Platform super trustees need to remember who they work for
ASIC’s latest report shows some platform super trustees are still failing to protect members from excessive advice fees, harmful switching and risky investment practices, despite the clear warning of the Shield and First Guardian collapses.
Super Consumers Australia says the report shows voluntary safeguards are not enough, and the Federal Government should introduce mandatory advice fee caps, mandatory holding limits and stronger trustee obligations for high-risk switching into platforms and SMSFs.
ASIC reviewed six platform trustees responsible for 72% of platform trustee member benefits and found trustees are “still not doing enough” to protect members from harmful advice fee deductions and inappropriate investments. The report found trustees oversaw $2.56 billion in advice fees from 720,000 advised members, with advice fee caps as high as $25,000 and one trustee considering a $30,000 cap.
Super Consumers Australia CEO Xavier O’Halloran said trustees are in a prime position to protect their members from high-risk super switching.
“They have the data. They can see fee patterns, adviser behaviour and unusual flows. It’s staggering that after everything that’s happened, ASIC is seeing so little progress.” Mr O’Halloran said.
“How can you watch people lose $1.1 billion in hard-earned savings and do nothing to protect your own customers? After Shield and First Guardian, no trustee can say they didn’t know the danger.”
ASIC found gaps in advice fee controls, poor low-balance account protections, limited advice document checks, inadequate monitoring of advisers and advice licensees, and poor monitoring of fees and investment flows. It also found that while four of the six trustees applied holding limits, only two reported monitoring those limits. Despite ASIC releasing a report about trustees’ advice oversight obligations two years ago, progress remains slow.
Super Consumers Australia CEO Xavier O’Halloran said the findings expose a fundamental problem in parts of the platform super market.
“Platform trustees need to remember who they work for. It’s not the adviser bringing business through the door, it’s the person whose retirement savings are on the line,” Mr O’Halloran said.
ASIC found platform trustees rely on advisers to drive new business, creating tension between growing platform membership and acting in members’ best financial interests. ASIC said it was concerned some platform trustees may be prioritising adviser relationships at unacceptable risk to members’ retirement balances.
Super Consumers Australia says that ASIC’s findings demonstrate conclusively that the Government needs to act urgently to protect members’ savings through:
- Mandatory advice fee caps so people’s super cannot be drained through excessive advice charges.
- Mandatory holding limits and due diligence requirements so people cannot be overexposed to risky or inappropriate investments.
- Stronger trustee obligations on high-risk switching and adviser monitoring so trustees identify red flags before people lose their retirement savings.
Super Consumers Australia’s recent submission to Treasury’s ‘Enhancing member protections in the superannuation system’ consultation called for mandatory holding limits and due diligence requirements, mandatory fee caps on advice fee deductions, and enhanced trustee obligations when people are switched from APRA-regulated funds into platform funds or SMSFs.
“We’ve had two reports and six court actions from ASIC. It’s not ignorance – trustees are simply refusing to put their members first. The Government needs to introduce mandatory advice fee caps, mandatory holding limits and stronger trustee obligations when people are switched into platforms before the next Shield or First Guardian happens,” Mr O’Halloran said.
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