Govt response to grandfathered commissions disappointing: AIST

The Federal Government’s legislated response to end grandfathered conflicted remuneration is disappointing, according to the Australian Institute of Superannuation Trustees (AIST).

The super body said the Government’s response, which followed the Royal Commission, had fallen short on consumer protection.

AIST chief executive, Eva Scheerlinck, said: “While the new law puts a stop to financial advisers charging fees-for-no-service, it does not remove the incentive for advisers to recommend that clients stay in existing, often poorly performing and expensive products”.

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AIST said while it had welcomed the Government’s timeframe on how it would implement the Hayne Royal Commission recommendations its response had been “far too slow”, with only a handful of recommendations having been subject to the legislative process.

“The Government’s response so far has been tepid at best. It is crucial for restoring consumer trust in Australia’s financial system that key recommendations to address harmful conflicts of interest in the financial services sector are prioritised and implemented in a way that will improve outcomes for all Australians,” Scheerlinck said.

Scheerlinck called on the Government to prioritise recommendations to stop the worst practices among banks and other for-profit entities, including to ban the hawking of super products, such as the upselling of super along with the sale of bank products.

The super body also welcomed the Australian Securities and Investments Commission’s (ASIC’s) report that said the body would prioritise work on 13 matters referred to it by the Royal Commission.

Scheerlinck noted that Commissioner Hayne had not referred any profit-to-member super funds to investigation to the regulators.

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Quite obviously Eva Scheerlinck has absolutely no understanding whatsoever of previous and grandfathered rules governing retirement income products and Centrelink assessment, capital gains tax implications or pricing of some older products which are as competitive and comparative to current product.
Her lack of understanding regarding the best interest duty would always require an adviser to assess both advantages and disadvantages to the client relative to the client's objectives and goals.
It may well be in the clients best interest to remain within an existing product or strategy for a range of reasons.
This totally misguided assumption by commentators, politicians and self interest groups that an older product is automatically disadvantaging the client is wrong.
It's an easy way by which these groups can again turn the focus back around onto advisers as being the conflicted party when in reality the AIST in their commentary is about as conflicted as possible.
The Royal Commission did not refer so called profit to member funds (or profit to union funds) simply because it was a targeted witch hunt with an agenda that was not balanced and skewed and influenced by individual ideology.
It is entirely clear that almost every single industry super fund charges every member an advice fee for ad hoc or general advice irrespective of whether that member ever accesses or utilises that option.
If that isn't fee for no service Eva Scheerlinck then explain exactly what is is and have the courage to refer it to ASIC as a breach.
The utterly inequitable treatment and assessment between the industry super funds and the remainder of the financial services industry is a disgrace. It is unbalanced and manifestly unfair.
The AIST commentary is always and only ever to push their own agenda rather than intellectual and reasoned debate for the benefit of the entire financial services industry.

If Eva Scheerlinck is serious about stopping advisers hawking product, she would be calling for a total ban of Intrafund advice payments to the Union Super Fund tied agency sales force from administration fees - where all members are being charged admin fees for advice most fund members will never receive.

There’s a reason why ASIC/APRA don’t pursue union funds - left leaning public sector regulator enforcers are hardly going to impose penalties on their like minded comrades. And even if they did, who pays...the members. Imagine the uproar.

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