The federal government’s new intra-fund rules have received mixed reviews from Australia’s financial services and superannuation sector.
The chief of the Financial Services Council (FSC), John Brogden, said the FSC cannot support the measures as they stand.
“At exactly the time when the government is requiring full disclosure for financial advice under FOFA [Future of Financial Advice], it is creating a framework where intra-fund advice in super will be exempt from opt-in and full transparency,” Brogden said.
As a consequence of the new measures, millions of superannuation fund members will be paying for an advice service they will not receive, he said.
“This runs against all of the Stronger Super/Cooper and FOFA reform principles,” he said.
“We cannot support a framework that creates two levels of transparency for financial advice.”
While FPA policy and government relations general manager Dante De Gori said the rules were a positive step, he said further clarification on what constitutes intra-fund advice is essential.
“This is a positive step toward creating best practice financial advice,” De Gori said.
“However, these new regulations still allow superannuation funds to charge indiscriminately and invisibly for their intra-fund advice.
“The FPA believes that any fees for intra-fund advice must be transparent to fund members. As long as the government allows intra-fund advisers to avoid disclosing fees, inequities will remain within the financial planning industry and those most affected will, of course, be the clients.”
Conversely, Australian Institute of Superannuation Trustees chief executive Fiona Reynolds praised the government for clarity around the rules and confirmation that the scope of such advice covers retirement products offered within the fund.
“There’s an obvious need for more affordable advice around superannuation, particularly as not everyone requires a comprehensive financial plan,” Reynolds said.
“There’s no doubt that demand for affordable financial advice about super issues will increase as fund balances grow in size and more people head towards retirement age.
“Intra-fund advice is likely to become even more important as funds move to distinguish themselves in the competitive MySuper landscape.”
Meanwhile, the Association of Superannuation Funds of Australia (ASFA) has labelled the new rules “a key win” for members of superannuation funds.
“A fundamental principle is that people should be able to get access to genuine help with the money and benefits they have in their superannuation fund. This is the real benefit that will be delivered by the proposed arrangements,” ASFA chief executive Pauline Vamos said.
“A large number of funds already deliver this level of help to members in an efficient and effective way.
“Members don’t want to have to think about whether or not they are asking for advice or what type of advice. What they want is some help around making decisions about the money in their fund. They expect their fund to be able to deliver this to them.”
Yesterday, the Assistant Treasurer Bill Shorten announced a new set of rules that superannuation trustees will have to comply with to ensure intra-fund advice is provided in the members’ best interest and at a reasonable cost.
