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(Mar-2005): ASFA warns of mis-selling under choice
The Association of Superannuation Funds of Australia (ASFA) has warned superannuation fund members to be cautious in the evolving choice of fund environment in circumstances where there are already suggestions that mis-selling is occurring.
Drawing on the outcome of a recently completed report into the new choice of fund arrangements, ASFA estimates that around 8 per cent of superannuation fund members will exercise their right to change funds, but warns the biggest risk will be advisers mis-selling people into self-managed superannuation fund arrangements.
ASFA chief executive, Philippa Smith said the risk in selling people into self-managed superannuation fund arrangements was that the client often did not have the skills, time or adequate savings to make this viable.
“Fortunately, most instances of mis-selling so far seem to be isolated cases driven by individual advisers, not co-ordinated marketing campaigns by financial institutions,” she said.
The report broadly concludes that self-managed superannuation will be the major beneficiary from choice, with retail superannuation fund members being more likely to change funds.
However, it said that both retail and industry funds would be likely to gain market share as corporate super fund outsourcing continues.
The report warns employers to be careful who they allow to provide educational or marketing material in the workplace to their employees.
“There have already been reports of ‘educational seminars’ that have recommended inappropriate or unwise courses of action to employees,” it said.
AUTHOR
Mike Taylor
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