MLC has called for the sole purpose test to be amended to allow members to pay for financial advice from their super fund.
In a submission made today to the Federal Senate inquiry into the Structure and Operation of the Superannuation Industry, MLC said the amendment would help more Australians gain access to holistic financial advice.
Paying for advice from super would “significantly increase the number of people who could access holistic advice in an affordable and convenient way”, according to chief executive Steve Tucker.
“With the super changes proposed in the recent Federal Budget,” he added, “super is now the most effective retirement planning strategy for most Australians, and as individuals invest larger amounts of savings into super funds, the need for financial advice will be critical”.
MLC’s submission also called for the payment to be a fee for advice, either a fixed dollar amount or an annual percentage of assets, to be disclosed annually in a dollar amount on the client’s super statement.
The fee should be agreed upon between the planner and client, and able to be stopped by clients at any point in time if they decide they do not want any further advice.
MLC also called for all publicly offered superannuation providers to be required by law to meet uniform minimum capital requirements.
“Allowing funds to rely on custodial arrangements alone to meet capital requirements does not provide adequate investor protection,” Tucker said.
Specifically, he said, it “does not address risks associated with the trustee, including fraud, poor administration, technology failures or human errors”. “This is because it is the fund trustee and not the custodian who is accountable to the investors for the management and administration of the fund.”
MLC also expressed concern with the regulatory change to Financial Services Reform (FSR) that enables accountants to give advice on some self-managed super fund (SMSF) issues without needing to come within the Australian Financial Services licensing regime.
“We would like to see this carve out for accountants removed to ensure the protection of consumers,” Tucker said.
“The carve-out has led to confusion within the accounting profession as to where the line should be drawn, and in some cases is resulting in inappropriate outcomes for SMSF customers.”
Tucker said the initial FSR regulation provided “sufficient scope for the accounting profession to deal with appropriate matters required for the efficient administration of a fund”.
He added that the “capacity of the Australian Taxation Office to regulate the SMSF sector should be reviewed on a regular basis”.
