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Financial Planning, Superannuation

ROAs pointer for new advice framework

records of advice framework

The use of records of advice for the early release of superannuation will support calls for a new licensing framework focussed on specific advice needs.

The introduction of records of advice (ROA) for advice related to the early release of superannuation (ERS) due to COVID-19 will be used to push forward a new industry framework claims advice can be given on a piece-by-piece basis, according to an SMSF technical specialist.

Smarter SMSF chief executive Aaron Dunn said despite the low levels of use of the ERS ROAs, the use of single-issue-focused documentation was being viewed as a way to provide advice to more consumers and deal with issues around who was licensed to give it.

“The interesting thing from this [the ERS ROA model] is conceptually this is a way that many of the member bodies, from the accounting profession, the SMSF Association and the Financial Planning Association, are looking at what they call a consumer-centric framework to move forward the provision of piece-by-piece advice,” Dunn said.

“The ROA concept may not have been used extensively in the ERS scenario, but people don’t want to be put off by the restrictions that were placed on it, for example, what they could charge for advice. From that point of view there is some opportunity for discussion about this process going forward as the ROA model included those who were licensed and those who fit in the tax agent space.”

He made the comments as part of a recent webinar hosted by Holley Nethercote, where he indicated he had been involved in discussions with the SMSF Association about the development of the ERS ROAs and where he also noted the rollout of the templated ROAs available to advisers or accountants may not have suited the needs of consumers.

“A lot of the early release requests were time sensitive for many people and we did see ASIC provide a legislative instrument around time-critical advice, but unfortunately, in this instance, the ERS ROA model was not a great example to get this type of approach going for a solid debate about the advice framework, but at least it is a step in the right direction,” he said.

During the webinar, participants were polled as to whether they had used the ERS ROA with clients, with most responses stating they had not used the templated ROAs available to advisers or accountants as their SMSF clients had no need to gain early access to their superannuation funds.

Dunn pointed out SMSFs had a much smaller number of requests for early access compared to superannuants in the industry funds space because of the age of individuals using SMSFs and the sectors they worked in.

These figures have been confirmed by the ATO, which stated that at the start of July, of the 2.5 million people who had accessed $28.1 billion under early access provisions, only 28,000 applications had come from 17,000 SMSFs that had accessed $280 million.

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