AFCA has updated and released its AFCA Approach to superannuation fees and charges document.
The document sets out AFCA’s approach to assessing complaints that allege that a fee or charge debited from a superannuation product was not disclosed and/or a corresponding service was not provided. It does not relate to complaints about insurance premiums.
In AFCA’s view, it would generally be unfair or unreasonable for a trustee not to refund a fee or charge if something of value was not provided for each fee or charge debited to a superannuation product (except in relation to certain ‘grandfathered’ arrangements).
In reviewing whether a trustee’s decision not to refund a fee or charge is fair and reasonable, AFCA will consider whether:
• the fee could be charged under the trust deed and law at the time
• there was sufficient and meaningful disclosure in the information provided to the complainant about the fee and its operation
• there was a service provided in return for the fee.
The recent changes address ‘grandfathered’ commission arrangements and acknowledge that under the Future of Financial Advice (FOFA) reforms to the Corporations Act benefits and commissions given to a financial services licensee or representative under arrangements entered into before 1 July 2013 were allowed to continue until 1 January 2021.
The Approach explains that AFCA generally considers a trustee’s decision not to refund a fee or charge for access to financial advice debited to an account before 1 July 2013 is fair and reasonable, as long as the fee was permissible, the agreed or required advice service was provided, and the fee was sufficiently and meaningfully disclosed.
For fees charged from 1 July 2013 until 1 January 2021, except for those paid under ’grandfathered’ arrangements, AFCA will consider what service or value was provided in return for the fee or charge. If access to adviser services is promised under an agreement, AFCA’s consideration will include if they were capable of being delivered and if there has been sufficient disclosure about them, including if they can be switched off.
If a trustee does not have records of whether a service was provided, AFCA would generally consider the trustee’s decision not to refund the fee to be unfair or unreasonable and would expect the trustee to refund the fee with foregone earnings.
If you found this article helpful, then subscribe to our news emails to keep up to date and look at our video courses for in-depth training. Use the search box at the top right of this page or the categories list on the right hand side of this page to check for other articles on the same or related matters.
Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.