Welcome to the latest issue of the KHQ Super Alert. Two key items were released by ASIC this week which related to its recent review of ten superannuation trustees and the processes they have in place to protect members from inappropriate advice fee deductions or inappropriate switching advice. An ALRC webinar is now also available in relation to its review of corporations and financial services legislation.
ASIC – Report released in relation to ‘unscrupulous’ advice fee deductions
On 9 May 2024, ASIC published Report 781 ‘Review of superannuation trustee practices: Protecting members from harmful advice charges’ which summarises ASIC’s findings from its review of 10 superannuation trustees and whether they were ‘acting to protect members’ superannuation balances from erosion by inappropriate advice charges’.
In an associated media release, ASIC requested trustees ‘to renew efforts to protect members from unscrupulous operators amid evidence of inadequate oversight of advice fee deductions’. For example, ASIC’s review found that ‘members of 70% of trustees were found with advice fee deductions exceeding $15,000’ and ‘fee caps as high as $20,000 or 5% of a member’s balance were in place, with few trustees implementing controls to protect members with low balances’.
ASIC has advised that all trustees should be:
- considering how they sample financial advice documents ‘to identify unscrupulous advisers providing harmful advice’;
- ‘considering the caps on advice fee deductions, including by using objective criteria to assess the cost of advice’;
- ‘vigilantly monitoring financial advisers involved with cold calling businesses’; and
- ‘regularly checking ASIC’s Financial Adviser Register for unexpected adviser movements that might indicate a problem, maintaining watchlists and monitoring patterns or irregularities in advice fee deductions, withdrawals of member consent and rollovers into the fund’.
Click here and here for details.
ASIC – Concerns raised about cold calling for superannuation switching
On 7 May 2024, ASIC issued a warning to consumers in relation to ‘cold calling operators using high-pressure sales tactics and online click-bait advertisements to lure consumers into receiving inappropriate superannuation switching advice’. This warning arose following ASIC’s review outlined in the above news item.
In particular, ‘ASIC has observed considerable volumes of superannuation savings flowing into high-risk property managed investment schemes…and associated payments made to cold calling businesses’. As part of the various media releases, ASIC ‘called on financial advice licensees and super trustees to do more to weed out unscrupulous actors and reduce consumer harm’.
Click here and here for details.
ALRC – Webinar in relation to financial services reform report
On 1 May 2024, the Australian Law Reform Commission presented a webinar to explain its findings following its review of corporations and financial services legislation. The final report, titled ‘Confronting Complexity: Reforming Corporations and Financial Services Legislation’, was tabled in Federal Parliament in January. See our Super Alert of 2 February 2024 for further information about the Final Report.
The webinar topics were:
- ‘why legislative complexity matters’;
- ‘how a reformed legislative framework for financial services legislation would reduce complexity’; and
- ‘how implementing the ALRC’s reforms would reduce the costs of complexity’.
A recording of the webinar is now available. Please note that you will need to provide your name and email address to access the webinar recording linked below.
Click here for details.
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