Limited advisers could be caught out in best interests duty

Limited licenced financial advisers would not be meeting best interests duty if they spoke to clients about switching to another superannuation fund or self-managed superannuation fund (SMSF), according to BT.

BT national manager for SMSF strategy, Neil Sparks, spoke at the SMSF Association’s National Conference last week and said it was the overall impression of advice given that counted, not necessarily the documentation that went with it.

Switching advice, he said, was giving advice to redirect part of all of a super balance from one to another, or to redirect contributions form one fund to another.

“The Australian Securities and Investments Commission (ASIC) are clear to point out that if your documentation doesn’t talk about switching but your conversation did then all of your advice is switching advice,” Sparks said.

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“This is a challenge for those with limited licence advisers because a limited licenced adviser can’t talk about switching. They can only talk about the fund they recommend being an SMSF and they can’t talk about the benefits of the fund.

“There seems to be a challenge there with what are you really telling your clients and meeting best interests duty.”