Workplace super struggles with FOFA rules
After the Australian Securities and Investments Commission (ASIC) refused to provide an exemption to corporate super specialists under the Future of Financial Advice (FOFA) reforms' conflicted remuneration provisions, the Corporate Super Specialist Alliance (CSSA) announced it is working with Treasury to find a workable solution.
CSSA president Douglas Latto said that under the provisions a conflict arises when a corporate super specialist undertakes a superannuation fund selection tender and then provides ongoing services that are paid for by the super fund.
"While it is essential to make sure that the specialist is not inappropriately influenced in the tender process when they are also providing the ongoing service, as things stand at the moment they will have to find a new way to be remunerated — and that is proving very difficult," Latto said.
CSSA recently requested ASIC send a no-action letter regarding structural issues with respect to the conflicted remuneration provisions of the FOFA reforms, which come into effect from 1 July.
However, ASIC declined the request — and Latto announced the CSSA was working with the Treasury to find a regulatory solution which would ensure employers and their corporate super fund members can access assistance from corporate super specialists.
Latto said the issue was unique to corporate super specialists and resulted from the combined effect of FOFA and MySuper. He added if no regulatory solution was found, specialists might have no alternative but to abandon corporate super fund clients or exit the industry.
"This would have devastating consequences for small to medium businesses which now enjoy a range of pro-active services at the employer level, at the policy committee/representative body level, at the individual super fund member level and at the collective member level," Latto said.
"This would leave a large gap in the market with no obvious alternative."
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