The concept of “fair exchange of value” has been aired at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in the context of National Australia Bank (NAB) seeking to retain adviser fees in relation to superannuation fund members not actually receiving advice.
The former chair of the MLC Superannuation trustee, NULIS, Nicole Smith confirmed that a paper had been developed seeking to justify the “fair exchange of value” concept and that this had been opposed by the Australian Securities and Investments Commission (ASIC).
Under questioning from counsel assisting the commission, Michael Hodge QC, Smith agreed that the concept was based on the banking group agreeing to provide a service and could therefore justify keeping fees.
Smith said she was aware of ASIC’s concerns with respect to the proposition amounting to fee for no service and agreed with ASIC on the issue.
The Royal Commission was told that the issue of “fair exchange of value” was being contemplated within NAB/MLC as recently as late last year and January, this year.
While the Financial Advice Association Australia said it supports a performance testing regime “in principle”, it holds reservations about expanding this scope to retirement products.
In a Senate submission, the Financial Services Council said super funds should be able to nudge members on engaging with their super and has cautioned against default placements.
The Joint Associations Working Group, which counts FSC in its ranks, has issued an urgent warning to the government.
Senator Jane Hume will join the speaker lineup at the inaugural Australian Wealth Management Summit.
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