The potential of the Future of Financial Advice (FOFA) reforms to eliminate fees paid to corporate superannuation advisers on a collective basis is another change that will lead to a significant increase in administrative duties, according to the Corporate Super Specialist Alliance (CSSA).
"Currently, collective fees are agreed between employers and advisers and apply equally across all members," CSSA president Douglas Latto said.
"We believe that in the future only individual members will be able to agree to such fees. What this will mean in practice is that if opt-in is introduced, advisers will have to collect the signatures of hundreds of thousands of employees every two years - an impracticable and we believe ultimately impossible task."
This potential change has led to suggestions for alternative remuneration arrangements for advisers operating for corporate superannuation clients.
One such recommendation has been for the implementation of a user-pays system where each employee pays for the piece of advice they draw upon.
However, this remuneration system has already been seen as having limitations.
"This has been trialled by some segments of the industry and we know from those experiences that it doesn't work because it is reactive, not proactive. The way the system works at the moment allows everyone to share the cost so that services can be delivered to all members at all times. Members always have the option to opt out through fund choice," Latto said.
In regard to the banning of commissions on risk cover held within superannuation, Latto was critical of the government's stance to not include commissions on group policies in its reform rethink on the grounds this type of cover had no associated advice.
"[Financial Services and Superannuation] Minister [Bill] Shorten's statement assumes, wrongly in our opinion, that group risk is unadvised. In fact, corporate specialists provide a range of ongoing advice services which are available to all members of the corporate super plan at all times," he said.
