The concept of “fair exchange of value” has been aired at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in the context of National Australia Bank (NAB) seeking to retain adviser fees in relation to superannuation fund members not actually receiving advice.
The former chair of the MLC Superannuation trustee, NULIS, Nicole Smith confirmed that a paper had been developed seeking to justify the “fair exchange of value” concept and that this had been opposed by the Australian Securities and Investments Commission (ASIC).
Under questioning from counsel assisting the commission, Michael Hodge QC, Smith agreed that the concept was based on the banking group agreeing to provide a service and could therefore justify keeping fees.
Smith said she was aware of ASIC’s concerns with respect to the proposition amounting to fee for no service and agreed with ASIC on the issue.
The Royal Commission was told that the issue of “fair exchange of value” was being contemplated within NAB/MLC as recently as late last year and January, this year.
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In its latest report, the corporate regulator says the deduction of advice fees has led to instances of “inappropriate erosion of members’ balances”.
Financial advice is having a significant impact on how Australians are engaging with the more complex aspects of their superannuation, new findings have shown.
While the Financial Advice Association Australia said it supports a performance testing regime “in principle”, it holds reservations about expanding this scope to retirement products.
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