POWERED BY MOMENTUM MEDIA
Time for a change
The Association of Superannuation Funds of Australia (ASFA) has called for key changes that would create greater clarity for superannuation funds with respect to the difference between member education and the provision of financial advice.
In a submission responding to a Treasury Corporations and Financial Services Regulation Consultation Paper, ASFA has made clear that the Financial Services Reform Act has acted as an impediment to superannuation funds, particularly where the provision of member education and advice is concerned.
The submission, sent to the Government in late May, said despite numerous attempts at clarification, the boundaries between information, general advice and personal advice remained uncertain — particularly the definition of financial product advice, which it described as being “very broad and captures a considerable portion of the communications between a superannuation fund trustee and a member.
“This definition has affected superannuation fund trustees that want to educate and inform their members about both superannuation generally and features of their fund,” the submission said. “All too often, trustees have had to modify or suspend educational materials or activities for fear such initiatives constitute financial advice.”
ASFA’s submission said, in this context, caution had been paramount in the minds of trustees because of the approach adopted by the Australian Securities and Investments Commission to enforcement.
It said superannuation fund trustees had increasingly been acquiring Australian Financial Service (AFS) Licences from the regulator.
“As such, the concerns over the definition of advice are less to do with providing unlicensed advice than they are with offering advice and triggering the various requirements to provide appropriate disclosure documentation in a timely manner,” the submission said.
“We believe that superannuation funds should be able to communicate with members on features of the fund without such communications being considered advice,” it said. “This might also include defined benefit funds seeking to provide examples of how benefits are calculated.”
The submission said that, overall, ASFA believed any communication aimed at explaining the internal features of a fund should be permissible without such communication being considered advice.
“In addition, alerting a member to matters such as the government co-contribution scheme or the tax advantages of salary sacrifice should be seen as education and not advice,” it said.
The submission said that while recent changes enabling product issuers to discuss features of their own product without the need for a licence had been of some assistance, the concession did not extend to general education about superannuation, such as the benefits of salary sacrifice.
“Further, many superannuation fund trustees now hold AFS licences and are not able to use this exemption,” the submission said.
It said there remained other difficulties with the concession in circumstances where it was often the superannuation fund administrator and not the trustee discussing the fund’s features.
The submission said that in these circumstances thought should be given to extending the concession to those authorised to act on behalf of a trustee.
“Any redefinition of advice, including general advice, needs to be targeted where there are genuine consumer protection issues at stake,” it said. “Encouragements to invest discretionary monies or switch products must be caught within the advice definition. Similarly, communications suggesting specific investment choices where the costs and investment risks are borne by the customer/member should be considered advice.”
ASFA has used its submission to recommend that a new definition of financial advice be developed that better enables funds to discuss internal features of the fund and educate members about superannuation, including preservation and taxation issues.
Elsewhere in its submission, ASFA also suggested that there be no requirement for the provision of a Statement of Advice (SoA) where minor issues were being discussed.
It said the regulation of personal advice had proven problematic for superannuation funds in circumstances where members often wanted more information on the range of options they had within a fund, such as additional insurance cover.
“The moment that the member starts providing information about their personal circumstances, the SoA requirements are triggered, even if the member only wants information,” the submission said.
ASFA said, however, that it strongly believed that any changes to the SoA requirement had to be done carefully, because extending relief too far might prove hazardous.
AUTHOR
Mike Taylor
Recommended for you
Following the roundtable, the Treasurer said the government plans to review the superannuation performance test, stressing that the review does not signal its abolition.
The Australian Prudential Regulation Authority (APRA) has placed superannuation front and centre in its 2025-26 corporate plan, signalling a period of intensified scrutiny over fund expenditure, governance and member outcomes.
Australian Retirement Trust (ART) has become a substantial shareholder in Tabcorp, taking a stake of just over 5 per cent in the gaming and wagering company.
AustralianSuper CEO Paul Schroder has said the fund will stay globally diversified but could tip more money into Australia if governments speed up decisions and provide clearer, long-term settings – warning any mandated local investment quota would be “a disaster”.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
74.26 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
72.60 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
44.46 3 y p.a(%)
4
Pengana High Conviction Equities B
39.12 3 y p.a(%)
5
Pengana High Conviction Equities A
39.05 3 y p.a(%)
