Misha Schubert

After calling out “dodgy advisers” earlier this week Super Members Council CEO Misha Schubert wants “cool heads to prevail” over debate on the Delivering Better Financial Outcomes bill.

During public hearings on the bill on Thursday, Schubert disputed that the claim that the law would require trustees to check every SOA issued to a member.

“Respectfully, this claim is not correct,” she said.

“Some claims have been made about this bill that [we] view as unfounded and that’s why we’ve urged cool heads to prevail in a calm public discussion on this important legislation,” Schubert said.

References to Schubert “dodgy advisers” comments dominated conversation during the hearings. Her comments reignited animosity between the advice and super sectors over advice fee deductions from a member’s super account under Section 99FA in the Superannuation Industry (Supervision) Act.

Schubert’s comments earlier this week drew on an ASIC media release in May warning against cold calling operators. “Dodgy advisers are using clickbait-style social media posts, cold calls and high-pressure tactics to convince people to change super funds,” she said to The Australian.

But it is understood one or more SMC members have also raised complaints about the language by Schubert, which comes as a number of funds seek to foster more collaborative commercial relationships with external adviser groups.

Financial Services Council CEO Blake Briggs said it is “unhelpful” that this has become a bigger political issue.

“Some of the language around ‘dodgy advisers’ that we’ve seen from the industry super side of things probably hasn’t contributed to a sensible policy debate,” Briggs said.

Briggs noted that if ASIC had found evidence of “dodgy advisers”, it had the power to take action. “We would encourage it to take legal action,” Briggs said.

“If all it has done is written a report on it whilst it has found evidence of misconduct then you have to ask what is ASIC doing with its time?”

Financial Advice Association CEO Sarah Abood also criticised the SMC head’s reference to “dodgy advisers”.

“That language is pretty inappropriate,” Abood said. “It is not the case that financial advisers are dodgy. It’s unfortunate that language was used.”

Abood referred to ASIC Report 781, also released in May, which identified which found that less than 1 per cent of advice cases reviewed showed evidence of fees for no service and less than 0.07 of those cases showed evidence of excessively high fees “according to ASIC’s definition”, Abood said.

FAAA chair David Sharpe took to LinkedIn after the hearings to request an apology from Schubert and “an acknowledgment of the many thousands of professional financial advisers in this country who are doing a great job ensuring the financial wellbeing of their clients every day”.

“To use a broad brush slur is offensive; It would be akin to slurring all super funds for the misdeeds of a few,” he said.

“I don’t suggest that all super funds are involved in greenwashing, for example, because some have been prosecuted by ASIC for this conduct.”

‘Ticking time bomb’

While the regulator has argued it isn’t mandatory for trustees to check every Statement of Advice under the current or future application of the law, WT Financial Group chief executive Keith Cullen argued the law should make this clear.

“With respect to 99FA, the bill as currently drafted is a ticking time bomb,” Cullen, who represented the Joint Licensee Group, said.

“It threatens the financial wellbeing of Australians. It aims to reshape provisions for advice fee deductions from super that in a way, in our view, that will inflate costs with redundant compliance requirements, and potentially devastate access to quality advice while adding no value for consumers at all.”

Law Council of Australia superannuation committee head of submissions said the proposed law would be a “prohibition of advice”.

“It contains no express permission to pay advice fees and there’s no improvement in legal clarity regarding the payment of advice fees,” Hodge said.

Cullen argued the language of the bill meant there is a genuine risk that super funds may choose to rely on that rather than any guidance provided in the Explanatory Memorandum.

“I draw everybody’s attention to the drafting of that relevant section of 99FA as it is before parliament and this committee at the moment,” Cullen said.

“It does not say superannuation funds can charge a fee; the first thing it says is ‘they must not unless’ so it’s an outright prohibition to start with.”

Cullen said the Joint Licensee Group estimated the additional cost would be $400 per member request if trustees are forced to scrutinise each advice document.

“This will siphon away literally hundreds and millions of dollars of consumers’ retirement savings annually,” Cullen said.

“That doesn’t just fail to make advice more affordable, it’s a sabotage of consumers’ financial security.

“The minister’s attempt to clarify the ambiguous drafting of 99FA through the EM and parliamentary statements only highlights the desperate need for clear and simple legislative language.”

Lack of consensus

While the SMC had been strongly in favour of the bill, Association of Superannuation Funds of Australia CEO Mary Delahunty, which represents industry and retail funds, offered a more nuanced view.

“The guidance from ASIC and the guidance that has been inserted into the Explanatory Memorandum provides comfort to majority of our members that a risk-based approach is acceptable,” Delahunty said.

“But it doesn’t provide comfort to all of the members because they all have different risk tolerances and it’s worthwhile for the committee to note that these risk tolerances may change.”

Briggs noted that the super side of the industry isn’t in lock-step in its understanding of how the law will work.

“What you’ve heard today from all of the superannuation representatives is a whole diversity of opinions of how these provisions work,” Briggs said.

“If the intent was to provide legal certainty, the drafting has absolutely failed to do that and it can’t be rectified by a regulator saying it’s current interpretation at this point of time is as follows, because it has no legal effect,” Briggs said.

Dealing with dynamic regulatory views

ASIC Commissioner Alan Kirkland reiterated that trustees would not be required to check every SOA provided to members, while Treasury assistant secretary for advice and investments Andre Moore said the law is not prescriptive about how a trustee might go about complying with it.

“That really is a matter for the trustee to determine, based on the commercial arrangements they have in place, the risk profile of their fund and the counterparties they’re dealing with,” Moore said.

However, FSC’s Briggs noted that public statements from the regulator aren’t legally binding.

“With all due respect to the current commissioners, they can say whatever they like now and a future commissioner – or even themselves at a future point in time – aren’t bound by those comments,” Briggs said.

“This would not be the only situation where ASIC has changed its opinion or change its course of action after legislation has come into effect.”

Briggs also called for ASIC to release its submission on the bill as a matter of transparency.

“It would be a useful evidence point to be able to see ASIC’s submission and say okay did what it submit on the drafting of the bill align with what they’re saying publicly, or are they saying different things behind closed doors to what they’re saying publicly,” Briggs said.

One comment on “SMC calls for calm in DBFO debate after blasting ‘dodgy advisers’”

    The SMC is calling for calm following the storm they, and specifically Misha Schubert, created. If you smear a whole professional sector, then expect the backlash. The SMC is the tip of the spear in an assault on the for-profit advice sector.

    The SMC, working with ideological factions within ASIC, is coordinating the release of its reports and public announcements to bulldoze 99FA language into law. This move will push the super fund trustee sector to adopt a more conservative “check every SOA” approach or abandon offering fee deductions altogether. It’s an incredibly sophisticated strategy, coordinated with the government and Minister Jones’ office, to further throttle for-profit advice and pave the way for the newly enshrined “qualified adviser” (aka call centre operative) to fill the ever-growing gap in advice delivery.

    Regulatory capture comes in all shapes and sizes, and we are seeing it in operation in real-time in Australia. They were relying on nobody paying attention. As for the SMC and Misha Schubert, they have shown themselves to be bad faith actors in the financial services space and not to be trusted.

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