Will the QAR super requirement be as stringent as industry fears?

14 June 2024
| By Laura Dew |
image
image
expand image

ASIC has told the Senate economics committee that it expects the requirement for superannuation trustees to check Statements of Advice won’t be “highly prescriptive”. 

Discussing section 99FA of the Delivering Better Financial Outcomes legislation, the regulator acknowledged it has seen pushback from the industry including the Financial Services Council (FSC), the Law Council and the Financial Advice Association of Australia (FAAA).

The legislation sets out multiple requirements that need to be satisfied before a trustee can charge the cost of advice against a member’s interest in the fund. This includes an assurance that the financial product advice is personal advice and is wholly or partly about the member’s interest in the fund.

The legislation also outlines that a trustee is not required to agree to the member’s request to charge the relevant costs even when the requirements are satisfied.

Appearing before the committee, commissioner Alan Kirkland said ASIC was consulted during the process and provided insight on whether it would be able to administer the proposed law in line with the policy intent. But the regulator was unaware of the problems with the drafting until it was flagged by the media, he said.

Kirkland reiterated previous comments that it does not expect the requirements will be stringent as organisations and licensees fear. Appearing before the same panel in an earlier session, WT Financial managing director Keith Cullen said it could cost the industry an extra $400 per member request

He stated: “We have said previously that it is not our view that section 99FA would require trustees to check every single piece of advice.

“Consistent with the evidence from Treasury, we provide guidance on how people can comply but are not likely to be highly prescriptive about exactly how trustees do it because they have some flexibility about identifying the correct range of practices to ensure they are complying with the law.”

Checking of Statements of Advice would not be the only requirement that superannuation trustees could use to obtain evidence, he explained, and regulatory guidance would be issued nearer the time.

“It is our expectation that we will release regulatory guidance once the reforms are passed, in consultation with the industry. The purpose of that is to give industry as much certainty as possible around how we interpret the law and how we would apply it in our regulatory and enforcement work. 

“Our regulatory guidance would likely acknowledge that trustees can access a range of evidence to make that assessment, including having agreements with financial advisers as part of their onboarding process, requiring attestations from advisers, processes for checking controls are working and looking at some SOAs is just one form of evidence that trustees can look to make that decision.”
 

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

GG

So shareholders lose a dividend plus have seen the erosion of value. Qantas decides to clawback remuneration from Alan ...

2 months 1 week ago
Denise Baker

This is why I left my last position. There was no interest in giving the client quality time, it was all about bumping ...

2 months 1 week ago
gonski

So the Hayne Royal Commission has left us with this. What a sad day for the financial planning industry. Clearly most ...

2 months 1 week ago

A Sydney-based financial adviser has been banned from providing financial services in the interest of consumer protection after failing to act on conduct concerns. ...

3 weeks 3 days ago

ASIC has cancelled the AFSL of a $250 million Sydney fund manager, one of two AFSL cancellations announced by the corporate regulator....

3 weeks 1 day ago

Having divested its advice business in August, AMP is undergoing restructuring in at least four other departments amid a cost simplification program....

2 weeks 5 days ago