FAAA urges reversal of ASIC’s approach on | Australian Markets

The Financial Advice Association of Australia (FAAA) is urging a reversal of a current Australian Securities and Investments Commission (ASIC) resolution in order that superannuation fund members have full visibility of the price of offering intra-fund advice.

At the identical time as opposing collective charging for the supply of retirement planning advice, the FAAA has informed Treasury that it desires full visibility of the prices being imposed on super fund members to supply advice.

What is more, the FAAA desires ASIC’s oversight of intra-fund or collective charging advice to be allotted to the superannuation funds sector of the needs of ASIC levy.

“The cost of providing retirement planning advice will significantly increase the cost of running an intra-fund advice business, with flow on consequences for all members of the fund,” it mentioned. “This will result in significant cross subsidisation within the fund with younger members paying for the personal retirement planning advice of older members.”

“Collective charging for retirement advice should not be permitted, because it will require many members to pay for a service which they have no potential to benefit from for many years,” it mentioned.

The FAAA additionally identified that members who had already paid for his or her own financial advice shouldn’t be anticipated to pay for the supply of retirement planning advice to different members of the fund through collective charging.

“That is a form of double charging and quite unreasonable,” it mentioned.

“Previously, the cost of intra-fund advice was separately disclosed to members of super funds. In recent years, ASIC removed this obligation from super funds. In the context of the potential broadening of the scope of advice that can be provided through a collective charging model, we recommend that the separate disclosure of the cost of intra-fund advice should be reintroduced,” the FAAA mentioned.

“It can be useful for members to grasp how a lot the fund is spending on financial advice being supplied at no direct price to the suggested members, and this would possibly immediate them to hunt intra-fund advice themselves.

“We also recommend that super funds should publicly disclose each year the number of members accessing intra-fund advice, including the types of advice being provided and the cost of this advice,” the FAAA mentioned.

“Finally, we suggest that the cost of any oversight by ASIC of the intra-fund or collective charging advice businesses, should be allocated to super funds for the purposes of the ASIC funding levy, not to financial advisers. It is unreasonable for financial advisers to pay for this activity, which only happens as a result of regulatory relief offered to super funds,” it mentioned.