The Financial Planning Association (FPA) has used its submission to the Parliamentary Inquiry into the Structure of the Superannuation Industry to argue that superannuation fund trustees should be obliged to take greater heed of advice to fund members provided by financial planners.
The submission, filed with the Parliamentary Joint Committee on Corporations and Financial Services, recommends that member investment choice be fully recognised within the terms of the Superannuation Industry Supervision (SIS) Act, thereby changing the regulatory approach being adopted by the Australian Prudential Regulation Authority (APRA).
In its submission, the FPA argues that many changes have taken place in the offering of member investment choice since the introduction of the SIS Act in 1994, with many funds, particularly master trusts, offering a wide variety of investment options.
“[The] FPA is concerned that APRA’s interpretation of the SIS Act will undermine the member investment choice arrangements under which many public offer superannuation funds operate,” it said. “This will have major implications for the superannuation arrangements of many clients of FPA members.”
The FPA submission referred to particular paragraphs of an APRA circular, which it said could be read as requiring superannuation fund trustees to ignore the advice given to a fund member by a professional financial planner.
“While it is the role of the trustee to determine the suitability of an investment at the fund level, it is neither appropriate nor necessary for a trustee to supervise individual investments under investment choice,” the FPA submission said.
It said that, in fact, a strong argument could be made that any trustee unilaterally interfering in investment choice selections would be acting in contravention of their legal obligations.
