Appearing before the Senate economics committee, WT Financial managing director Keith Cullen has described the first tranche of the Quality of Advice Review (QAR) as a “ticking time bomb”.
Representing the Joint Licensee Group, Cullen and Fortnum Private Wealth managing director Neil Younger discussed their concerns over the first tranche of the reforms with the committee on 13 June.
He was specifically concerned about section 99FA around superannuation trustees and payments to financial advisers, which is a topic that has been raised by numerous industry experts.
Among the requirements is an assurance of an unspecified kind that the financial product advice is personal advice and is wholly or partly about the member’s interest in the fund, and that the amount charged does not exceed the cost of providing financial product advice about the member’s interest in the fund.
The legislation also outlines that a trustee is not required to agree to the member’s request to charge the relevant costs even when the requirements are satisfied.
“The bill as currently drafted is a ticking time bomb, it threatens the financial wellbeing of Australians. It aims to reshape provisions for advice fee deductions from super in a way that will inflate costs with redundant compliance requirements and potentially devastate access to advice while adding no value for the consumer,” Cullen stated.
“The proposed changes add nothing but confusion, cost and uncertainty when this is the exact opposite of what was sought to be achieved.”
He estimated the cost burden of the change regarding scrutiny of advice documents would be $400 per member request.
“This will siphon off literally hundreds of millions of dollars from consumers’ retirement savings annually. That doesn’t only make advice unaffordable, it’s a sabotage of consumer financial security.”
Cullen said “robust” obligations are already in place for AFSLs to ensure that advice fee deductions are legitimate as do superannuation trustees, which makes the need for extra legislation unnecessary in their current format.
Also appearing before the committee, Younger added that the licensees are not against the wider aims of the Quality of Advice Review, but on ensuring it is implemented efficiently.
“We have not expressed concern over the intent of the bill nor with 99FA but with its practical application.
“Anything that acts counter to an efficiency dividend will act counter to access to advice and certainly act counter to the cost of advice.
“We see this as an important form of legislation and critical in its endeavor, but it is necessary to get it right on the way through.”
Well done Keith and Neil, these Canberra Bureaucrats need to be stopped.