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The trustees of industry and multi-employer funds are being warned that they need to be careful in providing advice to employers in circumstances where they do not hold an appropriate Australian Financial Services (AFS) licence.
Principal with Mercer Human Resources Consulting said trustees needed to understand the implications of a recent Australian Securities and Investments Commission (ASIC) interpretation, which had effectively deemed all employers to be retail clients.
He said Mercer had been warning its client funds that they needed to review the type of advice they were providing members and employers.
Mason said funds that regularly dealt with employers, providing assistance and advice on award compliance, choice of fund and successor fund transfers, needed to understand that this is now deemed to be providing financial advice to retail clients.
He said Mercer was recommending to clients that they not only review the advice provided to employers but the conditions of their AFS licence.
He said to ensure the conditions of the licence were met, trustees needed to ensure that a Financial Services Guide was provided to employers and a general advice warning given in all cases where general advice was given to employers.
“Where the trustee considers that personal advice will be provided to employers, the trustee should apply to ASIC for a variation of its AFS licence to include provision of personal advice to retail and wholesale clients,” Mason said.
AUTHOR
Mike Taylor
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