Intra-fund advice reforms are not consistent with Future of Financial Advice (FOFA) reforms or MySuper, the Financial Services Council (FSC) has said in a submission to Treasury.
The proposed intra-fund advice framework allows an advice fee to be bundled with a product administration fee and charged across the membership, regardless of whether the member actually accesses advice, it said.
The 'hidden’ payment for intra-fund advice replicates product commissions – which FOFA banned – and directly contradicts the central objectives of the reforms, the FSC said.
The regulations would exempt super funds from 'opt-in’, it said.
Additionally, MySuper legislation allowed trustees to charge advice fees bundled with administration costs, which represented the same conflicted remuneration that FOFA banned, FSC said.
It negated an intended goal of MySuper, which was to protect uninformed investors.
The FSC hit back at claims that intra-fund advice would only bear a minimal cost to members. It said a preferable approach was to adhere to the principles underpinning FOFA and MySuper reforms.
It estimated intra-fund advice costs $405 million per annum across all superannuation fund member accounts. Given 80 per cent of members were disengaged, up to $324 million would be paid for disengaged members who were not receiving any advice.
It also supported expanding scaled advice to include non-super investments.
