Don’t include us in CSLR funding say super funds
Superannuation funds have made clear to the Treasury that they do not want to be wrapped up into the funding arrangements for the Compensation Scheme of Last Resort (CSLR), arguing that the superannuation sector has a largely unblemished record in paying determinations from the Australian Financial Complaints Authority (AFCA).
In a submission to the Treasury review of the CSLR, the Association of Superannuation Funds of Australia (ASFA) has expressed concern about the cost of the CSLR to the financial advice profession but has argued that is not a reason to expand the funding regime to superannuation funds.
“Given current concerns regarding the funding needs of the scheme and the burden that imposes on impacted sectors of the financial services industry, the review provides an important opportunity to re-examine the scheme’s funding mechanism to ensure it is operating in a sustainable manner,” the ASFA submission said.
“It is also timely to re-consider the scope or coverage of the CSLR, based on up-to-date data pinpointing where in the industry uncompensated losses are arising. We note that it is important to ensure that personal financial advice is accessible and affordable.
“We acknowledge concerns raised by other stakeholders regarding the decline in the number of financial advisers and the impact that the CSLR model in its current form can have on the direct costs of those advisers who have not themselves contributed to the uncompensated losses. We further acknowledge that this may be a factor influencing decisions by potential new entrants to the sector,” the ASFA submission said.
“That aside, ASFA notes there is no data suggesting undischarged compensation is an issue within the APRA-regulated superannuation sector,” it said.
“We maintain our long-standing position that there should be no cross-subsidisation from the APRA-regulated superannuation sector in respect of undischarged compensation arising in other sub-sectors or in relation to products and services not provided by the APRA-regulated superannuation sector.”
The ASFA submission closed with the message that while it might be a good time to review the CSLR and how it is funded, superannuation funds should remain out of the mix.
“It is, in ASFA’s view, an opportune time to reconsider the sub-sectors that are ‘in scope’ for the CSLR, to ensure the scheme is appropriately targeted. However, we are strongly of the view that any extension beyond the presently ‘in scope’ sub-sectors would only be appropriate where there is compelling evidence of undischarged determinations – that is, uncompensated losses,” the submission said.
If they want to be advisers they need to pay there way.
So why am I included in the cslr?
I haven’t had an AFCA complaint, or a product fail. Why should I pay?
The CSLR is a joke. So are the people who designed it.
Australian Financial Services legislation and regulation seem two-tiered.
Advisers existence perpetually under assault.
Unlevel playing field.
Disgusting.
Jon you are correct! And after Jones announcement on the SIS act being changed to allow super funds to levy all members for the cost of advice, ostensively allowing them to fund and build Wealth advice businesses internally and be allowed to give advice on practically everything we do has me wondering why the hell bother?
Agree. I’m finishing my FP Masters degree at the moment.
I’m very much of the view that I’ve wasted all of these resources, time, money, everything else to have a Government that is going to let someone with 6 months education do what I do.
To then give super funds the ability to collectively charge (fee for no service)… How can advisers compete against that?
I’m incredibly angry and cynical about how Canberra works.
It’s pure filth.
Jon, agree the FARSEA process has been a disaster and continues.
As for Canberra as whole, what an obscene, corrupt joke it is towards Advisers.
On a winning note Jon, there is and will continue to be bucket loads of Real Adviser work and demand for wealthy clients.
Industry Funds only think of FUM and keeping it and the Union, Bikie and ALP clipping the ticket.
ISA have no care for real advice or any client relationship.
And that my friend is where you will win, good honest, valuable long term client relationships.
The mass over regulations and obscene Canberra rubbish noise never goes away. But try tune it out and focus and the client relationships and great work you can do.
I too have an unblemished record. I want to be excluded from the CLSR.
As usual the union funds want their cake while they eat it too. Nothing new to see here.
NIMBY. They admit that there is a problem, refer to vague solutions, but say don’t look at us. If everyone had the same attitude, then the Government will just crush the financial advice profession, and all these other stakeholders will just look the other way and say what happened there.
Whilst the initial CSLR explosions have been outside the APRA regulated super space, the next big one, which is fermenting every day, is much closer to home for the super funds. Shield Master Fund and First Guardian, were products that were available on super fund platforms. Where this will hit the CSLR, is that one large licensee, owned by a listed financial services company, was heavily exposed to both Shield Master Fund and First Guardian. We are talking about hundreds of millions of dollars of exposure to both of these disasters. This information is out there and is being repeatedly published in the mainstream media. It is now just a matter of time until it blows up. What are the super funds going to say then?
To be clear, the CSLR is wrong, but if there is one, why is it not spread across all Fund Managers, platforms, Super and Non-Super funds, and Advisers?
Our cost would be a cup of coffee a year. That I would consider reasonable.
But again why are we covering the failure of a company that Phoenix itself (Doesn’t ASIC investigate This type of action)
If you want to be outside the CSLR (and industry funding adviser component) then just provide General Financial Advice and get your ass off the Advisers register. Yes it’s that easy.
Advice only becomes personal when you recommend either a dollar amount of something to buy or a qty of something to buy.
(When it comes to sellinh something the same applies – the client tells you the qty of sell of their holding)
You can tell a client why BHP is a buy for example so long as they the client tells you how much to buy or what qty to buy. Never talk dollar amount or qty. Leave that for the client. Providing trading tips or opinion based on technicals or trend following isn’t personal advice. Just ensure the client signs before their first trade a General Advice and Execution letter. It’s at most a few paragrpahs.
If someone can be convinced to move their Super monies out of AustralianSuper into United Global Capital on the promise of an Iphone than surely Australian Super needs to have a look at it’s offering.
If you take 4 years to transfer a dead members Super to the wife, months for a switch or you get fined for Greenwashing you’re the problem.
The downright illegal and immoral practices of these Super funds have hit the headlines recently. Practices Advisers have seen for decades. It’s these very poor client service standards that encourage people to look at failed products attractive.
If Super Funds lifted their game, both in product features, they way they worked with Advisers, and Customer Service, people would not be looking to invest in products like United Global Capital in the first place.
They need to be part of the solution, because they’re the problem.