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ASIC confirms scrutiny of industry funds advice
Conflicts of interest impacting the quality of financial advice are not restricted to retail superannuation funds, according to the Australian Securities and Investments Commission (ASIC).
In a recently-delivered address, ASIC Commissioner Sean Hughes confirmed that the regulator was currently looking at advice delivered by superannuation funds to their members.
He said ASIC had commenced the project with a survey of 25 funds and would move on to looking at some examples of personal advice with a view to completing the exercise in about a year’s time.
“As part of the project, we are particularly interested in whether conflicts affected the quality of advice,” Hughes said. “Conflicts are not restricted to retail super funds and can arise in different ways across the industry.”
The ASIC Commissioner noted that the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry had recommended a prohibition on the deduction of advice fees from MySuper accounts and a limited on the deduction of fees from choice accounts.
As well, he noted that the Royal Commission to repeal the grandfathering provisions for conflicted remuneration by 1 January, 2021.
“We think there is scope for trustees to improve their oversight practices in this area, including having regard to the sole purpose and best interest requirements in the law,” Hughes said.
Elsewhere in his address, the ASIC commission flagged that the regulator intended to “heighten the intensity of our regulatory scrutiny in superannuation”.
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The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
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