The Australian Securities and Investments Commission (ASIC) has revealed it did not take action against superannuation funds which it identified as having delivered defective advice but, instead, contacted them an asked them to fix the problem and then to confirm they had done so.
Answers provided by ASIC to a key Parliamentary Committee have revealed the regulator has not and does not intend taking action with respect to the advice.
Answering questions on notice from NSW back-bencher, Jason Falinski ASIC stated: “ASIC has not taken enforcement action against any specific funds as a result of the advice review findings and it does not plan to do so”.
“For the files where there was an indication that the member was at risk of suffering financial or non-financial detriment, we contacted the advice licensee of the advice provider requesting them to review the advice and where required, remediate those affected members. We asked advice licensees to confirm that they had undertaken the appropriate steps and to provide us with an update on the outcome.”
ASIC referenced its financial advice by superannuation funds project which it said included a review of personal advice provided to 233 members of 21 industry, retail, corporate and public sector superannuation funds.
“In the review we assessed 32 files recording advice that was provided under an intra-fund arrangement, 68 files recording advice that was scaled/limited in scope but not provided under an intra-fund arrangement and 133 files recording advice that was comprehensive in scope,” it said.
“The findings from the advice review identified the need for improvement in the advice provided to members of superannuation funds. For most files, that did not demonstrate full compliance with the best interests and related obligations, this was due to procedural, disclosure or recordkeeping deficiencies.
“However, the file did not indicate that the member was at risk of suffering detriment as a result of the advice. For a smaller number of files (36) that did not demonstrate compliance with the best interest duty and related obligations, there was an indication that the member was at risk of suffering detriment as a result of the advice.”
It said it was with respect to those instances of advice that it had “not taken enforcement action against any specific funds as a result of the advice review findings and it does not plan to do so”.
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.