Industry super funds call for relaxation of regulations on financial advice

“However, existing laws and regulations – particularly around the use of general advice or guidance, technology and calculators – prevent members from getting the information they need in a cost-effective way.”

The Association of Superannuation Funds Australia is also calling for an expansion of in-fund advisory programs. In his submissionit says in-fund advice should be changed so that members can be advised on their fund’s retirement income products and on issues such as pension entitlements due to age.

ASFA chief executive Martin Fahy said he was focusing on building education and awareness, which included clarity of language when it comes to financial advice. The association wants intra-fund advice to be simply called “fund advice”.

“Someone once told me, if you think you understand financial advice, you clearly don’t,” he said. “It’s a complicated area…I think [the review] could do is bring some much-needed clarity and tidying up to what’s there.

This comes as the industry prepares for the Retirement Income Commitment to take effect on July 1, which will require super funds to have a documented strategy to improve outcomes for their members in retirement.

Xavier O’Halloran, director of advocacy group Super Consumers Australia, said while super funds play an important role in helping people plan for retirement, he thinks there are problems with widening the advice intra-fund.

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“Some of the restrictions are there for a reason. They are put in place to protect consumers from inappropriate or inappropriate advice,” he said.

“When people reach retirement, they have to make decisions, like should they pay off their mortgage or should they keep their money invested in the superannuation. Obviously, if they pay off their mortgage, it’s is money that is taken out of the superannuation environment, the fund can no longer charge fees, so they have a conflict in this type of scenario.

“It’s kind of a vertical integration problem – if all the advice and the product come from the same company, consumers won’t get the best advice on which products are right for them.”

Instead, O’Halloran said Australia should look to the UK and expand ASIC smart money service, which could connect people to free basic financial advice.

A spokesperson for Deputy Treasurer Stephen Jones said: ‘As stated before the election, the Government currently has no intention of changing the parameters of intra-fund advice.

“The Deputy Treasurer will meet with the Independent Reviewer this week to receive an update on the progress of the Board Quality Review.”

The Treasury Financial Advice Review is due to report to the government by December and is chaired by lawyer Michelle Levy.


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