Government rejects ACA calls on super choice
TheFederal Government has rebuffed calls by the Australian Consumers’ Association (ACA) for superannuation choice legislation to be delayed in the wake of the release of damning findings on the quality of financial planning advice.
A spokesperson for the Minister for Revenue and Assistant Treasurer, Senator Helen Coonan, says choice was an “election commitment and the Government does not see a need to delay progress of the legislation”.
The rebuff came in response to a call by the ACA for super choice to be halted as a result of the findings of its recently released report into the financial planning industry.
The chief executive of the ACA, Louise Sylvan, previously a strong supporter of super choice, says the report highlighted major weaknesses in the financial planning industry, including the recommendation of investments by advisers in order to generate commissions.
“Because of the results, we are changing our position on super choice, which is due to be debated in the Parliament shortly,” she says.
“Until we get some protection in place, like no commissions or trail commissions [for advisers], we will not be supporting superannuation choice.”
The Labor Party, as well as theAssociation of Superannuation Funds of Australia(ASFA), have come out in support of the ACA’s position on choice.
The Shadow Minister for Retirement Incomes and Savings, Nick Sherry, says the report proved a significant proportion of planners “cannot be relied upon to do the right thing for consumers”.
The chief executive of ASFA, Philippa Smith, says there is a risk planners will advise clients to “go into higher cost products that suit the adviser not the consumer”.
But the Government says the ACA report is not valid in the choice debate because its findings relate to an environment before the full consumer protection measures of the soon to be implemented Financial Services Reform Act (FSRA) have taken effect.
“Choice won’t be implemented before the end of the transitional period for implementation of FSRA in March 2004,” the Government spokesperson says.
“To suggest that Australian employees can’t be trusted to make intelligent choices is insulting.”
TheFinancial Planning Association(FPA) said last week consumers should have the right to choose where they invested their superannuation savings.
TheAustralian Securities and Investments Commission(ASIC), which worked with the ACA on its report into the financial planning industry, did not weigh into the debate on superannuation choice last week.
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