Superannuation funds are expected to be the big winners in this year’s Quality of Advice Review as minister for financial services, Stephen Jones, speak to the industry.
Last week, it was mooted that Jones would be discussing the matter with superannuation fund chief executives at an Association of Superannuation Funds Australia (ASFA) event in Sydney before issuing his formal response widely, prompting speculation the report would be focused on the possibility of super funds giving financial advice to its members.
It is understood Jones has approved 14 of the 22 recommendations.
This morning, Glen McCrea, ASFA deputy chief executive, said the proposed reforms would mean:
- Superannuation funds can provide more relevant advice to members in the lead up to and during retirement;
- Superannuation trustees have discretion in how they charge for advice provided to their members to improve cost effectiveness and access to advice for all members;
- The requirement to provide a Statement of Advice (or record of advice) is replaced with the requirement for providers of personal advice to provide fit-for-purpose advice records which are more meaningful for consumers.
“These reforms will improve access to financial advice and retirement outcomes. They will also increase the efficiency, cost-effectiveness, and consumer experience of advice,” he said.
“Superannuation funds are well placed to deliver the financial advice that consumers want and need. This can range from relatively simple advice around a single issue such as contributions or investment options, to more holistic advice around retirement.”
In her report, reviewer Michelle Levy had discussed how super fund trustees should be able to provide personal advice to their members about their interests in the fund, including when they are transitioning to retirement.
In doing so, trustees will be required to take into account the member’s personal circumstances, including their family situation and social security entitlements if that is relevant to the advice. Super fund trustees should have the power to decide how to charge members for personal advice they provide to members and the restrictions on collective charging of fees should be removed.
Super trustees should be able to pay a fee from a member’s super account to an adviser for personal advice provided to the member about the member’s interest in the fund on the direction of the member.
The Quality of Advice Review, conducted by Allens lawyer Michelle Levy, released its final report in February after seven weeks of waiting. It had commenced on 11 March and included an issues paper and proposals paper which prompted over 100 submissions in response from industry stakeholders.
Matters in the review included digital advice, Statements of Advice, financial advice given by super funds and life insurance.
Last week, an industry panel including head of superannuation at CFS, Kelly Power, discussed the report and the possibility of super funds giving advice.
