Royal Commission report makes super fee recommendations

You can access the final report here.

The final Royal Commission report has recommended banning advice fees from MySuper accounts, limiting fees for choice accounts and prohibiting the unsolicited sale or offer of super products.

In his final report for the Royal Commission, Commissioner Kenneth Hayne has recommended an outright ban on the deduction of advice fees from MySuper accounts and limitations on the deduction of advice fees from choice accounts. You can access the final report here also. 

“Deduction of any advice fee, other than for intra-fund advice, from superannuation accounts other than MySuper accounts should be prohibited unless the requirements about annual renewal, prior written identification of service and provision of the client’s express written authority in connection with ongoing fee arrangements are met,” the report stated.

Grandfathering provisions for conflicted remuneration, it said, should be repealed as soon as is reasonably practicable.

The report has also called for the hawking of superannuation products to be prohibited.

“That is, the unsolicited offer or sale of superannuation should be prohibited except to those who are not retail clients and except for offers made under an eligible employee share scheme,” it said.

“The law should be amended to make clear that contact with a person during which one kind of product is offered is unsolicited unless the person attended the meeting, made or received the telephone call, or initiated the contact for the express purpose of inquiring about, discussing or entering into negotiations in relation to the offer of that kind of product.”

The report said that a person to whom an unsolicited offer is made will “very often not be in a position to judge the merit of what is offered”.

“In particular, that person will seldom if ever be in a position to compare what he or she is offered with what he or she already has under some existing superannuation arrangement,” it said.

“That is why the attempts by ANZ and CBA to sell superannuation in bank branches under a ‘general advice’ model may have contravened the law.”

The report also recommended stapling a person to a single default account in order to eliminate multiple accounts.

It also called for tougher penalties for breach of covenants and obligations from trustees of APRA-regulated funds.

“Breach of the trustee’s covenants set out in section 52 or obligations set out in section 29VN, or the director’s covenants set out in section 52A or obligations set out in section 29VO of the SIS Act should be enforceable by action for civil penalty,” it said.

It also said that the roles of ASIC and APRA in relation to superannuation should be adjusted.

Miranda Brownlee
04 February 2019
smsfadviser.com

More Articles

From Bricks to iPhones: The Evolution of the Telephone

Check out the history of communication, eventually leading to the modern phones we use...

Read full article

SMSF commercial property owners and Div 296 ‘misconceptions’

There are three misconceptions among business owners with SMSF commercial property, a finance expert...

Read full article

LRBA stability has been understated

The stability of limited recourse borrowing arrangements (LRBA) within SMSFs has been understated, with their...

Read full article

7 simple steps to get on the investment ladder

Entering the world of investing can be a life-changer for people of all ages. Here are seven simple steps for...

Read full article

Carer responsibilities don’t meet interdependency criteria: PBR

A parent who was the sole carer for a terminally ill child is not considered to be in an interdependency...

Read full article

Can I access my super early?

Many older Australians are understandably eager to access their superannuation, but strict rules...

Read full article

Look for the red flags that signal unscrupulous advice

While the ATO is watching for signs of illegal early access to superannuation, SMSF trustees should also be on...

Read full article

Magnificent Seven: More diverse than they may appear

The Magnificent Seven are more diverse businesses than their shared label suggests . The...

Read full article

Heathmont Financial Services Pty Ltd (ABN 68 106 250 104) trading as Heathmont Financial Services is a Corporate Authorised Representative (No. 262098) of Knox Wealth Management Pty Ltd (ABN 74 630 256 227), Australian Financial Services Licence Number (AFSL) 513763.

Julian McGoldrick is an Authorised Representative (No. 262098) of Knox Wealth Management Pty Ltd AFSL 513763.

Financial Services Guide - Disclaimer & Privacy Policy

^