Documents

Association of Financial Advisors

Australian Finance Group

AMP

FASEA

Finance Brokers Association of Australia

Industry Fund Services

IOOF

Association of Financial Advisors

No.

Member

Question

Hansard page
and Hearing date
or Written Questions

Response

(Publication date)

AFA01QON

Falinski

Mr FALINSKI: I'd be interested to know, if you'd like to take it on notice—it doesn't have to be to the decimal point—how you as an organisation spend your money. I'll fess up that I want to compare it to some of the advocates in this space who are in receipt of tens of millions of dollars of public funding. Could I ask, on that matter, what is driving the tripling of the ASIC funding levy? Is it because your sector is taking up so much more of ASIC's time?

Mr Anderson: I think the key driver has been the increase in spend on enforcement activity. That's gone up. Two years ago, it was less than $10 million. In the latest numbers we saw last week, it's $31 million—that is, $31 million of $71 million is specifically referred to as enforcement. There are also indirect costs.

Hansard, p. 8

29 July 2021

(26 August 2021)
(PDF126KB)

Australian Finance Group

No.	Member	Question	Hansard page and Hearing date or Written Questions	Response (Publication date)
AFG01QON	Leigh	Dr LEIGH: You don't seem to share my concern about this issue—my fear that this is a part of the standard which could well be breached. Commissioner Sean Hughes suggested the problem is a big one for the best interest duty. Simply putting it into a webinar doesn't cut it, in my view. Have you got any statistics on the incidence with which brokers turn away customers not because they wouldn't be getting any loan but because they should be getting it via someone else? Mr Bailey: No, we would haven't that information. Dr LEIGH: It would be incredibly rare, though, wouldn't it? We're talking about snowflakes in hell. Mr Hewitt: We don't know the answer to that. Dr LEIGH: Can you undertake to get some evidence on this, to do some internal inquiries and find out the number of times in which this has happened and some denominator for that trigger? Mr Bailey: We can attempt to. It's probably something we haven't been able to track at this point in time, but it's something we can consider, moving forward, in terms of how we can try and track and measure that statistic. We will go back and look at our statistics and systems and see if there is anything that could be indicative. At this point in time, we don't have that data available.	Hansard, p. 57 30 June 2020	(26 August 2020) (PDF152KB)
AFG02QON	Aly	Dr ALY: Thank you, gentlemen, for appearing today. I have a couple of questions based on anecdotal evidence from discussions that I've had with mortgage brokers in my electorate. One of the things that they were telling me was that the higher compliance that they have to meet has added some 20 hours or so onto the amount of time and effort that it takes to run an application. They are saying that that has had significant impact on their business model and on the cost of providing a service. Have you got any data that monetises that, that looks at increased costs to mortgage brokers for the costs of compliance? Mr Hewitt: We haven't done that calculation, but it's certainly something that we can turn our mind to. I think we've got the inputs we need to make that calculation. We could take that on advice and come back to you with our estimate of that.	Hansard, p. 59 30 June 2020	(26 August 2020) (PDF119KB)
AFG03QON	Falinski	Mr FALINSKI: Do you have examples where people have gone and got mortgages without the benefit of a broker or adviser and when they have come to see you, what sort of savings or what sort of benefits have arisen through getting expert advice? Mr Hewitt: Yes, we would have examples of that that we gathered during the royal commission that we could share if required. Mr FALINSKI: Well, I think it would be very beneficial to the committee if they were actually shared because it is the other side of the story, is it not? Mr Hewitt: That is correct. I was talking to a broker who, as an example, two weeks ago, when COVID struck, started working through his customer and client list and generated annual savings of about $60,000, $70,000 for those customers through just negotiating a better rate with the customer, based on what was available in the marketplace. There are lots of stories about that, so we are happy to try to send those to you.	Hansard, p. 61 30 June 2020	(26 August 2020) (PDF382KB)

