FSCP issues latest outcome regarding SOAs
The Financial Services and Credit Panel (FSCP) has made its latest decision on a case regarding Statements of Advice (SOA) and rolling over superannuation funds.
While the panel found the case breached compliance with the code of ethics, it did not believe it had breached the Corporations Act. As a result, no action was taken against the relevant provider.
In the case, the relevant provider had given advice in an SOA to a couple recommending that they rollover their superannuation funds from their existing fund to a new product that would cost a total of $1,960 per annum more.
It was referred to the panel as there were concerns that the relevant provider had failed to demonstrate how the more expensive product could meet the couples’ investment preferences to invest their super in a suitably diversified product. The product had been described in the SOA as “having low fees and being cost effective”.
It particularly referenced sections of the Corporations Act 961B, around acting in the best interest of the client, and 961G which discusses how advice must be appropriate to the client.
The FSCP’s outcome stated the relevant provider had failed to comply with standard five of the code of ethics, which requires an adviser to ensure any recommendations provided are appropriate to a client’s individual circumstances and the client understands the advice.
However, it did not believe the relevant provider had contravened the Corporations Act based on the SOA.
This was the third outcome where no action had been taken and the second where there had been a breach of the code of ethics, but not of the Corporations Act.
AUTHOR
Laura Dew
Recommended for you
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
Morningstar has made two business development appointments to drive the growth strategy of its financial advice software, AdviserLogic.
Nice to have money management report around these aspects. I would love more context as if they have 3mil FUM and its a 1% projected performance increase and doubling of fees but currently they are mostly in cash bringing their current portfolio holding fees to be well below that 50bips to 150bips then I think this article may need a little more insight to paint the actual picture if possible.
Yep thanks Canberra for the 8 different sets of Regulations.
And of course the 8 different sets of rules are ALL contradictory.
What a Canberra induced bureaucratic, political, regulatory, legal overall total rubbish red tape costly mess you have ALL created.
Good to see the getting rid of SOA's and making advice easier is tracking well. I'm assuming there were other reasons that supported the change of product provider but these don't get a mention. I hate financial planning more and more every day.
But a breach of the Code of Ethics is a breach of the Corporations Act as section 912E of the Corporations Act requires advisers to comply with the Code of Ethics no?
oNE EXPERIENCE LIKE THAT, BECAUSE SOME DILL IN THE PUBLIC SERVICES CLAIMS TO BE ABLE TO THINK SHOULD CAUSE ANY THINKING BUSINESS MAN TO FIND ANOTHER INDUSTRY JG
There are some really terrible Super funds out there so you don't really need to say anything. The Adviser has saved another client from a poor performing, terrible administration, unethical most likely a super fund that takes over 12 months to pay an insurance claim so some things don't need justification.