Workplace super the latest FoFA victim
The Corporate Super Specialist Alliance (CSSA) is currently liaising with Treasury to find a regulatory solution that will ensure employers and their corporate super fund members can still access the assistance they need from corporate superannuation specialists.
CSSA President, Douglas Latto said the move has been prompted by a letter to the CSSA from the Australian Securities and Investments Commission (ASIC) which formally declined the CSSA’s request for a no-action letter in relation to structural issues with respect to the conflicted remuneration provisions of the Future of Financial Advice (FoFA) reforms which will come into effect from 1 July.
“Under the provisions, a conflict arises when a corporate super specialist undertakes a superannuation fund selection tender and then provides ongoing services that are paid for by the super fund,” Mr Latto said. “While it is essential to make sure that the specialist is not inappropriately influenced in the tender process when they are also providing the ongoing service, as things stand at the moment, they will have to find a new way to be remunerated – and that is proving very difficult.”
The issue is unique to corporate super specialists and has come about from the combined effect of FoFA and MySuper.
Mr Latto said if no regulatory solution can be found, corporate super specialists may have no alternative but to abandon corporate super fund clients or exit the industry.
“This would have devastating consequences for small to medium businesses which now enjoy a range of pro-active services at the employer level; at the policy committee / representative body level; at the individual super fund member level and at the collective member level,” Mr Latto said.
“This would leave a large gap in the market with no obvious alternative.”
Mr Latto said corporate super specialists have a long history of providing services to employers.
“The role we have played has helped employers and policy committees ensure their members receive competitive benefits and features, at a competitive price and that members have access to general advice and information to help them improve their decisions about their retirement savings and life insurance choices,” he said.
“If no regulatory solution to the remuneration issue is found quickly, these services may disappear altogether on 1 July 2013. Discouraging competition and pro-active services is hardly in the public interest.”
