There needs to be greater transparency on the part of all superannuation funds on how they fund their activities, including the provision of financial advice, according to newly-elected NSW Liberal Senator and former Financial Services Council policy adviser, Andrew Bragg.
Commenting on financial planner concern about the manner in which some industry superannuation funds access administration and investment fees to pay for advice, Bragg said he believed the system had to be made more transparent.
Bragg had been asked to comment on calls by some financial planners for the Australian Securities and Investments Commission (ASIC) to be more consistent in its handling of salaried planners employed by industry superannuation funds.
In particular, the advisers pointed to the manner in which superannuation fund salaried advisers were being paid out of the fund’s administration and investment fees, meaning that all members of the fund were paying for advice whether they had received it or not.
Bragg said he believed that there was a need for better disclosure on the part of all superannuation funds, irrespective of whether they were industry funds or retail funds.
He said better disclosure and transparency would make it easier for fund members to determine how their fees were being used by their superannuation funds.
Prior to his election to the Senate, Bragg has been a significant critic of the conduct of some industry superannuation funds, particularly around expenditures.
Comments
As well as the same scrutiny on advice given by them and their 'AFSL' being the fund itself, as is extended to normal financial planners. Level the playing field.
While you're at it, get corrupt unions out of superannuation altogether, their greasy mitts definitely do not belong grabbing 'fees' out of there. Perhaps an inquiry into how Mrs Shorten got to be heading the ISA wouldn't be astray either
Don't tell me, is there is a little light at the end of the tunnel? Someone that understands our viewpoint in power? Well I never! Thank you Mr Bragg.
Prior to his election to the Senate, Andrew Bragg was Director of Policy and Global Markets at the FSC.
Andrew Bragg signed off on the FSC submission to the Trowbridge Review of Retail Life Insurance Advice on 5th Feb, 2015.
Andrew Bragg and the FSC were staunch and aggressive supporters of the Trowbridge Review and Bragg made it very clear in several media releases following their submission that he supported an option of Level only Life Insurance commission of a maximum of 20% and made it clear he believed that the eventual ideal outcome would be for the abolition of Life Insurance commissions entirely in order to enhance the quality of advice and to improve consumer outcomes. It was very clear the FSC ideally wanted the ban of Life Insurance commissions to eventuate.
Andrew Bragg also signed off as a representative of the FSC stating that the clawback provision not only be extended and applied to the significantly reduced Level commission payment, but also on the then proposed additional service payment.
What there needed to be in 2015 was a lot more transparency around the conflicts of interest among FSC members who were not only product providers but also distribution models within their own businesses and why the cartel like behaviour of many of the Life Insurance company FSC members were advocating and supporting the push to significantly reduce or ban Life Insurance commission remuneration to Independent Financial Advisers.
This was an ugly misuse of market power and designed to reduce the competition in the form of adviser distribution models in order to maximise the direct distribution models and therefore profit to shareholders.
Life Insurance commissions are by far the most cost effective means by way of allowing the consumer to access advice and product at a reasonable cost base and the most efficient method by which advisers and Life Insurance companies can work together as professionals to manage and protect the Australian consumers financial position.
Anything other than this is complete folly and will fail.
It will fail the consumer and it will fail the quality, professional advisers who know exactly what they are doing and how the advice of Life Insurance should be demonstrated and recommended to the consumers who need it.
Andrew Bragg now has an opportunity as a Senator to make good the inconsistencies of the past and to push forward and support the adequate and meaningful remuneration for financial advisers when providing Life Insurance advice.
The complex process of advice analysis ,the Best Interest Duty and the Safe Harbour provisions means the safeguards surrounding advice are more than adequate.
Remuneration via adequate commission levels does not minimise or reduce professional process at all.
It is the cost for the consumer of receiving appropriate and personalised advice and it is the remuneration model that allows them to do so.
So, Andrew Bragg, take on a challenge and be an advocate for high quality advisers and small businesses who deserve better treatment and respect than they have received for the last decade.
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