CSSA: Market volatility highlights risks to ordinary workers


The current volatility on share markets around the world should demonstrate to Government that ordinary workers cannot afford to be without the financial guidance and access to advice currently provided within their corporate super plans, according to the Corporate Super Specialist Alliance (CSSA).

“The volatility is a powerful and timely demonstration of what millions of Australian workers stand to lose if the Government’s plan to ban commissions on group risk and introduce opt-in goes ahead,” said President of the CSSA, Douglas Latto.

The CSSA believes the Government also intends to prohibit fees being paid to corporate super specialists on a collective basis – such as a dollar cost for each member.

“Currently, collective fees are agreed between employers and advisers and apply equally across all members,” Mr Latto said. “We believe that in the future only individual members will be able to agree to such fees. What this will mean in practice is that if opt-in is introduced, advisers will have to collect the signatures of hundreds of thousands of employees every two years – an impracticable and we believe ultimately impossible task.”

Mr Latto said that alternative remuneration solutions being put forward by some sectors of the industry do not stand up.

“One suggestion has been to introduce a user-pays system, whereby people only pay for pieces of advice,” Mr Latto said. “This has been trialled by some segments of the industry and we know from those experiences that it doesn’t work because it is reactive, not proactive.  The way the system works at the moment allows everyone to share the cost so that services can be delivered to all members at all times. Members always have the option to opt-out through fund choice.”

On the commissions’ issue, the Minister for Financial Services and Superannuation, Bill Shorten recently announced that although the Government was considering changing its stance on banning commissions on life insurance within superannuation for individually advised insurance, he did not see the case for commissions on insurance through default or group policies.

“Minister Shorten’s statement assumes – wrongly, in our opinion – that group risk is unadvised. In fact, corporate specialists provide a range of ongoing advice services which are available to all members of the corporate super plan at all times.”

Mr Latto said these services include; providing ongoing reviews, continually monitoring the insurer for accurate data (particularly where sums insured are linked to salary), assisting in the underwriting requirements of new members, answering member questions, conducting seminars and being there for members at claim time.

Mr Latto warned that if corporate super specialists cannot be fairly rewarded for their services then those services will have to be withdrawn and ordinary Australians will lose access to experienced financial advice professionals.

“The only recourse for employees in this scenario will be to seek help from call centre operators with no runs on the board.”

Mr Latto also said that in today’s workplace, people need pro-active advice delivery. “Our members are out in the workplace at this very moment – asking corporates what they would like us to do for their members. That’s where they’ve been every minute of the day, even before markets began tumbling.

“Our aim is to make sure companies and their employees get the information they need and are looked after properly.  We are there for people when they need us, helping them to make logical decisions.”

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