Super funds given window to provide limited advice

The Australian Securities and Investments Commission (ASIC) has provided relief to superannuation fund trustees to provide ‘limited guidance’ to fund members during the current period of market volatility.

ASFA chief executive Pauline Vamos said the relief is “not about recommending a course of action”, but gives superannuation fund trustees the ability to “inform fund members about matters they need to consider”.

This could include the differences in products, the implications of switching portfolios, crystallisation of losses and the potential loss of insurance benefits.

Vamos said the relief provided by ASIC has certain disclosure requirements that must be met by fund trustees.

“This is not about suddenly allowing unlicensed superannuation trustees to provide financial advice or about providing recommendations,” Vamos said.

“It is about being able to provide reasonable assistance to fund members at this time.”

Vamos said the line between “guidance and personal financial advice is a difficult one”, with the relief given by ASIC aiming to address “what often falls within the grey area between general information and personal advice”.

“It is important that fund members can receive some guidance when they ask about switching funds or transferring to a different portfolio or to a potentially lower risk/lower return vehicle,” she said.

Vamos said ASFA sees “implied personal advice as a major stumbling block to the provision of helpful guidance to fund members in the current environment”.

She said the risk of being caught under ‘implied advice’ “has stopped many funds from providing much-needed additional information to members when they call their super fund to switch or redeem an investment”.

The issue is currently being reviewed by the Government’s Financial Services working group.

Superannuation trustees must notify ASIC in writing if they wish to take advantage of the regulator’s ‘no action’ position.