Quarantine product providers, says Snowball

Independent financial planning dealer group Snowball has used its submission to the second phase of the Cooper Review to make clear the need to remove product providers from the relationships fundamental to providing advice in superannuation.

The Snowball submission calls for the removal of up-front commissions payable by the product provider to an adviser on all default funds and superannuation guarantee contributions, and the removal of trailing commissions payable by the product provider to the adviser on all default fund account balances.

At the same time, it has called for the legitimisation of payments to advisers authorised by the trustees, or under instruction by the employer/policy committee to the trustees, for the provision of collective member advice services.

The Snowball submission said payment for collective member advice represented a contract between the trustee/employer and the adviser and that “it is not a contract between the product provider and the adviser, nor between the adviser and each member”.

“It is tantamount to member advice services in-sourced by the trustees and spread across all members’ accounts,” it said. “The trustee/employer is entitled to turn it off or on, and responsible for terminating advisers in breach of the service level agreement.”

Elsewhere in its submission, Snowball said action should be taken to prevent “flipping” and that no member should be removed from a fund or division of a master plan to a more expensive option without their approval.

It said that action should be taken to remove other payments that distort the selection of product suppliers other than on their merits.