Considering the broader regulatory settings that apply specifically to superannuation funds, the Quality of Advice review should consider whether it is appropriate that a less-stringent regulatory regime is applied to advice provided by funds.
This was one of the 18 recommendations made by Industry Super Australia (ISA) in its submission to the Quality of Advice (QoA) review issues paper whose consultation process has now completed.
According to ISA, its submission explored how the financial services regulatory settings could enable super funds to provide cost-effective advice and guidance to members at scale.
The organisation of super funds said access to quality, affordable advice should not always mean comprehensive personal advice with many members with straightforward circumstances able to rely on advice and guidance other than comprehensive personal advice.
“It is also unrealistic to expect every super fund member to pay for comprehensive personal advice and equally, it is not possible for super funds or the retail financial advice industry to give comprehensive personal advice to each member or even to those who are close to retirement,” it said in its submission.
ISA also called for the review to make the Australian Securities and Investments Commission (ASIC) publicly provide evidence on whether the Future of Financial Advice (FOFA) reforms had improved the quality of financial advice, before completion of the QoA review.
In relation to digital advice, ISA said the QoA review should consider whether a separate framework for digital advice which focused on the design and ongoing monitoring of the algorithm underpinning the digital tool would encourage the development and use of digital advice solutions.
Meanwhile, intra-fund advice (which could be collectively charged) should be expanded, according to ISA, to include advice about retirement adequacy and Age Pension eligibility, and advice about the member’s household that is pertinent to the member’s retirement.
Further recommendations included:
- The outright ban on the deduction of ongoing advice fees from MySuper accounts should be extended to choice products;
- Commissions for the sale of life insurance should be banned;
- The design and distribution obligations should be extended to SMSFs; and
- Facilitating tailored generic advice by recommending that the government make available to funds data it holds about members on a de-identified basis to assist funds to determine characteristics of cohorts.