Industry superannuation fund body, Industry Fund Services (IFS) has acknowledged some of its financial advisers have been in receipt of conflicted remuneration.
Initial submissions released by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which is related to Industry Super Australia (ISA), has revealed that IFS identified “conflicted remuneration by advisers” as falling below community standards and expectations.
It reported to the Royal Commission that individual performance plans for two advisers appeared to include funds under management targets for the Industry Fund Portfolio Service, an investment product issued by IFS.
“Both advisers provided advice to retail clients in relation to the IFPS,” the submission said. “IFS investigated the matter and confirmed that the structure of the performance plan was covered by grandfathering arrangements and consequently was not a breach of the prohibition on receiving conflicted remuneration but did fall below community standards and expectations.”
However, the same submission said that IFS had not identified consequences for consumers and that it had restructured its advice business “to ensure that persons involved in the business development functions of IFS, were not also involved in the provision of personal advice to retail clients”.
It said it had also amended the performance measures of the two advisers to remove product sales targets.
The submission said the conduct of the advisers was also monitored through the Advice Governance and Risk Committee.
The submission also itemised two cases of IFS financial planners providing advice on the establishment or closure of self-managed superannuation funds “which was outside the scope of their authorisation by IFS”.
It said the financial planners had been counselled and provided with training and guidance.
Comments
So what was the RC doing in not discovering this?
Not only that, they try to get members to sign up to ongoing advice services, when the specific industry fund offers FREE phone advice which would be suitable for the member in most cases...Surely the this is a conflict and breaches the FPA and AFA membership obligations (charging a fee for something when the member could get it for free).
This is actually a really good point considering that they are charging everyone for Intra Fund advice in their admin fees kinda begs the question why are they also paying for personal advice they can't just for debt advice through super... what is the difference its not like they can provide investment models with 12 options to choose from.
“which was outside the scope of their authorisation by IFS” - what does their authorisation cover - rolling into an Industry Fund only?
Hey wait a minute, they were advising clients to shut down SMSF and roll into the industry fund! This is a massive breach to do this with no SMSF authority. Counselling for IFS advisers, banning orders for the rest of us! About time some of this stuff is coming out anyway.
Is it to early to get a comfortable chair and pop-corn?
There is a rapidly transparent situation emerging that there are rules applied to some that don't seem to apply to others.
In addition, the scrutiny applied to retail superannuation funds and advisers must also be applied equally to the Industry Super Funds and their in house and " associated advisers".
The manner in which the Industry Super Funds were ignored at the RC was negligent and illustrated a clear bias.
"IFS financial planners providing advice on the establishment or closure of self-managed superannuation funds “which was outside the scope of their authorisation by IFS" - and all they get is counselling?? Haven't they breached their employment agreement, worse than this haven't they breached their Licensee obligations and ASIC Guidelines by giving advice that they were NOT licensed to give? Why is this not reported to the Professional Associations, why is it not reported to ASIC? Why is the Licensee (who is responsible for advice given when not authorised to do so) held to account?????
Double standards and it's interesting the Royal Commission doesn't grill the CEO's of Industry Funds and CEO of ISA on TV for the public to see.
Just another of their, "there's nothing to see here" outcomes. Nothing will happen as it does not fit the RC's narrative.
Just another of their, "there's nothing to see here" outcomes. Nothing will happen as it does not fit the RC's narrative.
OK, so, if it was a retail Adviser (Big 4 or AMP), they would have had this as front page news and bagging us out again. Yet, when it is an Industry Fund FP, hardly any mention of it, or any consequence.
Why do they seem to get away with issues such as this, yet the Retail Advisers get bagged so much?
Come on RC, how about one rule for all Advisers????
Industry fund financial planners should not be allowed to flog the in-house product!! How is this any different to the banks or AMP? I really do not understand how FOFA does not apply to industry fund financial planners giving intra-fund when the advice is actually personalised to their clients..... where is the RC in ending this double standard from industry funds not having to meet the best interest duty obligations like every other FP?
I suspect they are all at the Tennis with ASIC staff, hosted by the Industry Funds discussing how much profit - oops - political donations to Labor they will need to make to remain "not for profit".
Industry funds have been a fertile ground of career progression for all those bank executives jumping ship and being pushed. No wonder they have adopted similar ethical, moral and downright dumb business models.
Every cent earned by an adviser employed by an Industry fund is conflicted because their remuneration is paid by their employer, a product provider.
ASIC stated back in March "they would consider investigating industry funds" for the first time. Perhaps it is time for everyone to write to the minister and request an update from ASIC. What was the result of the consideration? Or is it still OK not to have ever looked at 40% of the super funds. The RC is not to blame, they have only investigated evidence presented to them. ASIC is to blame for never opening the files......
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