Major superannuation fund trustees have found themselves under scrutiny over fee for no service with both the major financial services regulators revealing their pursuit of issues in a joint letter to major funds this week.
The letter from the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) directly asks: “Are the deductions explicitly authorised by members? Are the deductions consistent with the authorisations and disclosures made to members?”
The letter also asks whether the deduction of fees for advice meet the sole purpose test and whether it is in the best interests of members.
It references the fee for no services issues identified by the Royal Commission and then goes on to state: “Separately, we have identified a range of industry practices in relation to trustee oversight, many of which fall below the standard we expect”.
“A number of these matters are the subject of enforcement investigations or actions. This raises concerns about some trustees’ risk governance, capabilities and culture, as well as their ability to appropriately manage conflicts of interest,” the letter said.
“All trustees must have in place strong governance, risk management and oversight processes to ensure that only authorised and appropriate fees and other charges are deducted from members' superannuation accounts.”
“Accordingly, APRA and ASIC expect all trustees to be reviewing the robustness of their existing governance and assurance arrangements for fees charged to members’ superannuation accounts, and to address any identified areas for improvement in a timely manner,” the regulators’ letter said. “We expect these reviews to be substantially completed by 30 June 2019.”
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ASIC and APRA need to get their heads out of their proverbial and go where we all know there is serious misconduct for fee gouging - Industry Super!
How about you inept boys and girls do your job impartially and go investigate the flagrant misuse of member benefits in political advertising, commissions paid out and 'consulting fees' paid to union groups as 'indirect member fees' ?
So if a large Industry Super fund is paying 20 salaried planners, and there is no bi-annual opt ins being signed by their clientele, does this mean the millions of their other fund members they are NOT being advised and who are paying admin fees, is that also (admin) fees for no service? Nice racket, if you can crack it.
It is setup by the law, so perfectly legal!
The Government definition of "service" is wrong... Who is stepping up for advisers and say surely we just don't provide switching advice. This is a strong reason as to just why we need an independent association that will represent the needs of all advisers. The next step is for super funds to say too hard to comply with ASIC and you advisers just employ a team of book keepers and debt collectors to charge clients.
The 20 planners at that major Industry Super Fund has all of their overheads, CPD & University units, ASIC supervisory fees & PI insurance paid for out of the admin fees, but when we charge a small fee to our clients to cover these flat costs, we are accused of charging "fees for no service". Enough is enough
...and can ASIC confirm they haven't been conflicted by receiving gifts from the corporations they regulate and provide details of their 2018 register?
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