The final report of the Quality of Advice Review has detailed what superannuation fund trustees told reviewer Michelle Levy about the state of super and advice.
When writing the final report, Levy consulted numerous super fund trustees on her proposed changes to garner their suggestions regarding super and financial advice.
“Stakeholders said there were an increasing number of people who were unable to access financial advice about retirement even though that advice could lead to a higher income in retirement,” she stated.
Additionally, super funds described the current law as a barrier to them providing retirement advice to their members. If Levy’s recommendations were implemented, it would “make it simpler for superannuation funds to provide good advice to their members,” she said.
Other comments from funds included suggestions around intra-fund advice, which was defined as financial product advice, strictly personal only and given by or on behalf of a fund trustee to a member where they were not charged an advice fee.
“Most (although not all) superannuation funds have told us they would like to be able to provide more intra-fund advice to their members, by which I think they mean that they want to provide that advice on a collectively charged basis,” Levy wrote.
Funds expressed the desire to provide advice to members leading up to their retirement, therefore meaning the intra-fund advice regime needed to be broadened.
In consideration of Levy’s proposal to remove section 99F of the SIS Act, which would eliminate restrictions on collective charging of fees, many funds agreed.
“They liked the greater clarity about the scope of advice and the flexibility to determine how they provide and charge for advice. Some said the increased discretion about charging for advice will allow them to provide more advice to their members.”
Despite this, the lawyer revealed that some funds indicated concerns that removing section 99F would make it more difficult for funds to justify collectively charging for advice and could lead to trustees being less willing to provide advice.
In response to these worries, Levy said: “This is a mistaken view of the law and section 99F should not be relied on as permission or justification for the way costs and expenses are allocated between members.”
In her final report, Levy made two key recommendations in light of super funds’ comments which would change their ability to give advice.
Those were:
- Recommendation 6: “Superannuation fund trustees should be able to provide personal advice to their members about their interests in the fund”; and
- Recommendation 7: “Superannuation trustees should be able to pay a fee from a member’s superannuation account to an adviser for personal advice”.
Levy’s recommendations were driven by the purpose of enabling super funds, as well as other non-relevant providers like banks and insurers, to provide personal advice to their members.
Widening the number of professionals who could deliver financial advice would make it “more accessible and more affordable”, she explained.
