Synchron has lashed out at the Government, the industry funds and what it sees as the ‘socialist’ agenda behind the Future of Financial Advice (FOFA) reforms.
“There is a lot of talk in the media about ‘conflicted’ financial advice,” said Synchron director Don Trapnell (pictured). “And yet, no-one is prepared to tackle the elephant in the room and ask the obvious question: Are the FOFA reforms, announced by a minister who used to be a director of one of the largest industry funds in the country, an example of conflicted governance?”
Minister for Financial Services and Superannuation Bill Shorten was a former director of the Superannuation Trust of Australia and the Victorian Funds Management Corporation, and Trapnell stated that many of the reforms Shorten announced last month took a socialist approach to financial advice that unfairly favoured the industry funds movement.
“Our reading of the reforms – particularly around scaled advice, bans on life insurance commissions within superannuation and opt-in – is that they are skewed in favour of industry funds at the expense of the financial advice industry and ultimately consumers,” said Trapnell. “In our opinion this is not surprising given Mr Shorten’s experience with superannuation has been solely with the industry funds movement, the very group that this legislation favours.”
Trapnell asserted that scaled advice was actually elitist and presumed that ‘near enough was good enough’ for ordinary Australians. He said the “bargain basement” prices associated with scaled advice would force the cost of tailored advice up and out of the reach of everyday Australians.
The ban on commissions on life insurance within superannuation did not make sense given that commissions on general insurance in super and on life insurance outside super were to remain, Trapnell added. He said that insurance was about the transfer of risk of loss, not about the accumulation of retirement savings. He said the “ludicrous” ban was a further illustration of the Government deferring to the industry funds movement.
“The eradication of brokerage on general insurance has not been on their agenda because, as yet, they don’t have fingers in those particular pies,” said Trapnell referring to the industry funds.
Synchron stated that if the Government was serious about reform it would first simplify complicated superannuation rules, adding that tinkering over the last 20 years had led to widespread disengagement, apathy and suspicion about the benefits of superannuation.
