includes an assurance that the financial product advice is personal advice and is wholly or partly about the member’s interest in the fund.
“The legislative changes in Schedule 1, Part 1 of the Bill relating to legal basis and appropriate and justified oversight of adviser fee deductions by superannuation trustees from member accounts, which the FSC supports, are defective.”
The organisation is particularly concerned about the requirement for advice to be charged on a cost basis which, it said, is contrary to proposals initially put forward by reviewer Michelle Levy.
“The amendments inadvertently, through ambiguous drafting, have the potential to force superannuation trustees to reject advice fee deductions on the basis that they are not charged on a cost basis, in effect meaning financial advisers risk not being paid the fair market price of their advice.
“The amendments restrict the ability to charge for advice services provided through general advice, which was not a stated policy objective of relevant recommendation of the Quality of Advice Review.
“The impacts of these unintended consequences may be that some superannuation trustees will decide not to facilitate advice deductions from members’ accounts where the adviser is independent of the superannuation fund.”
Removal of the ability for super fund members to fund financial advice through their superannuation account will have a “chilling effect” on consumers being able to receive professional financial advice.
Possible impacts include increased red tape, restricted access to independent financial advice, reduced advice provided to superannuation fund members and will undermine consumer access to professional financial advice, all of which go against the original intentions of the Quality of Advice Review.
The FSC recommended the legislation to be amended so superannuation funds and financial advisers have clarity that advisers can receive their market price for the financial advice they provide, and that an advice fee paid in accordance with member consent is treated as expense of the fund.
AUTHOR
Laura Dew
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Minister for Financial Services, Stephen Jones, has said he did not expect backlash to changes around advice fee deduction and believes the second tranche will have greater impact, committing to enact it by May 2025.
The sh*t show rolls on. Heaven forbid we run a profitable business and not a charity.
This was no mistake by the MOB (industry fund, union and Labor Party movement). They have been attacking the advice profession for decades and will not stop until they have closed the advice profession down completely. They want 100% control of super member money for their own ideological purposes.
The Liberals have done a pretty good job of decimating the advice industry too.
It just never ends. No wonder financial planners have horrible mental health - every time they say "don't worry, there's light at the end of the tunnel", the light turns out to be the burning fires of the hell you've been trying to escape and you've just ended up going in a circle.
How much longer can we all bear this.
Sick of it. Canberra is a joke.
This is really concerning....
C'mon Canberra, sort this nonsense out.
The FSC should have thought about this when they cooperated with O'Dywer/Frydenberg/Hume/FPA/AFA 10 years ago when this nightmare commenced. The Advisers need to engage their clients to intimidate their local member and use that power leading into the Election......it's not rocket science.
What do you think the motivation is behind this broadly worded legislation Peter?
Is it to make it harder for retail advisers (on purpose), or maybe assist some 'preferred' superannuation funds?
How is it that I feel that financial advisers are professionals when we are punished, but we're suddenly not professionals when it comes to professional testimony (in-conjunction with client consent) with regard to fees paid from a members super fund?
It's insanely frustrating and unacceptable.
How is A TRUSTEE ever going to be able to be sure , if an adviser gave advice on super and some other part of a clients business or not. And if he did charge it all through the super fund.
At the least the adviser would need to raise two invoices with a clear defining line between the two.
I believe advisers with wealthy clients might not view super as the best thing if there were large sums in other placesit would not matter which area the fee came from either would be reduced by the amount paid, with a corresponding decrease in the investment performance.BUT with a working man any fee makes a difference that may have a consequence JG
The greatest issue is that Stephen Jones and the federal Labor government are anting to prohibit retired Australians, who have met a condition of release, rom having full access to their own funds. The directive from a superannuation pension account holder is now subject to oversight by the superannuation fund/trustees. This is a worrying development. The solution is to make the legislation ONLY apply to accumulation accounts.
Thank God I sold my business.
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