Complex advice referrals duty recommended | Australian Markets

Superannuation funds would have a duty to refer members to financial advisers for more complicated financial advice when mandatory, underneath a proposals being recommended to Treasury by main accounting group, CPA Australia.

Responding to the Government’s second tranche DBFO publicity draft laws, CPA Australia is arguing that such a duty imposed on super fund trustees would help guarantee members obtain complete and tailor-made advice, safeguarding their financial wellbeing.

The CPA Australia response has acknowledged some the advantages prone to circulate from including further areas of advice to these which might be collectively charged however warned that one measurement can not match all.

Discussing the elevated vary of advice points about which super funds can offer, submission made clear that the need to tell apart between easy and complicated advice.

“For some Australians, in particular those for whom full qualification for the Age Pension is not in doubt, or where the likelihood of any amount of partial eligibility is remote, this has the potential to greatly simplify the advice process for Australians who just need relatively simple financial product advice around retirement income products and their features,” it mentioned.

“However, given the complexity of retirement income advice, and the reality that most Australians will continue to need advice which assesses current or future part pension eligibility, we are unable to recommend the extension of intrafund advice to cover retirement income products,” the CPA Australia response mentioned.

“Assessing and advising on retirement income requires highly specialised knowledge and a detailed understanding of each member’s unique financial situation both inside and outside of superannuation. Extending intrafund advice to include these products could lead to inadequate or inappropriate advice, potentially jeopardising members’ financial security in retirement. Therefore, it is essential to maintain a clear distinction between general superannuation advice and the more complex, personalised advice needed for retirement income planning,” it mentioned.

“We additionally advocate that the aid contained within the proposed laws be coupled with a duty on trustees to refer members to financial advisers who can present more complicated advice if such a need is recognized. This referral ought to be required to happen when a trustee within reason conscious that there could also be member detriment if solely the restricted advice companies underneath this proposal are offered.

“By establishing this threshold, trustees can ensure that members receive the comprehensive and tailored advice necessary to address their unique financial situations, thereby safeguarding their financial wellbeing and preventing potential adverse outcomes. Such a duty should be accompanied by standards specified in the fund’s retirement income strategy.”