Warnings as industry award takes effect
The principals and directors of financial planning practices will need to ensure they, their planners and their employees have appropriately nominated the superannuation fund of their choice or risk defaulting to a number of industry funds nominated under the Banking, Finance and Insurance Award.
The warning has come from Sydney-based lawyer Steve Godding, who has been working with the Financial Planning Association to remind planning firms that the largely award-free financial planning industry is now subject to default coverage under the Banking, Finance and Insurance Award 2010.
What is more, the Fair Work Act 2009 legislation makes superannuation an “allowable” term within the award, which means that if someone working in the industry has not already nominated a superannuation fund, they will find themselves defaulting to one of the mostly industry funds nominated under the award.
Those funds include CareSuper, AustralianSuper, Sunsuper, HESTA, Statewide Superannuation, Tasplan, Westscheme, Master Plan Superannuation, Cuesuper and the Insurance Industry Superannuation Fund.
Godding, of law firm Kemp Strang, said given the depth of knowledge in the financial planning industry, he believed most planning firm principals would be aware of the implications of the new industrial relations legislation.
He said while the new legislation would not affect the status of default funds nominated by employers before September 12, 2008, it would certainly impact any attempts to change those default arrangements now or in the future.
“If an employer decides to change the existing default fund, any new default fund selected must be a fund described in the award,” Godding said.
He said he believed it was not unusual for employers to change default funds but, in future, they would need to take account of the new industrial legislation.
In the event that financial services employees find themselves defaulting via the award into an industry fund, their only recourse would be to exercise their rights under the choice of fund rules.
AUTHOR
Mike Taylor
Recommended for you
As the industry navigates the fallout from recent product failures, two major AFSLs have detailed their APL selection process and relationship with research houses, warning a selection error could “destroy” a licensee.
The impending retirement of financial advisers in their 50s could see the profession face significant succession challenges over the coming decade and younger advisers may not be the answer.
With a third of AFSLs being solo advisers, how can they navigate key person risk and ensure they are still attractive propositions for buyers when it comes to their succession planning?
A quarter of advisers who commenced on the FAR within the last two years have already switched licensees or practices, adding validity to practice owners’ professional year (PY) concerns.
