No Expectation Funds Will Need to Check Every SoA

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Minister for Financial Services, Stephen Jones has made it very clear there is no expectation that superannuation funds will need to check every Statement of Advice when they’re paying out fees for financial advice.

In Parliament last week, Jones presented a supplementary explanatory memorandum to the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 saying the legislation adopts the recommendation of the Quality of Advice Review to give Australians certainty that they can pay for financial advice out of superannuation.

Stephen Jones.

In presenting the memorandum, Jones said: “Let me be very, very clear: there’s no intent, desire or expectation that superannuation funds will need to check every Statement of Advice when they’re paying out fees for financial advice.”

He said this has been clarified in this revised explanatory memorandum.

Jones noted that trustees “…must of course meet their longstanding obligations around the sole-purpose test and the financial interest duty. Under current practice, funds have been required to meet these obligations.”

…There is no new compliance burden on funds or advisers — none…

He says that under the proposed legislation “…funds will be required to meet these obligations. There is no new compliance burden on funds or advisers — none. The regulator has confirmed this; ASIC has publicly stated the expected compliance approach does not increase the course of this legislation.”

The Minister noted that the changes to the explanatory memorandum made it clear that the assurance process may include, for example, random risk-based sampling of advice.

“This is hardly an onerous burden on funds to simply maintain current practice. People who are suggesting an alternative need to explain why these important consumer safeguards should be watered down.

“This is also something that has real consequences. ASIC has recently released a report examining the practice of funds paying financial advice fees out of superannuation. Regrettably, ASIC still found that there were a number of circumstances in which fees for no service were discovered. This has the potential for great harm. It needs to stop immediately.”

Jones said this is why the legislation “…maintains important safeguards to ensure that we do not condone this behaviour.”

In April both the FAAA and the Joint Associations Working Group had raised strong concerns around this aspect of the initial legislation (see: Legislation Welcomed But One Key Concern and Fix Advice Reforms).