The SMSF Association has stated the core problem around harmful lead generation activity is conflicted and opaque influencing over consumer decision-making, especially with regard to retirement savings, and not self-managed super funds.
The industry body made the claim in its submission to Treasury’s consultation paper on curbing lead generation activity.
“A person who, for commercial benefit, captures, screens, warms, transfers or refers a consumer in a way that is intended or reasonably likely to influence a decision about financial advice, superannuation switching, SMSF establishment or a financial product should be subject to the financial services regulatory framework,” the association said in its submission.
Thus, it recommended such a person should hold an Australian financial services (AFS) licence, be an authorised representative of an AFS licensee or “fall within a carefully defined low-risk exclusion”.
Further, it acknowledged the importance for any new regulation to distinguish between harmful, high-risk lead generation activity and legitimate education, factual information, professional services and consumer-initiated advice.
With nearly a quarter of total superannuation assets in Australia, the sector is an established and integral part of the super system, and the association indicated it is vital SMSFs are not treated as the source of the problem.
It explained the risk occurs when SMSFs are used as a conduit by bad actors who have no obligation to, nor intention of, acting in the consumer’s best interests.
In addition, it recognised many SMSF trustees rely on practitioners such as accountants, licensed financial advisers, lawyers and auditors for assistance in running their fund. As such, it concluded it is essential ordinary professional interactions and trustee education do not get restrained by any new regulations.
“In our view, the most effective reform package would bring high-risk lead generation activity, with the view that the activity is considered providing a financial service, within the AFS licensing regime, prevent cold-call models from being cleansed by later-provided licensed financial advice, prohibit conflicted referral and lead payments, and provide ASIC with faster intervention powers in relation to harmful advertising,” association chief executive Peter Burgess said.
