ASIC has announced temporary relief from some of the financial advice rules, to improve the ability of consumers to get affordable and timely advice about early access to their superannuation.
The Government expanded the early access to superannuation financial hardship rules as part of the COVID-19 response. This means more people will be able to apply to access up to $10,000 of their super in 2019/20, and up to a further $10,000 in 2020/21. It has been reported that so far 600,000 have registered their interest in accessing their super under the expanded rules.
“The decision to access superannuation early is significant and many Australians will seek assistance from superannuation funds, financial advisers and registered tax agents before deciding whether to access the early release scheme,” says ASIC.
So that consumers can access affordable advice about early access to super, ASIC has made three changes to the rules around financial advice: not requiring financial advisers an SOA to be given when providing advice about early access to super, allowing registered tax agents without an AFSL to give advice to existing clients about early access to super, and a temporary “no action” position for super fund trustees expanding the scope of personal advice that can be given as ‘intra-fund advice’.
Though this relief is not without conditions: the client must be given an ROA, the advice fee is capped at $300, the “advice provider must establish that the client is entitled to the early release of their superannuation”, and the client must have approached the “advice provider” for the advice.
ASIC notes that many super funds are providing free general advice to members about early access to superannuation, and consumers can access information on ASIC’s website.
ASIC has also made temporary changes to the rules around ‘time-critical’ SOAs, and for ROAs.
The relief is temporary, though it is unclear at this stage for how long. ASIC said it will “consider market developments and consult with key stakeholders before revoking the Instrument of relief and provide 30 days’ notice to the industry”. Regarding superannuation trustees, the “no action position” expires when people can no longer make applications for early release of super.
ASIC will be conducting surveillance on advice provided under the temporary relief, to “ensure that advisers, registered tax agents and superannuation trustees are acting in the interests of their clients and members”. More detail about the relief is available on ASIC’s website.
Assistant Minister for Superannuation, Financial Services and Financial Technology, Jane Hume, welcomed the temporary relief.
“I welcome ASIC’s announcement: it is more important than ever for Australian consumers to get sound advice on how to manage their financial affairs,” Hume said.
“These measures will help ensure all Australians impacted by the COVID-19 pandemic can quickly access the financial advice they need.”
Professional bodies joined forces for regulatory relief
Five professional bodies – CPA, CAANZ, FPA, IPA, and the SMSF Association – “joined forces” to make the changes announced by ASIC happen, the bodies have said.
“There has been an increasing demand for advice around early access to super since the Government announced Australians could access up to two parcels of $10,000 in superannuation tax-free as part of their second stimulus package,” said a joint statement by the professional bodies, following ASIC’s announcement.
“We have come together and collectively worked with ASIC to help the Australian community and to ensure there are more skilled advisers in the marketplace to address this demand.”
“This move has removed significant red tape and ensured a simple, streamlined process is in place so those facing financial hardship during this time get the right advice.”
CAANZ Group Executive, Advocacy & Professional Standing, Simon Grant said: “As trusted advisers, accountants are well-placed to provide individuals with advice and many already have an existing relationship with their accountant. This is therefore an excellent extension for clients.”
SMSF Association CEO John Maroney said: “The professional bodies have worked together with ASIC to provide regulatory relief for financial advisers and Registered Tax Agents that allow them to provide advice in the most efficient, timely and cost-effective way to individuals in the current environment.”
“The decision to access superannuation early is a significant one with a long-term impact on individuals’ retirement savings, so for them to be able to speak to an accountant or adviser for a small fee to get the advice they need without sacrificing safeguards is welcomed.”