AMP head of compliance Sarah Britt fronted the royal commission today and was questioned about advice provided by an authorised representative of AMP, referred to as Mr E, in November 2016.
In the statement of advice compiled by Mr E, the goals of the clients were recorded as wanting to make sure that their funds were performing better to meet their goal of stimulating more wealth in the long-term.
The second goal that was listed for the husband was to ensure that he was to be adequately insured to protect himself and his family during misfortune.
Senior counsel assisting Rowena Orr QC noted that in the summary of advice provided by Mr E, advice was given to the husband that he roll over or consolidate his superannuation benefits from two existing funds, TAL Super and MLC Master Key Superannuation, into one super fund, which was My North Super.
“So the recommendation was that the husband roll over the $68,000 he had in TAL Super, and the $73,000 he had in MLC Super, and put both of those, a balance of $125,000 into My North Super,” she explained.
The second strategy for the wife also recommended that she roll over $46,000 that she had in Vision Super Saver into My North Super, an AMP product.
The decision to roll over $68,000 from the TAL Super product to My North Super resulted in the husband incurring an exit fee of $16,189.05.
“So the advice to the husband from Mr E, was to sacrifice close to 25 per cent of the balance of the fund so it could be transferred to My North Super,” said Ms Orr.
Ms Britt admitted to the commission that unless there were significant benefits which would outweigh the exit fee, then the advice could not have been in the client’s best interests.
When questioned whether there were significant benefits that outweighed the exit fee, Ms Britt said she could not identify what those benefits were based on the SOA, which was also the conclusion of the auditor who conducted an audit of the SOA.
An audit conducted on the SOA also revealed that the wife was going to be charged a higher ongoing fee as a result of her rollover.
Ms Britt admitted that based on the SOA, the advice appeared to be inappropriate.
When questioned about remediation for the clients, Ms Britt stated that the clients had notbeen remediated despite the advice being received in November 2016.
And no surprise, not a peep out o fthis pathetic excuse of an RC on Industry Super funds and their woeful advice!! Utterly pathetic
Steve, as a financial planner I have seen many examples of accountants putting clients into companies without any explanation of the risks involved or even a realistic chance of retaining their money. This however is ok given that accountants are harder to sue than planners. Also am the only one wondering why no one is mentioning that an exit fee of $16,189.05 or 23.80% of the funds invested was being charged by TAL. Let’s just accept it’s terrible advice but surely a fee of this magnitude needs to be considered unconscionable.
The actuaries who ‘manufacture’ these products should be in the dock too, as well as the insurance company executives who approve them for marketing. Otherwise its like going after the street dealer for drugs and doing nothing to apprehend the Mr Bigs.
Will you cover today’s Henderson Maxwell royal commission evidence? or do you only cover bad news for big banks and not the shockers who claim to be SMSF professionals
Let us never, ever forget that these people were the ones who lobbied the government to have the accountants’ exemption removed. What was that concession? Simply to assist the client to set up a SMSF. That’s all. Not to push any product: just help a client whom we have known for a number of years and with whose affairs we were familiar. It would be interesting to know just how Mr and Mrs E came to go to AMP. yes, there may have been a few accountants who abused the system but not on the industrial strength scale we are now witnessing.
Standard AMP advice
As an accountant I’ve seen many instances where planners have churned a client from a well performing Industry Fund to a retail fund, that past performance was worse and charges higher fees. Its was not limited to banks, its was happening wherever there were commissions payable. I’m sure this will soon come out in the commission
As an accountant I am troubled that you seem to be endorsing industry funds and commenting on other industries method of fee delivery or collection. Are you also an investment analyst, actuary, or how are you qualified in appropriate areas and what research have you undertaken to back such generic and obtuse statements? I would say exactly these types of redundant and largely ignorant broad sweeping statements from accountants who don’t actually have enough knowledge or intelligence to be quiet, is why our limited licensing requirements were imposed.
Either stay in your own sandbox, or else gain a broader understanding of all the relevant considerations, before burying your shovel in someone else’s.