David Whiteley

In an unprecedented move for retail and industry superannuation, the Financial Services Council (FSC) and Industry Super Network (ISN) have today announced that they will work together on the critical issues for superannuation in Australia.

At the FSC’s Annual Conference in Brisbane today (Thursday) John Brogden, CEO of the Financial Services Council said: “The superannuation industry is now at the point of maturity where it must speak with a united voice.”

“ISN is here at our conference to symbolise a new relationship in superannuation policy in Australia.“

“On the eve of the election we are signalling to Canberra that the ISN and the FSC will work together on many key issues impacting fund members.”

“This is the start of a new era,” Mr Brogden said.” It is critical that we put our differences of the past aside and focus on building Australia’s next major export industry.”

“Because we have allowed ourselves to be divided, the significance of the industry and our prominence in the minds of government and consumers has been diminished. Ultimately, it is superannuation that suffer.”

“Superannuation funds are now worth $1.6 trillion. This is more than Australia’s gross domestic product and the capitalisation of the Australian Securities Exchange”.

David Whiteley, CEO of ISN said:

“A five year freeze by the super industry on advocating or supporting regulatory change – to emulate Treasurer Bowen’s proposal – will deliver to members certainty in the tax and regulatory settings.

“Industry Super Network and the Financial Services Council should lead the elevation of superannuation out of the political discourse and ensure policy making is considered, sector neutral and even handed.

“A clear message from our industry to the Australian public and policy makers that we have the future in our sights, and not the past, would be our lasting contribution to creating stability and certainty,” Mr Whiteley said.

Mr Brogden also said: “The full potential of Australia’s compulsory superannuation system can only be realised with a commitment to medium to long term policy settings that are sustainable, consistent with community expectations, and can attract bi-partisan support.”

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As we approach the final hours, we continue to work with the Minister’s office on the ultimate shape of the reforms put to the vote.  We can also say that in the past few days, we have seen a host of options proposed to us by a range of parties.  We have negotiated some important concessions for you, our valued members, including a 12-month transition period and some relief on additional disclosure. We want to be clear with FPA members that the only discussions which will deliver an outcome are those with the Government, Opposition and Independents.

Through all of this, the FPA positions on FoFA have not changed and we remain unwavering in our resolve to use the full weight of our influence to achieve the best outcome for our members and their clients. Clearly the Government has ultimate control over what concessions are granted, however, we want you to know that we are working hard to negotiate the best outcome for you. 

Our efforts over the years have involved working with all stakeholders in the political process, including ASIC and the FSC, ISN, ICA, CPA,  IPA and SPAA. You may have seen media reports in the past 24 hours suggesting that the FPA has negotiated a deal with the Industry Super Network (ISN).  The FPA has had dealings with the ISN not just recently but throughout the past 3 years since the reform process began. We have sat in the Peak Consultation group and countless forums with the ISN debating our position on your behalf.

In any discussions with the ISN or any other stakeholder, our sole purpose is to unite the profession and achieve the best possible outcome for our members and their clients.

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The call comes after news in the press yesterday which alleges the ISN has made secret side deals with a financial services industry group on issues relating to the proposed Future of Financial Advice (FOFA) reforms, such as the highly-contentious opt-in provisions and the use of the term ‘financial planner’.

“If the allegations are true, ISN is acting as a de facto policymaker on behalf of the Government. It is time for this kind of activity to end,” said AFA CEO Richard Klipin.

“In the interests of consumers and the people who serve them, the Minister for Financial Services and Superannuation must fully focus on good policy.”

Mr Klipin said the ISN has spent countless millions on advertising campaigns over a decade or more doggedly maligning advisers and undermining the value of advice and the ISN’s role in the FOFA debate needs to be put into context:

• They have proposed many of the contentious changes, including opt-in
• They represent a small  number  of  industry fund advisers, which constitutes less than  one per cent (1%) of all advisers
• The FOFA changes, as designed, will have minimal impact on industry fund advisers
• The ISN, according to its own research, expects to increase adviser numbers tenfold in the next 15 years under the FOFA legislation
• The ISN is a vested interest group in this debate, seeking to drive a substantial competitive advantage from this legislation.

“We believe the actions of the ISN have unfairly influenced the FOFA debate,” said Mr Klipin.

“But a golden opportunity now exists for Minister Shorten to bring all key stakeholders to the table and finalise all the key issues. This is the only way to serve the national, rather than sectional, interests.”

Mr Klipin encouraged the Independents to focus on good policy outcomes through amendments to the legislation.

“The AFA has always supported legislation which will improve transparency around advice and increase consumer access to advice,” Mr Klipin said. “However we believe that the draft FOFA legislation, as it currently stands, does neither.”

Earlier this month the AFA sent a letter outlining its five major concerns relating to the proposed FOFA legislation to the Independents, relevant frontbenchers and members of both Houses of Parliament.

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A collective fee is a fee paid by all members of a super fund so that they have access to a range of benefits.

CSSA President, Douglas Latto said that while on the one hand, the Government and ISN have expressed ‘strong principles’ around opt-in on the grounds that people should not have to pay for advice they may never receive, on the other they are campaigning for personal, individual financial advice, which some super fund members may never access, to be paid for via a collective fee.

“This is possibly the most patent demonstration of double standards we have seen to date in the FoFA debate,” Mr Latto said. “Personal financial advice is exactly that, highly personal. Why should all members of a super fund, subsidise the personal financial plans of a few?”

Mr Latto said the Government intends to make it possible for super fund members to access personal financial advice which will be paid for via a collective fee, by introducing an intra-fund advice fee into both MySuper and other corporate super funds (to be known as choice funds).

“Making the situation worse, the collective fee will not, as it is now in the corporate super environment, be tailored to suit the needs of individual employers and their employees but by the trustees of the fund, at a standard level for all members,” Mr Latto said. “The Government, in its paternalistic fashion, has again decided what is good for you: in their view, one size fits all.”

In servicing corporate super fund members, CSSA members currently negotiate a collective fee with individual employers. The fee is usually applied equitably to all members. In exchange, CSSA members provide a range of services to members, including:

• Negotiating better terms and conditions with super funds
• Monitoring the super fund on a continuous basis, correcting the many errors that occur and overcoming administrative issues
• Playing a member advocacy role in negotiating lower fees
• Helping the fund with its group risk requirements; negotiating better features and lower life insurance premiums for members and helping members with life insurance claims
• Conducting financial literacy and education seminars, personal on-site meetings and distributing newsletters in the work place.

“If a member of a corporate super fund wants personal financial advice, tailored to suit their individual needs, we believe he or she should pay for it,” Mr Latto said. “It is hard to see a better world for super fund members in any proposal that has them subsidising the personal financial plans of others and which legitimises the Government’s double standards and conflicted principles.”

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