The proposed advice fee bill will limit superannuation member’s access to high quality personal advice, according to the Australian Institute of Superannuation Trustees (AIST).
In a submission to the Treasury consultation on enhancing consumer protections and strengthening regulators, AIST said it did not support the proposed legislative implementation of the recommendation to prohibit the deduction of advice fees (other than for intra-fund advice) from MySuper accounts in its current form.
Along with the lack of access to high quality personal advice, AIST said the bill would not provide enough member protection, and increased the prospect of members being subject to predatory efforts to switch super funds.
AIST proposed that the deduction of any fees for personal advice from a MySuper account be limited to non-ongoing super-related advice for MySuper members.
“Other than annual renewal (which should not be permitted), fee deduction from MySuper accounts should be subject to the new requirements outlined in Royal Commission recommendation 2.1,” the submission said.
“All new ongoing fee arrangements for non-MySuper products must commence from 1 July 2020 and not be delayed for a further 12 months.
“The extension of the arrangements grandfathered under FOFA proposed by the draft legislation is contrary to the views of the Royal Commission, and will only allow misconduct to continue for longer than necessary.”
AIST noted that these were the only aspects of the legislative package it did not fully support.
The proposed legislation would:
- Remove trustees’ capacity to charge advice fees from MySuper products. (Superannuation trustees would still be permitted to charge fees in relation to intra-fund advice as administration fees);
- For non-MySuper products, remove the capacity of trustees to charge advice fees to a member (other than fees for intra-fund advice) unless certain conditions are satisfied; and
- For ongoing fee arrangements for non-MySuper products, these would include the new requirements outlined in recommendation 2.1 (annual renewal, identification of services that will be provided and consent to the charging of fees).