Advice fees should be quarantined from default funds
The Federal Government should act to ensure that people in default superannuation funds are not made to pay for ongoing financial advice, according to Canberra-based group The Australia Institute.
The group has also called for the capping of ongoing superannuation fees and charges, with the maximum fee being determined by an independent regulator.
In a submission to the Cooper Review this month, the Institute pointed to recent research it had conducted which suggested that the choice of fund regime had substantially failed to meet its objectives — with fewer than 10 per cent of workers having actively chosen a fund since 2005, and with choice of fund failing to lower the number of multiple accounts.
The submission then makes a series of recommendations, including the cap on ongoing fees and charges, the prohibiting of entry and exit fees and a prohibition on the payment of ongoing financial advice fees where people have been placed in a default fund.
It said that if workers were placed in a default fund then, by definition, they had not made an active decision about that fund and it was therefore unlikely they had received any formal financial advice.
AUTHOR
Mike Taylor
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