AFA News 7 July 2021. On 30 June 2021 APRA and ASIC issued a follow up letter to super fund trustees on oversight of advice fees charged to members’ superannuation accounts. This letter followed an earlier joint APRA/ASIC letter in April 2019 that was issued shortly after the release of the Royal Commission final report.
In the most recent letter, APRA and ASIC have doubled down on their expectations about super fund trustees implementing processes to independently verify that financial advisers are providing the services that they commit to clients and that the fees that they are charging are compliant with the sole purpose test. In order to achieve this, they have set out their expectation that trustees will review a sample of Statements of Advice.
The AFA has been aware that some super fund trustees have been requesting copies of Statements of Advice from financial advisers since 2019, and we have previously raised our concerns about this with both ASIC and APRA. There is a fundamental privacy issue with this practice. We are also aware that the privacy issue has been raised directly with APRA as part of the Senate Estimates process (Question 4). There is an obvious inconsistency in how APRA responded to this question from Senate Estimates, when compared with what they have said in their 30 June 2021 letter. They have not held back in stating that it has been their expectation that trustees undertake regular proactive reviews of a sample of SoAs.
We continue to strongly oppose this on two grounds. Firstly, it is inevitably a breach of Privacy obligations to provide a copy of a Statement of Advice to trustees that contains personal and private client information that should not be shared with super fund trustees. Secondly, it is excessive and unnecessary. Trustees should be able to rely on the client consent forms that have been implemented directly as an outcome of the Annual Renewal legislation that emanated from the recommendation of the Banking Royal Commission.
The AFA has issued a media release expressing our serious concerns about this letter.
We have also published an article setting out the details of this matter, tracking the history of it and the discussion of it through the Senate Estimates process.
Issued 07.07.2021. AFA Policy & Education Update