Ms Anna Burke (Chisholm, Australian Labor Party) Share this | Link to this | Hansard source

Earlier this week I tabled the Parliamentary Joint Committee on Corporations and Financial Services report Statutory oversight of the Australian Securities and Investments Commission. I ran out of time when speaking during the debate and I would like to put on the record some very important matters from that report. Most importantly, I want to talk about an ASIC undertaking on superannuation switching. With super choice nowadays, people are seeking advice on whether they should change funds. ASIC has monitored the advice being given to people to see if it is appropriate or not and, sadly, it is not. Firstly, ASIC found in investigations of the ‘from’ fund—the fund you are transferring from—that most advisers recommending a switch had made little or no investigation of the fund that they advised their client to switch from.

Secondly, ASIC discovered poor disclosure of costs, loss of benefits and other significant consequences if this advice is followed. As a result of limited or no investigation of the ‘from’ fund, most advisers under our surveillance did not comply with the specific obligations to disclose the cost, loss to benefits and other significant consequences of the recommended switch. Thirdly, there was a tendency to recommend a fund related to the licensee. Based on statistics provided by licensees, there is a strong tendency among advisers to recommend switching to a fund related to the licensee. In these cases, there is a conflict of interest that must be carefully managed in order to avoid the perception that the advice is inappropriate or is not given on a reasonable basis. Fourthly, there was a tendency to oversell life insurance. There were a number of examples where advisers appeared to recommend life insurance to clients where there did not seem to be a reasonable basis to do so.

This is a glaring report and the case studies in it are quite frightening. But most frightening of all, it seems that the majority of this mis-selling occurred among people of low to middle incomes—people who already had limited superannuation were being advised to take that limited super and put it into another fund, which in most cases was detrimental to their own financial wellbeing. They were losing money by having to pay the cost of going into funds, switching funds and then buying life insurance products that they had no need for. Most of our superannuation provides us with good death and disability cover; most of us do not need the additional life insurance products that these people are being sold. This is a real concern to us as a society, where more people are taking out their super and retiring. We need to ensure that people are getting appropriate advice—that people actually know what to do with their life savings and are not blowing it on the scams we are seeing coming across the internet every day.

The federal government has put aside $21 million to the Consumer and Financial Literacy Taskforce. This is meant to be doing things to give us financial advice now so that people know what to do with their money. So far it has put out eight press releases. One of them told us that if you save money you will be better off. I could have told anybody that; I think most people know that. What we need is actual advice now, assistance to people and more things done in schools so children have a knowledge of life savings and people are not losing money. The Liberian loans scam alone has netted that country $21 billion. It is a disgrace and we need to be doing more. (Time expired)