Corporate super advisers are seeking further guidance from the Australian Securities and Investments Commission (ASIC) on the provision of advice to fund members, particularly in areas where individuals are seeking more personal advice.
At the recent Dexx&r Corporate Super Conference, a number of advisers expressed concern about the blurred boundary between general advice and personal advice, and some were unsure whether limited advice could be offered to those just seeking advice on super.
Dexx&r managing director Mark Kachor said: “I think everyone is trying to work out the right thing to do. One of their concerns was whether the people who do the auditing [at ASIC] are sufficiently familiar with how the corporate super business works, or are they of a mindset where they are used to seeing documentation appropriate to an individual sale?”
Goodwin Financial director Michael Gulli said: “I do think further guidance is needed, especially for the guys who are just moving into the market and seeing opportunities to grow their business, but also for people who have been around forever and just find themselves giving ad hoc advice, which can be quite personal from years gone by.”
According to Financial Advisory Services Tracey Ashworth, “a lot of advisers are doing nothing because they don’t know what they can do, and they are not going to do a 100-page SOA [statement of advice]”.
Ashworth uses short-form, super-based SOAs when members want personal super advice, but not necessarily a broad-ranging financial plan.
She said: “I thought if we disclosed all our fees and commissions, if we’ve commented on the insurance, investments, estate planning, and rollovers in our plan, and included all the normal disclosures and things you include in an SOA . . . then if ASIC rapped us over the knuckles we knew we weren’t going to go to gaol for it.”
According to ASIC’s director of policy and research Mark Adams, “ASIC recognises that the law does provide for the provision of limited advice, and that the appropriate advice obligation is scaleable”.
“Nevertheless, depending on what advice you give, there are minimum standards which must be met as to reasonable enquiry and as to what you can recommend. People cannot use limited advice as a shield from doing a minimum level of reasonable enquiry,” he said.
ING’s head of marketing and sales channels Mark Pankhurst said, “we need as an industry to work with ASIC to come up with some clear rules on this”.
“It’s really a grey area … I think that’s part of the challenge for the adviser. On one hand, he [or she] might have someone who’s just looking for information, and on the other hand, he [or she] might have someone who’s asking the same question, but they are looking for detailed financial advice.”
Adams said ASIC is aware that “there are grey lines between what is factual information, general advice and personal advice”.
He suggested that advisers “would be well advised to look to what guidance has been issued, including from ASIC and industry”.
