The Financial Planning Association of Australia (FPA) has described a move to allow trustees of superannuation funds to provide limited personal advice to fund members as putting “the superannuation savings of millions of Australians at risk”.
The Australian Securities and Investments Commission (ASIC) has given conditional class order relief from the requirements of section 945A of the Corporations Act, to allow licensed super fund trustees to give “personal advice to members about their existing interest in a fund on certain limited topics”.
ASIC said the relief was designed to “clarify existing law and increase super fund members’ access to advice about their existing interest in a super fund”. The FPA described the move as “a mis-selling disaster in the making”.
The chief executive officer of the FPA, Jo-Anne Bloch, said it was unclear why trustees would now be allowed to give advice without having a reasonable basis for doing so, yet avoid criminal sanctions. “We cannot understand how or why ASIC, an independent authority, has signed up to this ideological move,” Bloch said.
The FPA said that “this policy initiative has been developed under the cloak of secrecy through the Financial Services Working Group”. “All parties to discussions were required to sign confidentiality agreements, and no public consultation or debate has been allowed, with little or no detailed analysis of the implications,” it said.
The chief executive officer of the Association of Financial Advisers (AFA), Richard Klipin, said the move was “a return to the dark ages, when people providing financial advice did not have to have a reasonable basis for that advice”.
Klipin said it is “not financial advice when the trustee does not have to know the member, does not have to understand the member’s needs and objectives, does not have to provide advice which takes into account the member’s entire financial situation, does not have to complete a risk profile on the member and when all the trustee has to offer in terms of investment is its own superannuation fund”.
“That’s not advice, that’s product selling by another name – and if any of AFA’s members tried it they would be facing criminal sanctions,” he said. The executive manager of Industry Super Network, David Whiteley, described the initiative as “a big win for millions of Australians”.