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Super bodies back QAR’s ‘sensible step’ of intra-fund advice
The Australian Institute of Superannuation Trustees (AIST) and Industry Super Australia (ISA) have voiced their support of adopting the recommendations of the Quality of Advice Review (QAR) that would allow super funds to broaden their financial advice offering.
Announced at an Association of Superannuation Funds Australia (ASFA) event in Sydney, Minister Stephen Jones confirmed the government would adopt 14 of the 22 recommendations in Michelle Levy’s report.
The recommendations were broken down into three streams — removing regulatory red tape that adds to the cost of advice without benefiting consumers; expanding access to retirement income advice; and exploring new channels to advice.
In terms of superannuation, restrictions on collective charging would be amended to allow super funds to provide more retirement advice and information to their members.
The government would also work with industry to consider adopting, and tailoring as needed, QAR recommendations 1–4 (around personal advice, general advice, relevant providers, and good advice duty), the remaining parts of recommendation 5 (statutory best interests duty), and recommendations 12.1 and 12.2 (on design and distribution obligations) to allow super funds to provide advice.
Additionally, superannuation trustees would be provided with legal clarity around current practices for the payment of adviser service fees and accept in principle recommendation 7 around deduction of adviser fees from super.
ISA said the expanded role for super funds in providing personal advice, known as intra-fund advice, would allow funds to assist members with retirement planning without impinging important consumer protections.
It would make funds consider family circumstances, how that impacts a members’ pension eligibility when offering personal advice about transitioning to retirement, and consider a member’s social security entitlements.
“Many members first call is to their super fund when they want information on their upcoming retirement,” said ISA chief executive, Bernie Dean.
“Empowering funds to provide relevant information — like family member pension eligibility and tax obligations is a sensible step that will help members.
“ISA will consult with the government on further changes that will give more Australians the meaningful information they need to plan their financial future without watering down consumer protections.”
The government is expected to develop legislation over the coming year to deliver the reform, with its final response on the Delivering Better Financial Outcomes package expected later in 2023.
In addition to these recommendations, ISA voiced the need to expand the Your Future, Your Super (YFYS) performance test to retirement income products. It also held a firm position against the watering down of the best interests duty to a ‘good advice test’ as recommended by the Quality of Advice Review.
According to AIST, although consumers had seen major protection reforms in recent years, it was the QAR that would make the biggest financial difference to super fund members.
“As the custodians of the retirement savings of Australians, super funds not only manage and invest this money but also provide members with advice, but their hands have been somewhat tied by limitations on the assistance they can provide,” said AIST CEO, Eva Scheerlinck.
“As the Minister noted, these funds are well suited to safely meeting their members’ needs yet only 26 per cent of members seek financial advice.
“As the peak body for the $1.9 trillion profit-to-member sector, AIST appreciates the government giving funds the opportunity to play an expanded and more effective role in serving the needs of their members.
“Understanding the interaction between super and the age pension can be complex and the changes proposed will allow funds to assist their members as millions of Australians approach retirement.”
AUTHOR
Rhea Nath
Rhea L Nath is a journalist on Super Review and InvestorDaily, with a focus on funds management, superannuation, and institutional investment. Previously, she covered small business and entrepreneurship news at Dynamic Business and multicultural issues at Indian Link Media Group. In 2022, she was named Young Journalist of the Year at the NSW Premier’s Multicultural Communications Awards.
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