Non-concessional contribution advice leads to FSCP action



The Financial Services and Credit Panel (FSCP) has made a written direction after an adviser gave incorrect advice regarding non-concessional contributions.
The individual, identified as Mr U, gave advice in April 2023 recommending a client make a superannuation non-concessional contribution of $299,000 for the 2022-23 financial year.
When giving the advice, the relevant provider failed to identify and take into account that the client had previously made a lump sum non-concessional contribution of $300,000 in the 2020-21 financial year, which reduced the client’s non-concessional contribution cap to nil for the next two financial years.
As a result of accepting the advice, the client had to withdraw $330,221.68 from their superannuation and incurred additional tax liabilities of $5,552.58 on associated earnings.
The Sitting Panel believed that the relevant provider contravened sections 961B(1), 961G and 921E(3), specifically they did not demonstrate compliance with the Code of Ethics’ value of diligence and breached Standard 5.
Under the written direction, the individual must engage an independent person with financial services compliance expertise, provide their details to ASIC and have the individual audit their next 10 pieces of advice that include a recommendation in relation to superannuation contribution or recontribution that are designed to take advantage of certain tax and super provisions to maximise tax benefits.
The auditor must notify the adviser of any changes to the advice in writing and the individual must enact these. If their AFS licensee disagrees with the recommended changes, they must keep a record detailing why they withhold approval and tell the auditor of those reasons.
The auditor must then submit a report to ASIC within 30 days of completing the final audit.
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