ASIC Superannuation (Consent to Pass on Costs of Providing Advice) Instrument 2021/126

Overview

The ASIC Superannuation (Consent to Pass on Costs of Providing Advice) Instrument 2021/126 was enacted to address the need for clear and comprehensive guidelines on how superannuation fund trustees can pass on the costs of providing financial advice to members. This legislative instrument was created under the authority of subsection 99FA(2) of the Superannuation Industry (Supervision) Act 1993. The primary objective is to ensure that members of regulated superannuation funds give informed and explicit consent before any costs associated with financial product advice are passed on to them. This is achieved through the specification of detailed requirements for the written consent process, which includes mandatory information such as the member’s name, details of the fund and advice provider, the nature and duration of the consent, and the method by which costs will be passed on. This legislative instrument ensures that the consent process is transparent and effective, thereby protecting the interests of superannuation fund members.

Scope and Application

The ASIC Superannuation (Consent to Pass on Costs of Providing Advice) Instrument 2021/126 applies to trustees of regulated superannuation funds who seek to pass on the cost of providing financial product advice to members of those funds. This legislative instrument, made under the Superannuation Industry (Supervision) Act 1993, sets out the requirements for obtaining written consent from superannuation fund members to pass on such costs. The consent must be clearly worded and presented, including specific details about the member, the fund, the advice provider, the explanation of the cost-passing mechanism, and the duration of the consent. This requirement ensures that members are fully informed and have agreed in writing to the passing on of advice costs, providing them with the opportunity to withdraw their consent before any costs are applied. The instrument applies across Australia, as it is a Commonwealth instrument, but it specifically governs the conduct of trustees in relation to their dealings with fund members. It is noteworthy that the instrument can be amended through subordinate legislation, which allows for adjustments to the requirements as needed to reflect changes in the regulatory environment or industry practices.

Key Provisions

The ASIC Superannuation (Consent to Pass on Costs of Providing Advice) Instrument 2021/126 provides the framework for regulated superannuation funds to pass on the cost of financial product advice to members. Section 5(2) specifies that a member must give written consent, signed or otherwise agreed to in writing, to allow the trustee of the fund to pass on these costs. This consent must include the member’s name, the fund’s and the adviser’s contact details, an explanation of why the consent is sought, the duration of the consent, and a description of the services to be provided under the arrangement. Furthermore, it must clarify how the costs will be passed on to the member, whether through fees deducted from the member’s superannuation interest or otherwise, along with either the exact amount or a reasonable estimate if the exact amount cannot be determined. The obligations imposed by the instrument require trustees to ensure that the written consent from members is comprehensive and accurately reflects the nature and implications of the consent. Trustees must ensure that the consent form is clear, concise, and presented effectively to avoid any ambiguity. This includes providing detailed explanations of how the costs will be passed on and ensuring that members understand their right to withdraw consent at any time before the costs are passed on. The instrument mandates that all written consents are dated, which aids in tracking and verifying the consent’s validity over time. Failure to comply with the requirements set out in the ASIC Superannuation (Consent to Pass on Costs of Providing Advice) Instrument 2021/126 can result in both civil and criminal consequences. Trustees who do not adhere to the written consent requirements may face penalties under the Superannuation Industry (Supervision) Act 1993. Civil penalties may include fines up to a substantial amount as stipulated by the relevant provisions, while failure to provide proper consent forms may also lead to members seeking redress in civil courts. Additionally, criminal penalties could be imposed if the non-compliance is deemed to be deliberate or negligent, with potential maximum penalties including imprisonment and significant fines.