ISA attacks planner sales culture in super choice
Industry Super Australia (ISA) has attacked the role of bank financial planners in adopting a sales culture in directing clients towards bank-owned superannuation products.
The ISA has used a submission to the Senate Economics References Committee review of the Government’s superannuation choice legislation to argue that “the vast majority of people who choose a super fund do so under the influence of sales strategies by the finance sector”.
“And individuals facing sales strategies generally do so with relatively low financial literacy,” the ISA submission said.
“It doesn’t do anyone – other than, of course the big banks and the finance sector – any good to promote choice of fund without clear, comparable and consumer-friendly disclosure. Perhaps more importantly, this disclosure must be accompanied by strong and aggressively enforced rules requiring those who sell superannuation to do so in in a way that prioritises the best interests of members,” the ISA said.
The submission said that although the Future of Financial Advice (FOFA) reforms did apply a best interest duty for personal advice, general advice by bank staff was not subject to those rules and, additionally, there existed the FOFA carve-outs.
“There also are questions regarding FOFA enforcement,” it said.
The ISA submission said appropriate consumer protections were essential accompaniments for choice of fund and that without them, policy makers could not have a clear conscience.
It said that to do otherwise would be to “have delivered vulnerable consumers into a sales environment without fair information and without fair protections”.
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