Responses to questions on notice from the House economics committee revealed that the regulator had only directly engaged with a small number of funds involved in its Report 639 into financial advice provided by super funds, following the sub-optimal results found in the report.
The report found just 49 per cent of all personal advice provided by super funds was fully compliant with the best interests duty, while 36 per cent of advice files “did not demonstrate full compliance” and a further 15 per cent indicated the member was at risk of financial loss because of the advice provided.
In a previous hearing of the committee, Coalition MP and former adviser Bert van Manen questioned ASIC commissioner Danielle Press around why the report had not “led to major reforms of the super advice sector”, when the regulator’s Report 413 into risk advice, which found a better compliance rate, had led to the LIF reforms.
Mr van Manen’s question on notice to the regulator asked whether a 49 per cent compliance rate “passed the test” for ASIC to take no further action around super advice.
“If so, the ASIC review of life insurance advice delivers a better outcome. Why then would ASIC call for further reforms to life insurance commissions?” Mr van Manen asked.
In response, ASIC said its response to Report 639 had been “commensurate with the concerns identified in that review”.
“While we found that 36 per cent of files did not demonstrate full compliance with the best interests duty and related obligations, this was as a result of procedural, disclosure or record-keeping deficiencies and did not indicate the member was at risk of suffering financial or non-financial detriment,” the regulator said.
“A smaller subset of 15 per cent of files indicated that the member was at risk of suffering financial or non-financial detriment.”
ASIC said further regulatory action taken as a result of its industry investigations “depends on the nature and scale of concerns identified”.
“For example, for files reviewed as part of REP 639 where there was an indication that the member was at risk of suffering financial or non-financial detriment, we engaged with the advice licensee about our expectation that they review the advice and, where required, remediate those affected members,” ASIC said.
The regulator added that any legislative change as a result of its reports was “a policy matter for government”.
