Concerns about consumers paying fees for financial planning advice or other services but not getting the service they were promised, a central issue for the Hayne Royal Commission, have not gone away.
Despite all the promises from financial institutions that they will do better, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission wrote to superannuation trustees last week saying they had ongoing concerns about the way trustees were managing the issue.
The letter said: “Cases of financial advice fees being charged without the provision of the relevant services have recently been the subject of inquiry by the [Hayne] Royal Commission. Separately, we have identified a range of industry practices in relation to trustee oversight, many of which fall below the standard we expect.”
APRA and ASIC has told trustees to review their governance and assurance arrangements. Super fund members and other consumers of financial services can help themselves but doing some reviews of their own.
The MoneySmart site has a page that helps consumers check that they are getting the right level service.
The site says: “Your ongoing service agreement may include newsletters or other financial education but the most important thing it should include is an annual advice review.
“The review should include discussion with your adviser about whether any adjustment needs to be made to your financial plan in response to changes to income, expenses, assets or liabilities, changes to personal insurance cover.
“The review should also focus on whether cover is still appropriate; how you are tracking against stated goals; changes to your goals or personal circumstances; how changes to legislation, the economy or financial products could affect your financial plan; whether any adjust.”
If people are paying ongoing advice fees for a period of more than 12 months, they must receive an annual fee disclosure statement. This requirement has been in place since July 2013 but may not apply to advice agreements made before this date.
The statement must include information about the amount paid in fees in the previous 12 months, the services received and the services the customer was entitled to receive.
Customers must also be provided with a renewal notice for the ongoing arrangement every two years.
MoneySmart also has a checklist for annual super statements. It recommends that fund members check the following details:
- Personal details. Make sure address and contact details are correct.
- Does the balance look right. Consider your starting balance, employer contributions, investment returns and fees. If something doesn’t look right, contact the super fund and ask for an explanation.
- Employer payments. Make sure you have received all your employer contributions. Employers only have to transfer contributions quarterly but they have the option of paying more frequently.
- Personal contributions. If you have made personal contributions, either directly or through salary sacrifice, make sure the fund received them.
- Employer and salary sacrifice contributions are taxed at 15 per cent. Investment returns are taxed at a maximum of 15 per cent. If you have been taxed more than this, your super fund may not have your tax file number. Check with the fund and supply TFN is necessary.
MoneySmart also recommends that fund members review their life insurance details to make sure cover is appropriate.
Another important piece of information in the annual account statement is the nominated beneficiary. This is the person who get your super payout if you die. If you have not nominated a beneficiary, it is important do so.