SMSF providers such as SuperConcepts will begin examining their fee collection arrangements with financial advisers that may constitute a grandfathered commission arrangement following recommendations stemming from the Banking Royal Commission.
SuperConcepts technical services and education general manager Peter Burgess said the Commission’s recommendation that grandfathered provisions for conflicted remuneration should be repealed as soon as practicably possible may impact on some ongoing fee arrangements put in place before the Future of Financial Advice reforms came into effect on 1 July 2013.
“If any grandfathered commission arrangements are identified, the process to terminate this fee arrangement by 1 January 2021 will begin, as well as ensuring fee arrangements which cannot be terminated are rebated to the client from 1 January 2021,” Burgess said.
“This measure may also impact trail commission payments that SMSF service providers such as SuperConcepts may be receiving from third parties if the arrangement was put in place before 1 July 2013,” he said, adding that SuperConcepts will update all clients once the assessment is complete.
Burgess also warned the federal government may use the no hawking measure stemming from the recommendation made in the royal commission to address the widely reported issue of SMSF spruiking.
He said the government may crack down on situations where individuals are encouraged to establish an SMSF by one-stop property shops, real estate agents and cold calling.
Addressing the report’s recommendation on annual fee renewals, he said SuperConcepts is seeking clarification on obligations an SMSF service provider may have to ensure the annual fee renewal requirement has been met before ongoing fees can be deducted from an SMSF and paid to the adviser.
The government has also agreed to the report’s recommendation to limit deductions of advice fees levied on non-MySuper superannuation accounts, in line with the requirement to have annual fees and services renewed annually in writing.
This applies to all types of super accounts other than MySuper accounts and will mean advisers will be prohibited from deducting advice fees from a client’s SMSF unless the annual fee renewal requirements are approved with the client’s written authority.
“SMSF service providers such as SuperConcepts are currently investigating any obligations to ensure these requirements have been met before any advice fees can be deducted,” Burgess noted.