ASFA CEO Mary Delahunty has distanced herself from comments made by her counterpart, Super Members Council CEO Misha Schubert, earlier this week insinuating that financial advisers are “dodgy” and voiced a difference of opinion over the contentious issue of fee deductions.
Schubert, who was appointed late last year to lead the new peak body for profit-to-member funds created by the merger of Industry Super Australia and AIST, came under questioning over the comments she made in a media release earlier this week. She argued for changes to legislation to stop “dodgy advisers” engaging in superannuation switching campaigns, referencing an ASIC report that some advisers have referral arrangements with these telesales operations.
Asked to comment on her counterpart’s rhetoric, ASFA’s Delahunty made clear she would have chosen different language. “There are certainly parties that have managed to insert themselves into the conversation with members and we would prefer that would be done with the funds and licensed financial advisers,” Delahunty told Senate Economics References Committee chair and Coalition Senator Andrew Bragg on Thursday.
“I don’t think it’s correct to use the term ‘adviser’ in that categorisation because licensed advisers are by and large, there’s not many of them left. And licensed advisers, I wouldn’t categorise them as doing cold calling.”
It is understood one or more SMC members have also raised complaints about the language used by Schubert, which comes as a number of funds seek to foster more collaborative commercial relationships with external adviser groups.
ASFA and SMC, which have a significant overlap in membership following the shock resignation of a number of retail funds last year, also displayed stark contrasts over the issue of super fund monitoring of financial advice deductions.
Schubert disputed the claim that the law would require trustees to check every statement of advice issued to a member, which some have argued would increase the administrative burden on super funds.
“Respectfully, this claim is not correct,” she said. “Some claims have been made about this bill that [we] view as unfounded and that’s why we’ve urged cool heads to prevail in a calm public discussion on this important legislation,” Schubert said.
But Delahunty provided a more nuanced view. “The guidance from ASIC and the guidance that has been inserted into the Explanatory Memorandum provides comfort to majority of our members that a risk-based approach is acceptable,” Delahunty said.
“But it doesn’t provide comfort to all of the members because they all have different risk tolerances and it’s worthwhile for the committee to note that these risk tolerances may change.”
‘Not a sensible policy debate’
Blake Briggs, CEO of the Financial Services Council, noted the exchanges demonstrated there was little consensus among the various super sub-sectors over this aspect of the reform package.
“What you’ve heard today from all of the superannuation representatives is a whole diversity of opinions of how these provisions work,” Briggs said.
“If the intent was to provide legal certainty, the drafting has absolutely failed to do that and it can’t be rectified by a regulator saying it’s current interpretation at this point of time is as follows, because it has no legal effect,” Briggs said.
Referencing Schubert’s “dodgy advisers” comments, which at times dominated proceedings, Briggs said it is “unhelpful” that this has become a bigger political issue.
“Some of the language around ‘dodgy advisers’ that we’ve seen from the industry super side of things probably hasn’t contributed to a sensible policy debate,” Briggs said.
Briggs noted that if ASIC had found evidence of “dodgy advisers”, it had the power to take action. “We would encourage it to take legal action,” Briggs said.
“If all it has done is written a report on it whilst it has found evidence of misconduct then you have to ask what is ASIC doing with its time?”
Financial Advice Association CEO Sarah Abood also criticised the SMC, while its chair David Sharpe called for an apology on LinkedIn.
“That language is pretty inappropriate,” Abood said. “It is not the case that financial advisers are dodgy. It’s unfortunate that language was used.”
Abood referred to ASIC Report 781, also released in May, which identified which found that less than 1 per cent of advice cases reviewed showed evidence of fees for no service and less than 0.07 of those cases showed evidence of excessively high fees “according to ASIC’s definition”, Abood said.
‘Matter for the trustee’
ASIC Commissioner Alan Kirkland reiterated that trustees would not be required to check every SOA provided to members, while Treasury assistant secretary for advice and investments Andre Moore said the law is not prescriptive about how a trustee might go about complying with it.
“That really is a matter for the trustee to determine, based on the commercial arrangements they have in place, the risk profile of their fund and the counterparties they’re dealing with,” Moore said.
However, FSC’s Briggs noted that public statements from the regulator aren’t legally binding.
“With all due respect to the current commissioners, they can say whatever they like now and a future commissioner – or even themselves at a future point in time – aren’t bound by those comments,” Briggs said.
“This would not be the only situation where ASIC has changed its opinion or change its course of action after legislation has come into effect.”
Briggs also called for ASIC to release its submission on the bill as a matter of transparency.
“It would be a useful evidence point to be able to see ASIC’s submission and say okay did what it submit on the drafting of the bill align with what they’re saying publicly, or are they saying different things behind closed doors to what they’re saying publicly,” Briggs said.
