SMC faces backlash over controversial advice remarks

The SMC has come under fire over the past week following a statement in which its CEO referred to advisers as “dodgy”.

Despite issuing an apology, the Super Members Council (SMC) has fallen out of favour with the advice profession. This follows remarks by its CEO Misha Schubert, who said in a statement last week that the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 and alterations to section 99FA of the SIS Act would curb the practice of “dodgy financial advisers” using cold calling to solicit clients.

Schubert also called for the tightening of anti-hawking laws, on top of the swift passage of DBFO legislation, to prevent “rip-off merchants” who are exploiting a hole in anti-hawking legislation – which bans the unsolicited selling of financial products – to secure “exorbitant advice fees” from unsuspecting consumers.

Following substantial opposition from the advice community regarding her comments, SMC issued a statement on Friday attributed to Schubert. In the statement, she is quoted as expressing that she “deeply values the role of high-quality qualified financial advisers”, especially in their capacity to provide advice that is in the “best interests of super fund members”.

“Disappointingly, some comments I made in a media release earlier this week highlighting ASIC’s recent concerns about a small subset of operators using cold-calling and online clickbait tactics to pressure Australians into moving their super into underperforming products have been mischaracterised,” Schubert said.

“The remarks were not intended to be generalised to all financial advisers.

“I regret – and apologise for – any offence that the mischaracterisation of my remarks caused to reputable financial advisers who are working faithfully in the best interests of their clients.”

The most interesting criticism of Schubert’s initial statement came from Mary Delahunty, the CEO of the Association of Superannuation Funds of Australia (ASFA), who defended financial advisers in a Senate hearing last Thursday, deeming the use of the term “dodgy advisers” inappropriate.

“I don’t think it’s correct to use the term adviser in the categorisation,” the ASFA CEO said.

“Certainly parties at the moment have managed to insert themselves into the conversation with members and we will prefer that that be done with the funds and with licensed financial advisers.

“I don’t think it’s correct to use the term adviser in that particular, you know, categorisation ... I wouldn’t say you can categorise them [licensed advisers] as doing cold calling.”

While super funds have mostly remained silent on the matter, the Australian Retirement Trust (ART), a member of both ASFA and the SMC, issued a statement late last week, pledging its support for advisers. 

In the statement, ART’s executive general manager of advice, guidance, and education Anne Fuchs said: “At Australian Retirement Trust we truly believe in the power of financial advice and the material impact it can have on our member’s retirement outcomes.

“The accessibility of affordable, quality advice is a top priority for ART, and we partner with the advice community to deliver this to our members, so they can retire well, with confidence.”

Fuchs continued, emphasising that advisers play a key role in helping ART’s members achieve their retirement goals, and adding that the fund sees them as “critical to the success of our organisation”.

“Qualified advisers are trusted professionals in the eyes of working Australians, who as they get older, will need advisers more than ever before,” Fuchs said.

Delahunty and Schubert disagree

Delahunty and Schubert also clashed on another critical issue. Delahunty emphasised that although most of ASFA’s members endorse the changes to section 99FA of the SIS Act as outlined in the advice legislation, she pointed out that risk appetites vary among funds due to historical events and interactions with regulators. 

“It doesn’t provide [comfort] to all of the members because they all have different risk tolerances. And it’s worthwhile for the committee to note that over time, these risk tolerances may change,” Delahunty said.

“A lot of the funds have a risk appetite that has been informed by historical events and informed by interactions and colleagues’ interactions with regulators over time and so it is something that the sector should be happy that we see these differences in risk approaches emerging in different funds because it is a sign of a mature sector that doesn’t suffer from group think, but can come to different levels of comfort based on their different risk appetites.”

Delahunty’s implied suggestion was that while some funds may be comfortable enough to continue their current practices, which include risk-based sampling, others may interpret the law as requiring more thorough checks.

On the other hand, SMC’s Schubert, insisted that it is incorrect to claim the bill requires funds to review every single statement of advice (SOA).

“One claim that’s been made is that the bill would require super fund trustees to check every single statement of advice ... This claim is not correct. The bill clarifies the trustees can continue to adopt a risk-based compliance approach, including using techniques such as spot auditing,” Schubert said.

The Senate report on the DBFO legislation is due to be released this Thursday.