Anger over backroom reforms

There is growing anger at the wall of enforced confidentiality the Federal Government has installed around the development of the policy that will be applied to the provision of intra-fund advice by superannuation funds.

Money Management understands that all participants involved in the policy discussions have been obliged to sign confidentiality agreements, and many are concerned that this has prevented an opportunity for public debate around what represent key changes for both superannuation funds and the financial planning industry.

At the heart of the discussions is just how far superannuation funds will be able to go in providing financial advice to members and whether enabling them to do so can be achieved by regulation rather than via the introduction of new legislation.

Money Management has sought comment from a number of senior financial planning and superannuation industry spokespeople on the policy development process, but all have refused to discuss the issue on the basis of the undertakings they have been required to give.

However, it is understood that a core concern for financial planners is that while superannuation fund trustees will need to hold a Financial Services Licence, the scope of the proposed intra-fund advice regime will allow them to provide members with a broader range of advice unconstrained by many of the rules that apply to financial planners.

While financial planners are required to take account of a client’s personal needs and circumstances in developing a Statement of Advice, it is understood the same requirements would not be imposed on superannuation trustees providing advice to fund members.

Money Management understands that one of the reasons superannuation funds would not be required to adhere to the same requirements as financial planners is that it is being argued that superannuation fund trustees are required to act in the best interests of their members — essentially the sole purpose test.

With discussions around the intra-fund advice issue now well-advanced, there is a real concern that any changes will be presented to the broader financial services industry as a fait accompli, and whatever public debate that then takes place will be too late to result in any meaningful changes.

If the Government were to move to institute the changes to intra-fund advice via a change to regulation rather than through new legislation, the Federal Opposition is expected to object on the basis that the issue was neither discussed in an open public forum nor in the Parliament.