The AFA has highlighted wording contained in a recent APRA and ASIC letter to Registrable Superannuation Entity licensees that the association sees as further undermining the reputation of the financial advice profession.
The AFA’s Acting CEO Phil Anderson says, in a statement, that the latest APRA and ASIC letter to RSE licensees (which advised that trustees were expected to review client SOAs) also contained the following wording:
“Reliance on attestations by financial advisers or advice licensees that services have been provided has limitations due to the potential for conflicts of interest, so cannot in all circumstances be relied upon.”
Anderson sees this as wording that “further undermines the reputation of the financial advice profession, suggesting trustees shouldn’t trust advisers”.
The AFA statement says it has raised concerns about the regulators’ letter to RSE licensees, on 30 June 2021, which advised that trustees were expected to review client SOAs as part of their obligations in respect to oversight of advice fees charged to members’ superannuation accounts.
…the AFA believes that trustee reviews of SOAs is unreasonable and may be a breach of the Privacy Act…
Anderson says the AFA believes that trustee reviews of SOAs is unreasonable and may be a breach of the Privacy Act.
“An SOA is an agreement between a client and their financial adviser and contains a great deal of personal information about the client that should not be shared with trustees.”
The AFA statement says that in early June 2021, APRA, when responding to a Question on Notice from Senator Slade Brockman following a Senate Estimates hearing, “appeared to deflect the issue”.
The AFA says that Senator Brockman asked about the requests for copies of SOAs: To what extent is APRA aware of these practices and what steps have you taken to address the issue that the provision of such information by financial advisers might breach the privacy obligations?
And that APRA’s response on 1 June 2021 was: We understand there is a range of practices employed by trustees in this area and APRA has not been prescriptive in describing how trustees should do this.
Anderson says that for APRA and ASIC to [recently] reinforce that trustees should be reviewing client SOAs is “confusing, and a matter of great concern”.
“Not only does this requirement for trustees ignore the Privacy Act obligations, therefore putting clients at risk, it is also excessive and will add to the already significant administrative burden on financial advisers.”
He says that the AFA is calling for financial advisers and superannuation funds to argue against this “excessive, unnecessary, and costly interference by the regulators”.