FAAA tells Treasury advisers need to be consulted
Financial advisers need to be consulted by Treasury and the Australian Prudential Regulation Authority (APRA) as it builds the regime around the performance test to be applied to ‘choice’ superannuation funds, according to the Financial Advice Association of Australia.
In a submission filed with APRA, the FAAA has expressed strong concern that financial advisers have been left out of the equation.
“We would like to express our concerns about the consultation process for this important reform. Our concerns relate to the following:
- The FAAA is the leading association for the financial advice profession, however we have not been directly consulted with in respect to this matter, which will have a substantial impact upon financial advisers.
- The Exposure Draft Explanatory Statement makes no reference to the implications of this reform for financial advisers, who are a key stakeholder.
- There has been no impact analysis undertaken, meaning that there has been no consideration of the impact of this reform on financial advisers and their clients.
“Financial advisers, whilst not usually involved in the recommendation of MySuper products, are very much involved in the recommendation of Choice products,” the FAAA said.
“Where clients receive a notification from their trustee that their fund, or one or more of their investment options, have failed the performance test, then many of them are likely to contact their adviser to either complain or seek advice on how to resolve this problem.”
“The impact of this is now probably only six months away. The financial adviser population are largely unaware of this issue at present, and will have little idea how this assessment is undertaken,” it said.
The submission said that whilst the expansion in 2023 of performance testing is limited to trustee directed products, on the basis of an APRA media release “it is likely that it will have a very substantial impact upon advised clients”.
“This expansion to trustee directed products will have implications for both Mastertrust products and Wrap products.”
“We envisage potentially significant issues for Wrap products, which are operated very differently to other superannuation products. For example, the impact of CGT is not built into unit prices and is deferred until the investment option is sold and secondly investment taxes are typically not taken from individual products, but instead from a cash account.”
“We believe that these two differences will have a meaningful impact on the way this regime is applied to Wrap products.”
Dear APRA, given you let your Industry Fund buddies have 94% Growth Assets in your Heatmaps and still allow these funds to be called Balanced.
The whole exercise is skewed and useless without some meaningful Asset Allocation parameters, valuation rules for unlisted assets, etc.
And of course Industry Super Australia will have a massive hand in manipulating the whole process to allow inflated unlisted assets be priced at whatever makes their funds win.
Apples v Peanuts is freaking useless.
What a novel concept, letting advisers have a say in the direction of their industry!!
It’s a real shame they didn’t think of this in the Royal commission.
We still may have had a viable personal insurance industry, and the government wouldn’t have had as many of the public begging for a handout.
If they had of let advisers have a say instead of the super product providers we still might have closer to the original 30,000, and saved those men who committed suicide when you took their livelihoods away with the stroke of a pen.
Their children may still have a father, and their families would still be together.
Yes not a bad idea letting advisers have a say on their own industry. Hmmmm!!