FOFA's unintended consequence on superannuation advice
The Superannuation Complaints Tribunal (SCT) has warned that the Government's Future of Financial Advice (FOFA) regime could give rise to unintended consequences around disputes involving financial advice delivered by superannuation funds.
In a submission filed with the Senate Economics Committee reviewing the FOFA bills, the SCT has warned that under the bills as currently drafted it would be possible for the Tribunal to deliver one finding and for an external disputes resolution scheme to deliver another, different finding.
The SCT submission has particular implications for the provision of scaled advice and the ability of superannuation funds to provide such financial advice either via their own Australian Financial Services Licence (AFSL) or via an outsourced adviser holding an AFSL.
The SCT submission suggests, however, that the greatest scope for jurisdictional conflict arises where financial advice is provided by an outsourced AFSL holder, but the trustee is responsible for the advice.
The submission, signed by SCT chairperson, Jocelyn Furlan noted: "The effect of the current arrangements [is] that complaints about essentially the same subject matter - advice to a member about their superannuation interest in a fund - would be heard by the Tribunal where advice was provided by the trustee of the fund, or heard by an Australian Securities and Investments Commission (ASIC) approved EDR scheme where the advice was provided by another person, with different remedies and appeal rights".
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