Minister for Financial Services Stephen Jones said that he doesn’t want super funds to review the content or the quality of every single piece of advice charged to their member accounts, despite trustees being warned by an ASIC report last month for not having proper oversight on the issue.
The comments come when discussions around fee deductions get increasingly muddy as changes to 99FA of the Superannuation Industry Supervision Act are debated in Parliament. While the ASIC report said it only expects trustees to do more regular sampling of advice documents as a way of member protection, the Financial Services Council said the expectation is “incompatible with the heavy-handed language in its report”.
“We don’t want trustees reviewing every single Statement of Advice, that’s just going to drive up costs, we know that,” Jones said in Sydney at an event hosted by Vanguard.
“And we don’t want trustees checking the quality of financial advice that members have received because quite frankly, that’s not their job.”
Addressing concerns that advice fee deductions may impose legal risk for super funds, Jones said it’s a “matter of conjecture”.
“We think members should be supported with financial advice on how to ensure their superannuation is meeting their needs, and paying for advice fees out of superannuation supports that goal,” he said.
“That’s the only reason we’re touching the law here… We are not seeking to ban advice fees or push people away from financial adviser. In fact, the objective is quite the opposite.”
The ASIC report also criticised a lack of due diligence from trustees in reviewing fee caps and the frequency of crosschecking advisers against the ASIC Financial Adviser Register.
The Delivering Better Financial Outcomes bill, tabled in April, has been hit with drafting hiccups along the way, while legislations around Statements of Advice and the removal of the Safe Harbour Steps have yet to have meaningful developments.
Jone said his priority is getting the Delivering Better Financial Outcomes bill through the Parliament before the next election, which has to happen within the next year.
“[The priority is] sending clarity to advisers, funds and more broadly across other areas in the financial services sector,” he said.
“Once we get all of that stuff put down, I’d like to look at some of the really scrappy interfaces that exists between the private pension system and the public pension system. There’s a lot of badminton that goes on between these two areas.”
Another contentious issue in the next election is around early super access for the purpose of purchasing first homes, with the Coalition touting to allow for up to $50,000 withdrawal from super for housing.
Recent Vanguard research also found that expectations amongst working-age Australians of home ownership in retirement are generally high amongst all generations, with Millennials the most optimistic age group about their chance of owning a house in retirement.
But Jones said the support for house ownership is “best dealt with using other policy levers” rather than compromising the “secret sauce of superannuation” – preservation.
“We’ve got to be really careful about playing around with some of these things which are fundamental to its [superannuation’s] success story,” Jones said.
