The new financial services licensing system holds superannuation funds responsible for representatives who give financial advice without having met required training, disclosure and conduct standards.
Who are fund representatives?
A union official who is a trustee of a superannuation fund is automatically a representative.
In some circumstances, a union official or delegate who is not a trustee might be taken to be acting on behalf of a fund. For instance, if the official or delegate is a member of a union which is a sponsoring organisation of the fund and is actively seeking to persuade employees to leave or place their superannuation with that particular fund.
What is financial advice?
Financial advice is a recommendation or statement of opinion that:
- Is intended to influence a person or persons in making a decision in relation to a financial product or class of products; or
- Could reasonably be regarded as being intended to have such an influence.
A statement or opinion can be advice only when the person has a choice about the financial product they will use.
It is important to note that union officials or delegates are NOT giving financial advice when they are engaged in collective negotiations. Arguing for an industry fund to be named in a certified agreement or to outsource the employer's corporate fund to an industry fund is NOT giving financial advice.
Should union officials and delegates give financial advice?
Unless they have received training (PS146) and authorisation, union organisers and delegates are not able to give any financial advice.
Union officials and delegates should avoid:
- Giving their opinion about whether one fund is better than another;
- Telling members their retirement benefits are likely to be better off in an industry fund with lower fees and thereby seeming to endorse that fund.
Union officials and delegates should never give individual advice to members about what they, as individuals, should do in relation to their superannuation.
Union officials and delegates can talk about:
- An employers obligation to pay super under an award or the Superannuation Guarantee Amendment Act;
- Employees rights and the employers obligations under choice of fund;
- Existing arrangements in relation to where employer super contributions are being paid;
- The fund currently receiving contributions;
- How super operates in a general sense;
- The general tax treatment of super.
Referrals
A union organiser or delegate can also refer a person to a licensed representative.
The referral must be limited to informing the person of:
- The licensee’s or representatives ability to provide a financial service;
- Their contact details; and
- Any benefits (including commissions) the person or their associates may receive in providing the referral.