APRA not ruling out new sole purpose test on advice fees
A new superannuation fund sole purpose reflective of changed advice arrangements resulting from the Quality of Advice Review legislation is not out of the question, according to the Australian Prudential Regulation Authority (APRA).
Amid financial planner concerns around the QAR-related legislation and the superannuation fund trustee authorisations of advice fees, APRA says it will be guided by the detail of the final legislation.
APRA’s approach has been outlined in response to questions on notice flowing from Senate Estimates in which West Australian Liberal Senator and former ministerial adviser, Slade Brockman specifically asked about QAR and the sole purpose test.
APRA said it believed the current sole purpose test had been superseded by industry and legislative developments over the past two decades.
“This guidance was originally intended as general guidance designed to assist a subset of RSE licensees which in 2001 were (by today’s standards) very small and comparatively less experienced in terms of applying the Sole Purpose Test,” it said.
“APRA notes that:
– the Government has committed to developing in 2024 legislation to implement the new model for financial advice, as part of its final response to the Quality of Advice Review;
– some industry stakeholders have recommended that, once that new legislation has been finalised, APRA should issue new Sole Purpose Test guidance, including to provide clarity regarding fees paid for financial advice.
“APRA will continue to engage with Treasury regarding the Quality of Advice Review and related legislation. At this stage, it would be premature for APRA to form a view on the net benefits of issuing new Sole Purpose Test guidance, as this would substantially depend on the detail of future legislation.”
“Looking forward, in any consideration of whether to issue new Sole Purpose Test guidance, APRA would need to consider a range of factors, including:
– the benefits of such guidance to different industry and broader stakeholders; but also – the net benefits of providing general guidance, given that whether a particular activity undertaken by an RSE licensee is consistent with the Sole Purpose Test turns on the specific facts of each matter, and the RSE licensee has a responsibility to satisfy itself in each specific case.
Will APRA apply sole purpose to industry funds that charge blanket ‘advice’ fees across all members accounts even if they didn’t utilise the service? How does that meet sole purpose???
Makes you wonder how the industry funds can argue that sponsoring sporting teams and payments to unions meet the sole purpose test….
The whole QAR is being solely manipulated to ensure Industry Super can massively increase the HIDDEN COMMISSIONS charged to every member for it’s in house so called Sales Advice, Single Product, Vertically Owned, Back Packer, Uneducated, Unqualified, Call Centre’s.
Nothing else matters in QAR.
But remember these type of payments are never to be referred to via the dirty word Commissions.
Industry Super prefers the term COLLECTIVE CHARGES.
And you can be sure that Regulatory Capture Corrupted APRA & ASIC will move to whatever Industry Super want.
Besides the last 22 years of ever increasing BS Red Tape from Canberra to Real Advisers, QAR will leave Real Advisers in this HOT MESS nightmare. And at the same time wipe it all away for Industry Super without a care in the world for their Unqualified Qualified Sales Call Centre’s.
One of the biggest con jobs ever pulled out of Canberra.
ISA have that much power.
Here we go. Remove the ability for a non-vertically integrated adviser to charge an advice fee through super. That cuts off another of our food sources in this eradication process.
If APRA interrupted the new test in a way that they banned advisers taking fees from Super or laid a ton of compliance around being able to do that – it would probably be the end of the industry over night. I know there are firms that charge their fee by invoice etc., but there’re few and far between.
I actually take this to read that there will be MORE red tape around this issue.
Who would have thought ?
My fees will be rising significantly on 1 July 2024. They will not be reducing.
…that’s if APRA dont reduce them for you?
The ATO already has increased them with the removal of GST input credits.
Just what professional advisers need – more uncertainty.
In APRA’s eyes using members funds to sponsor sporting clubs, provide super boxes at the footy and to pay union officials millions all perfectly ok, and no action has or ever will be taken. However if a client wants to use their funds to pay for advice its all hands on deck, and the problem needs to be sorted immediately.
What are your thoughts on The New Daily?
Does APRA have to declare those ‘entertainment’ benefits in excess of $300 (which hasnt changed in ten years) like advisers have had to? I think not!!
This is another clear example of APRA/ASIC focusing far too much time and resources to meaningless nonsense.
At the end of the day, what is the risk being mitigated by putting in a far more strict interpretation of the sole purpose test regarding charging for advice…?
Does it represent value for money for ASIC/APRA to focus on this when those resources could be put towards stopping people being ripped off by unlicensed scammers? Or investigating shonky products before they fail like Dixons?
This obsession with nitpicking advisers on tiny things is nothing more than a wasteful way of making us scapegoats for the sins of others while simultaneously making advice impossible to access for most Australians.
I would walk away from being a Financial Planner. Yes, I could work around it…. but it’s that consistent message that I’m viewed as a Cockroach. I guess that’s what they want…for me to leave.
This level of hatred and malice towards financial planners can’t be accidental. Every single inquiry / commission / report in over a decade has damaged financial planners and more importantly their clients. Incompetence from public servants at this level must be deliberate.