The two regulators released a letter they had distributed to super trustees on Wednesday, outlining expectations on the back of the Financial Sector Reform (Hayne Royal Commission Response No. 2) Act 2021 coming into force.
ASIC and APRA said they would be “monitoring trustees’ adherence to the legislative requirements and ASIC instruments’ requirements once they commence”.
“In making payments out of a superannuation fund, it is expected that trustees will have processes in place to ensure expenditure is appropriate,” the regulators said.
“In relation to advice fees, the design of specific oversight practices will depend on the advice service model that superannuation funds offer to members.”
APRA and ASIC said while it was not the job of trustees to “make a detailed evaluation of the specific professional advice provided by the financial adviser… trustees who have an understanding of the nature of the business model of the financial adviser will be better placed to implement robust and efficient assurance steps” with regard to the new laws.
“In circumstances where the trustee is not providing financial advice itself, the trustee’s role is to have controls in place in relation to payments made from the fund for advice services,” the regulators said.
APRA and ASIC referred back to their previous correspondence with trustees around fee consents issued after the royal commission’s final report in early 2019, where a review had been conducted of trustees’ oversight processes with regard to advice fee deductions.
“Our review identified a wide range of practices in relation to the extent of reliance on consents and attestations, from some trustees relying solely on financial adviser attestations that advice has been provided through to others who will not pay financial advisers without clear evidence of member consent,” the regulators said.
While advisers were now legally obligated to provide evidence of consent to trustees, ASIC and APRA said that “overreliance” on fee consent forms alone “should be avoided”.
“Instead reliance on the consent should be combined with further trustee oversight practices, in particular, proactive reviews of a sample of SOAs and/or related documents to evidence the provision of services, either where misconduct is suspected or as part of a regular review,” the regulators said.
“While member-written consent shows that fees have been properly consented to, reviews of SOAs and other documents for a sample of members provide a further assurance that the expected services have been provided in respect of those fees.”
Fees Glorious Fees!!!
I’m not talking about the fees we currently charge for advice, I’m talking about the Danish cheesecake layers of compliance over reach that costs substantially more to now run the business and will have to be passed onto clients. I haven’t asked them yet but I’m sure they’ll be over the moon to pay higher fees for this piece of garbage.
Meanwhile in another half arsed release from ASIC they are spending hundreds of thousands of dollars investigating why advice is expensive under the affordable advice review.
I was unaware there are people holding down jobs that are so fundamentally stupid.
Unless it’s politically motivated of course, then I understand.
Either way there is no coming back from the level of contempt in which I hold ASIC.
And, using the same arguments, and consistent with “it is expected that trustees will have processes in place to ensure expenditure is appropriate”, just exactly how do trustees go about policing if the ASIC and APRA providers are providing appropriate fee for service for their members?
WMG now we have to prove ourselves to a clerk that may have biases towards advisers, with again ZERO comeback if the result is No. and let us not talk about the privacy issues that this creates.
WOW! So we now have unqualified, self interested trustees who demonstrably abuse member funds being tasked to determine if advisers are charging appropriately. Forget the nanny state where are the Brown Shirts.
Freaking ASIC and APRA interpretations of laws to screw Advisers yet again.
A complete 2nd layer of AFSL compliance at platform level.
Let’s make Advice more affordable says ASIC = let’s double up compliance costs hey ASIC.