A number of financial planners have questioned whether the corporate regulator is appropriately scrutinising whether superannuation fund salaried advisers were being paid out of the fund’s administration fees or investment fees, meaning that all members of the fund were paying for advice whether they had received it or not.
The advisers raised the issue on the back of the latest announcement from the Australian Securities and Investments Commission (ASIC) concerning Commonwealth Financial Planning completing its enforceable undertaking relating to fee for no service.
In doing so, they pointed to the latest Financial Services Guides (FSGs) issued by two major industry funds – AustralianSuper and REST – which they said confirmed that financial advice salaries were being paid out of administration fees.
The advisers questioned whether the use of the administration fund to pay the salaried advisers meant that members were paying for advice but not receiving it.
The advisers described the ability of the industry funds to utilise their administration fees to pay salaried planners “discriminatory” and noted that ASIC had previously precluded the payment of external advisers under similar arrangements.
They said they believed the bottom line was that superannuation funds which owned salaried financial planning businesses were benefiting from not having to deal with client ‘opt-in’ or deal with fee disclosure statements because their operating expenses were covered out of the investment fees.
The advisers flagging the issue were concerned that the regulator was not being consistent in its treatment of these industry super fund-employed advisers compared to independent financial advisers.
