Advisers hit with 'commercially crippling' changes

by |

The IOOF has told advisers that in less than 3 months, corporate super commissions on FUM will receive a shake-up.

Wealth Professional received concerned emails along with a statement that advisers received. The statement explained: “IML as Trustee of the IPSSF will be required by law to remove Plan Service Fees for all corporate super members from 1 July 2013…PSFs are prohibited under new superannuation fee rules that apply generally across the super fund and commence 1 July 2013. Under new section 99D of SISA, the cost of advice to employers must not be borne by members…The grandfathering rules for FoFA are not applicable here as this is new super law.”

IOOF said Plan Service Fees would cease from 1 July across the board, regardless of any other remuneration. Advisers have the option to enter into a new arrangement with the Trustee for servicing a corporate super plan, with fees payable based on a percentage per member. Administration commissions will not be paid in addition to the servicing fee, so advisers choosing this option would need to opt out of FoFA grandfathered trail and contribution commissions.

IOOF has been seeking legal advice on section 99D of the SIS Act, which has only been finalised in the past two weeks. Advisers have expressed concern about the 11th hour notification, which could mean a potential loss of up to $100,000 for some firms. According to calculations, funds with $7 million FUM could lose about $25,000 a year.

“Naturally this has significantly blind-sided us at such late notice for a platform we generally have a high regard for,” said one firm. “We are beside ourselves with this potentially devastating and commercially crippling news (a potential loss of close to $100,000) that we thought would be under the grandfathering provisions (as other platforms have adopted).”

IOOF said “advisers who do not choose to take up the servicing option can continue to receive grandfathered trail commissions but no PSFs…As trail commission is embedded in the administration fee and not charged as a separate fee, it is not subject to the same ban as PSFs.”

When Wealth Professional contacted IOOF for comment they said, "As we are still working through the issue internally, we aren’t in a position to comment at the moment."

More stories:

Stars align for landmark agreement

Do you know what goes into an SOA?

Friday's final word goes to...

 

  • Stephen on 22/04/2013 11:54:24 AM

    What is the IPSSF? I think that S99D of the SIS Act only applies to MySuper accounts. However, that is not made very clear in the Act. When rummaging around in other acts such as ITAA 1936, unit trusts are not classed as superannuation accounts. The reason I looked there is "pooled superannuation trust" means a unit trust from s10 of the SIS act. Clear as mud to me.

  • Peter Johnston - AIOFP on 22/04/2013 11:36:34 AM

    What a bloody disgrace. Another example of this Government wanting to kill of small business. No prize for guessing where the confiscated revenue will end up, and it wont be a reduction in MER for the consumer.

  • GAB on 22/04/2013 11:10:22 AM

    Plan service fees banned but trail commissions stay put......now if that's not an example of flawed policy, what is? ..... And some advisers want to implement all the new rules in haste so they can call themselves professional......I'm approaching all of FOFA with extreme caution so I don't waste my time and my clients time.

  • Fedup on 22/04/2013 10:30:00 AM

    Unbelievable! The industry funds are subsidizing advice by charging higher fees to all members. I cant wait to see them shut down the Industry Funds. Can you imagine the screams when the boot is on the other foot.

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Name (required)
Comment (required)
By submitting, I agree to the Terms & Conditions