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Confusion appears to be the outcome of the Government's failure to answer questions about the provision of intrafund advice in the latest tranche of Stronger Super draft exposure.
Although financial planners balked at the idea superannuation funds would be exempt from some of the Future of Financial Advice provisions and the super industry has been pushing for leniency in tackling members' personal finance issues, both sides have demanded the Government nail down issues surrounding intrafund advice.
King and Wood Mallesons partner Michelle Levy said the industry was expecting tranche three of the Stronger Super draft exposure to answer questions raised in the Cooper Review about compulsory intrafund advice. Trustees are looking for relief from the obligations around personal advice, she said.
"It's not a rule about giving intrafund advice. It's not permission to give intrafund advice. It doesn't require you to give intrafund advice, and if you choose to give intrafund advice it's not offering you any relief," she said.
"All it really does is show that where you do give advice it's got to be charged to the members [to whom] you're giving the advice," Levy said.
Margaret Stewart, general manager of policy at the Association of Superannuation Funds of Australia, said the draft exposure raised more questions than it answered.
"The way that the exposure is drafted it could read as though that (product advice) was ongoing advice, which then pulls it out of the intrafund space and you have a whole set of obligations around ongoing advice," she said.
Stewart said intrafund advice should extend to transitioning from an accumulation to a retirement product under the same trustee and was an area that also needed clarity.
Corporate Superannuation Specialist Alliance president Douglas Latto said the provisions left a "massive, open-ended question" about how to charge for all the services it provides.
"They're not part of intrafund advice, but those services still have to be delivered and the big question is how can we be paid to deliver those services if it's not part of intrafund advice?" he said.
Latto said funds will find a fair and reasonable way of legally rewarding financial advisers for those services, while Stewart said some industry players would struggle with how to charge for things like general and practical advice.
The ambiguity of charging for intrafund advice has left a lack of consistency, with particular confusion around whether to charge a dollar or percentage amount, Latto said.
"I can assure you all the fund providers would be speaking to their legal people trying to get their interpretation of what's there, but I'm already seeing different interpretations from different firms," he said.
He said it was unfair to charge a fee to the membership base, which would be inequitable if charged at a percentage.
Stewart was confident the next tranche would bring clarity, but Levy said it was unlikely to be helpful.
"I think they're [trustees] probably not going to get anything. You might get some statements from ASIC in its regulatory guide about what trustees can do," she said.
