A joint industry body has called on the government to make changes to legislation that will expand the provision of advice but increase its cost by requiring superannuation fund trustees that allow fee deductions to check every piece of advice.
The Joint Associations Working Group (JAWG) said while its members were supportive of reforms to reduce red tape in financial advice, this was unlikely to occur under the process to set up an ongoing adviser arrangement with superannuation trustees to pay for advice.
The process is outlined in the proposed Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024, which will require superannuation trustees that allow fee deductions to check every piece of advice individually and duplicate valid checks already undertaken by financial advisers and their licensees.
“Professional advisers, superannuation trustees and advice licensees have consistently provided the government with suggestions to reduce red tape, make it easier for consumers to access affordable advice and remove duplication in the adviser fee deduction processes for consumers, advisers, licensees, superannuation funds and their trustees,” the JAWG said.
“Advisers already have a best interests duty and they must ensure their fees are reasonable and apportion the fees appropriately to meet the Superannuation Industry (Supervision) Act requirements.
“Codifying the requirement for trustees to also substantiate the claim of deductibility will increase red tape as multiple interpretations will be put in place, requiring advisers to respond to numerous different processes, which adds to the cost of advice and results in a poor consumer experience.”
The group noted this was “a technical area that is hard to get right” and was ready to work with the government to ensure the best outcome for consumers.
“The government needs to make urgent changes to the legislation to make advice more accessible and affordable to consumers to provide a way forward that is not unworkable and worse for all than the current situation at law,” it said.
The JAWG is made up of 12 industry and professional bodies and includes the Boutique Financial Planning Principals Association, CFA Societies Australia, Chartered Accountants Australia and New Zealand, CPA Australia, Financial Advice Association of Australia, Financial Services Council, Financial Services Institute of Australasia, Institute of Public Accountants, Licensee Leadership Forum and SMSF Association.
