Super fund telephone consultant gave wrong personal advice

18 January 2019

A superannuation fund has been required to make good a member’s excess contributions tax and pay interest on the amount, after the Superannuation Complaints Tribunal (SCT) found telephone advice provided by the fund led to her exceeding concessional contributions limits.

What is more the SCT has rejected a claim by the superannuation fund that the advice represented “general advice”.

An SCT determination (D18-19\084), handed down late last year, found that the superannuation fund needed to compensate the member because she had received misleading advice.

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The determination said that the SCT “considers the Complainant has argued essentially, that because the Trustee’s representative advised her exactly how much she could contribute by way of non-concessional contributions, without exceeding the Contribution Cap, she was entitled to rely upon that advice”.

“That the advice was erroneous means that she is entitled to be compensated by the Trustee for the Excess Contribution Tax,” the determination said.

It said that while the superannuation fund had submitted that “information provided by phone consultants was of a general nature only and based on the relevant contribution limits at the time”, the SCT considered that “if the Trustee’s representative gave incorrect advice that was specific to the Complainant’s circumstances, and she relied upon it to her detriment, the Trustee is responsible for that failure”.

The SCT referred to telephone transcripts between the member and the telephone consultant and said it considered the consultant had given the complainant advice, taking into account her particular circumstances and that this represented personal advice.

The SCT ordered that the superannuation compensate the member for $16,275 plus interest payable at the fund’s cash rate from the data the member made her payment of Excess Contribution Tax to the Australian Taxation Office, 15 September, 2015.

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Clients don't understand the differentiation between advice types even when explained to them. They take the word of someone who seems helpful on the end of the phone - all advice is advice, simple as that. The problem will become worse due to FASEA where people will now be money coaches - general advice being given as personal advice, watch the lawyers line up then,

RC missed this??
ASIC should be closed and start over again.

Interesting that the super fund isn't named. I'm pretty sure that means it is an union fund, because if it was a large institution such as a bank or AMP it would have been in the headline.

This kind of thing goes on regularly and it's brushed off as general advice.
Life companies offer contract alternatives/variations to adviser clients without first consulting the adviser, or explaining the ramifications of altering existing life contracts.
And there are many including changes in health that may impact on client's financial position to their detriment when existing contracts are altered/modified.

So it was personal advice? Did they provide an SOA? Was this a systemic issue? Did the person give the same advice to others? I think ASIC should consider if this is a breach. Has it even been reported to ASIC as a breach. Will ASIC do anything anyway or are they asleep at the wheel.

This industry loves to nail a bank to a wall when they do this, so why isn't the fund named?????
I thought transparency was the latest buzz word for Asic?

As usual, a tiny penalty of $16,000 plus interest to be paid by the Super Fund but NO SANCTIONS OTHERWISE,

Yes certainly not a large Bank or AMP or your average Financial Adviser. One rule for some and severe sanctions for others, especially Financial Advisers!!!!

Let's face it, Kell came out of that FAR LEFT ORGANISATION called CHOICE.
No doubt other staff at ASIC have followed a similar career path. A strong LEFT WING background, dedicated to searching for ways to be unhelpful to Financial Advisers.

Last year on the ABC Morning Breakfast program during the ABC Royal Commission feeding frenzy, the co-host, Madeline Morris proceeded to inform their millions of viewers that having more than one superannuation fund was not appropriate and if you had multiple super funds that all included Life Insurance cover, that it was ridiculous because "you could only ever claim on one policy anyway " !!!!!!!!
It was very clear at that point her co-host Michael Rowland knew full well that she was entirely incorrect and appeared uneasy with Madeline's misinformed rant about multiple super funds, insurance cover etc.
She then continued by saying this as Madeline was a bit worked up.
" Well, there is no point at all in having more than one Life Insurance policy, because you only die once " !!!!!!!
This was immediately followed by continued "general advice " about people having to consolidate their super funds into only one fund without any comment at all regarding automatic acceptance terms on group insurance under super or consideration of a persons financial needs or health status etc etc etc.
And get this.....Madeline Morris freely admitted she had had multiple super funds over time and had no idea about most of them.
Madeline Morris has also been charged with presenting the finance report!!!!! on the ABC Morning Breakfast program, in addition to the Fact Check segment !!!!
So, how is it that a completely uninformed journalist who knows next to nothing about superannuation or insurance is able to blurt out incorrect information to hundreds of thousands, if not millions of people and its ok?
How long would an adviser last on air if they did the same thing ?
The many so called " financial commentators" or " money coaches" who have regular segments on national television or radio should be subject to exactly the same scrutiny in the provision of general advice.
Suffice it to say that Madeline Morris was not on the program the next day.

As others have already commented, it's strange that the super fund is not named. Shouldn't members be made aware that the fund's contact centre acted inappropriately? Given that the advice was deemed personal - isn't there a rather important breach of SoA requirements here?

Unfortunately, the difference between general and personal advice is shades of grey. If anyone attempts to look through the legislation, you can see that is is impossible to clearly state where one stops and the other starts.

Every day I read newsletters and commentators make what can only be described as personal financial recommendations, under the guise of "general advice". It's a large problem that is difficult to tackle, and frankly, I don't think that it will be tackled. There's simply too much bias by industry participants, regulators and legislators.

FIB's - fees, independence and bias - are rampant in financial services, but somehow the spotlight is always shone on financial advisers, rather than the regulators and institutions.

Why hasn't the name of the fund made the headline?

It would be so easy to pull up ALL telephone conversations this person had with super member and see just how many time they have provided personal advice - or we assume this one time only it just so happens they got it wrong. The Super Fund should then be in deep for not monitoring there representatives and following previous ASIC determination, pull the ASFL. Will this happen? If as we all suspect it is an Industry Fund - no way on earth.

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