Corporate super crackdown

The corporate regulator has announced a crackdown on super advisers who recommend employers take employee funds out of corporate super and place them into commercial master trusts.

And human resource departments, call centre staff and trade union members will also be carefully monitored to make sure employees aren’t receiving illegal personal advice.

News of the crackdown comes just weeks after Money Management reported that corporate super advisers were concerned about how much advice they were allowed to give to fund members, particularly where employees want personal advice.

But the Australian Securities and Investments Commission (ASIC) said the regulator’s main focus would be on advice given to employers rather than to individual members.

“There are a number of issues to be explained on the advice that will be weighted towards the employer rather than the employees,” said ASIC executive director, compliance, Jennifer O’Donnell.

“If there looks like a conflict, we will see if there is a risk.”

While superannuation administration systems are exempt from choice legislation, recent amendments to the Superannuation Industry Supervision Act, such as the banning of kick-backs to employers, means advice has to be looked at carefully, O’Donnell said.

“Prohibition of kick-backs to employers is important and we are looking at the risk to employees due to decisions being influenced by these offers.”

ASIC is also undertaking surveillance of what add-on services, such as the provision of free financial planning advice to members, is influencing final decisions on moving corporate superannuation funds.

“Employers are retail clients and in a couple of cases we have requested further information on transactions,” she said.

As for what constitutes general advice and what constitutes personal advice, O’Donnell said ASIC was “still seeking guidance on this issue”.

“A company’s human resources department should only give generic advice, otherwise they would need a FSR [Financial Services Reform] licence.

“We are also receiving some comments that call centres for industry funds are giving personal advice and we are looking into that,” O’Donnell said.

“We are aware of members of unions giving product advice and union representatives have no exemption from being licensed if they are giving such advice.”