Industry funds urge action on dodgy adviser subset

Mike Taylor

Managing Editor and Publisher

12 June 2024

The industry funds representative Super Members Council (SMC) has issued a statement calling for a tightening of consumer protections “to stop dodgy financial advisers using click-bait social media posts, cold calls and pressure sales tactics”.

The statement, issued today, calls on the Government to extend anti-hawking laws “so it bans a small subset of financial advisers from using cold-calling businesses to get clients.

“Parliament should also swiftly pass the financial advice legislation currently before it, which locks into law the current robust consumer protections that require super funds to check that advice fees charged from a member’s super account are legitimate,” the statement said.

In doing so, the SMC pointed to a recent ASIC warning around cold calling operators using high pressure sales tactics.

“Rip-off merchants exploit a hole in anti-hawking legislation – which bans the unsolicited selling of financial products – to secure exorbitant advice fees from unsuspecting consumers, often charged from their super account,” the statement said.

“Many of these shonks can be caught due to super funds monitoring and scrutinising rip-off fees or inappropriate advice charged from super.”

“Regulators expect super funds to undertake risk-based sampling of the appropriateness of advice charged from a super account, and these vital consumer protections are being codified and clarified in financial advice legislation which is currently before the Senate,” it said.

Super Members Council chief executive, Misha Schubert said the regulator would be far more effective if cold calling to sell financial advice was banned by including financial services in the anti-hawking laws.

She said financial advice laws that will lock in requirements for super funds to check the appropriateness of advice fees charged from super should be passed without delay and without being watered down.

“Reputable financial advisers do not rely on third parties to cold call Australians to sell their services and using cold call lead-generation for financial advice should be banned,” Ms Schubert said.

“These groups use click-bait style social media posts, cold calls and high-pressure sales tactics to convince people to change super funds.”

“Super fund members are then charged a massive advice fee and plonked into a poorer performing super product. This predatory practice needs to end.”

“One of the ways these shonks can be caught is by super funds checking if advice fees are appropriate.”

“To give the regulator the teeth it needs to end the rip offs, anti-hawking legislation should be extended to also ban the unsolicited selling of financial services.”