ASIC issues warning on advice fees from super accounts
Both the APRA and ASIC have contacted large public offer funds to ensure they are maintaining proper oversight of the fees and charges being deducted from superannuation accounts and paid to third parties such as financial advisers.
In a letter issued from both Australian Prudential Regulation Authority (APRA) and ASIC to RSE licensees of APRA-regulated funds, the regulators have told trustees to review their risk management and oversight processes to ensure that only authorised and appropriate fees and other charges are deducted from members’ superannuation accounts, and to promptly address any identified weaknesses or concerns.
In the letter, ASIC commissioner Danielle Press said cases of financial advice fees being charged without the provision of the relevant services have recently been the subject of inquiry by the royal commission.
“Separately, we have identified a range of industry practices in relation to trustee oversight, many of which fall below the standard we expect. A number of these matters are the subject of enforcement investigations or actions,” said Ms Press.
“This raises concerns about some trustees’ risk governance, capabilities and culture, as well as their ability to appropriately manage conflicts of interest.”
The letter flagged a number of issues that should be considered in relation to the deduction of financial advice fees.
“Trustees should consider all necessary steps to make sure that members are clearly aware of fees being deducted from their account. Best practice would be to obtain effective consumer authorisation to charge the fees on a regular basis,” it said.
“In addition, there should be ongoing disclosure of the fees containing the specifics of the adviser receiving the fee, rather than relying on historical disclosure.”
Trustees of super funds should also be aware of circumstances where services are not being provided.
“There is a range of external data sources including the Financial Advisers Register, the ATO Provision of Details service, which provides data regarding deceased people and internal records such as members changing plans, that would assist trustees in undertaking appropriate checks,” said Ms Press.
Another aspect which needs to be considered is whether the deduction is consistent with the sole purpose test.
“The sole purpose test means that only costs associated with advice that relates to the member’s superannuation and insurance obtained through superannuation may be deducted from the member’s superannuation account,” the letter clarified.
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
