In his final report for the Royal Commission, Commissioner Kenneth Hayne has recommended an outright ban on the deduction of advice fees from MySuper accounts and limitations on the deduction of advice fees from choice accounts. You can access the final report here.
“Deduction of any advice fee, other than for intra-fund advice, from superannuation accounts other than MySuper accounts should be prohibited unless the requirements about annual renewal, prior written identification of service and provision of the client’s express written authority in connection with ongoing fee arrangements are met,” the report stated.
Grandfathering provisions for conflicted remuneration, it said, should be repealed as soon as is reasonably practicable.
The report has also called for the hawking of superannuation products to be prohibited.
“That is, the unsolicited offer or sale of superannuation should be prohibited except to those who are not retail clients and except for offers made under an eligible employee share scheme,” it said.
“The law should be amended to make clear that contact with a person during which one kind of product is offered is unsolicited unless the person attended the meeting, made or received the telephone call, or initiated the contact for the express purpose of inquiring about, discussing or entering into negotiations in relation to the offer of that kind of product.”
The report said that a person to whom an unsolicited offer is made will “very often not be in a position to judge the merit of what is offered”.
“In particular, that person will seldom if ever be in a position to compare what he or she is offered with what he or she already has under some existing superannuation arrangement,” it said.
“That is why the attempts by ANZ and CBA to sell superannuation in bank branches under a ‘general advice’ model may have contravened the law.”
The report also recommended stapling a person to a single default account in order to eliminate multiple accounts.
It also called for tougher penalties for breach of covenants and obligations from trustees of APRA-regulated funds.
“Breach of the trustee’s covenants set out in section 52 or obligations set out in section 29VN, or the director’s covenants set out in section 52A or obligations set out in section 29VO of the SIS Act should be enforceable by action for civil penalty,” it said.
It also said that the roles of ASIC and APRA in relation to superannuation should be adjusted.
Whoa there horsey. I have been providing advice offers to members of a MySuper corporate super fund allocated to me and and paid for by the Institution with NO COMMISSIONS, and now, when that member want’s advice they have to pay me from their own resources. That ain’t gonna happen. Legislators shouldn’t legislate what they don’t understand.
The new annual fee agreement suits SMSF advice to engaged clients perfectly, as long as you can manage overseas holidays around renewal time. One solution is to rengage on the 9th month annually so that gives you 4 months to ensure Ongoing Service Agreement renewed before deadlines annually. Leave it until the renewal date and if the client on holidays it means you may need to repay fees if no actual service provided in the 12 months or partial fees up to the date the new agreement signed. I have learnt from my mistakes…!
The Banks were found to be responsible for the majority of WRONGDOING against consumers. Yet it will be the non-bank Financial Planners and Mortgage Brokers who will pay for the Banks’ wrongs with their livelihoods. The banks have been “unscathed” and the Government will wipe out the only competition and alternative to the Banks, the non-bank Advisers see UFAA
and unsolicited approaches should apply equally to SMSF, retail [b]AND ISA [/b]funds!!!
The RC report makes no distinction between types of funds. So the no hawking provisions applies equally to Insto funds. SMSFs & Industry funds.
Aaaaand about time. Self serving and beyond reach of regulators (or so they thought). Now will the gov adopt all of the RC recommendations….