AMP

No.	Member	Question	Hansard page and Hearing date or Written Questions	Response (Publication date)
AMPF01QON	Wilson & Leigh	CHAIR: In terms of consolidation, do you charge fees in order to consolidate accounts? Mr De Ferrari: I am not sure I would have an answer to that. Consolidate means consolidate from different providers. Dr LEIGH: Indeed. If somebody wants to tell you that they have multiple superannuation accounts and they want to consolidate, my understanding was that AMP was currently charging fees of up to 4.1 per cent on their super accounts. That seems as though it would not be in the best interest of the client. Is that true of you? Mr De Ferrari: I will need to take that on notice. I don't want to say something that's incorrect.	Hansard, p. 32 30 June 2020	(26 August 2020)(PDF96KB)
AMPF02QON	Leigh	Dr LEIGH: It sounds a terrible way of investing your superannuation. How many of these new ERFs did you set up? Mr De Ferrari: As of May of this year, our ERF had roughly 92,000 accounts for an average balance on these accounts, as I said before, of roughly $11,000. Dr LEIGH: So you set up 92,000 new ERFs in order to deal with your fees-for-no-service refunds? Mr De Ferrari: No, that is the total balance of our eligible rollover fund. It is not only linked to remediation. Dr LEIGH: Okay, so do you have an answer to the question I asked? Mr Wade: We don't have that number to hand. But, Dr Leigh, if I may address your question on performance: the capital guarantee does result in a different performance return across the board, given that it is a unique product. What I can point to on performance is the fact that during this COVID downturn and substantial market volatility, our clients— Dr LEIGH: I'm sorry, Mr Wade, but we're revisiting grounds that you've addressed already. I'm happy for you to provide that information on notice, but I want to move on to other questions. Can you please take on notice the question of how many new ERFs have been opened as part of repaying the ill-gotten gains there.	Hansard, pp. 32-33 30 June 2020	(26 August 2020)(PDF104KB)
AMPF04QON	Mulino	Dr MULINO: … I'm just curious as to how many cases are currently in dispute that have arisen out of the royal commission. Mr De Ferrari: In terms of where we've made an offer to clients and clients are not happy with that offer? Dr MULINO: Yes; either in internal dispute resolution or at AFCA? Mr De Ferrari: From memory—and I can come back to you with the precise numbers—I thought that there were a few tens of cases, maybe 30 or 40, where clients have effectively said, 'Explain to me, please, how you reached this determination.' I think single digits of these cases are with AFCA today. Dr MULINO: Okay, thank you, if you could take that on notice.	Hansard, p. 35 30 June 2020	(26 August 2020)(PDF110KB)
AMPF06QW	Leigh	In regards to the sale and valuation of client books: (a) In the current class action that AMP financial planners have filed against AMP, it’s reported that AMP sold “books” to independent financial planners at four times the annual revenue of the clients contained within them. Is this correct? (b) Is there an industry standard valuation for such client books? If so, is it 2.5 times the annual revenue? (c) If the industry standard is 2.5 times annual revenue, why did AMP value the books at 4 times the annual revenue? (d) What percentage of the financial planners whose client books have been devalued funded the purchase of that client book with financing or credit provided by AMP? (e) Were there AMP financial planners who funded the purchase through finance or credit provided by lenders other than AMP? (f) When did AMP first consider reducing the Buyer of Last Resort clause? (g) For financial planners who sought finance from AMP bank to fund their business after AMP had first considered reducing the ‘book’ value from 4 times to 2.5 times the annual revenue, what rate of recurring revenue was their business valued at for lending purposes? (h) After AMP first considered reducing the Buyer of Last Resort rate, did AMP provide planners who were seeking to obtain finance with advice that the book value was being re evaluated?	Written	(13 October 2020)(PDF970KB)

FASEA

No.	Member	Question	Hansard page and Hearing date or Written Questions	Response (Publication date)
FAS01QON	Wilson	CHAIR: You say you had consultation. Can you take on notice that we'd like to know what you mean by consultation and with which groups? When you say you consulted, who were you consulting with? Mr Glenfield: I'm happy to take that on notice. We took a similar question at Senate estimates and it is already on record [inaudible] broad range of stakeholders. CHAIR: But what does that mean? Does that mean representative bodies or does that mean individuals who raised complaints with FASEA? Mr Glenfield: In terms of the requirements for consultation under the Corporations Act [inaudible] range of people we are [inaudible] stakeholders, which includes industry associations. We consult with regulators, we consult with consumer groups, and we consult with licensees who represent their advisers. We take numerous inquiries from individuals, which we do answer. In the last 12 months, we've dealt with [inaudible] thousand individual adviser inquiries around the standards, as in taking [inaudible]. CHAIR: That is why I would like a copy of the consultation time line. There may have been one at estimates, but it would be good for you to outline it for this committee to make sure that we feel confident that you've done your role.	Hansard, p. 22 30 June 2020	(26 August 2020)(PDF424KB)
FAS02QON	Leigh	Dr LEIGH: The advice degrees are also going up in price, aren't they? Mr Glenfield: I don't know that for sure. Dr LEIGH: I'd be grateful if you would take that on notice and get back to me on that.	Hansard, p. 24 30 June 2020	(26 August 2020)(PDF131KB)
FAS03QON	Kelly	Mr KELLY: What are the costs of these extra courses? Again, say I'm 59 years of age and I've been told I have to go and do these courses, what's the actual cost of the courses? Mr Glenfield: The course costs vary across university and provider. I'd have to take on notice the exact dollar figures by university. Mr KELLY: Would I be too far out if I guessed about $2,000 to $3,000 per course? Mr Glenfield: Again, it depends on the higher education provider. It would be better if I took that on notice to give you an accurate figure.	Hansard, p. 26 30 June 2020	(26 August 2020)(PDF134KB)

Finance Brokers Association of Australia

No.

Member

Question

Hansard page
and Hearing date
or Written Questions

Response

(Publication date)

FBA01QON

Aly

Dr ALY: Do you provide the training?

Mr Felton: It is available through both associations. There is a module that brokers are completing and have completed that was agreed in collaboration with the ABA, the MFAA and the FBAA.

Dr ALY: Is that provided at a cost to mortgage brokers?

Mr Felton: No, it was provided at no cost. To best of my understanding, the MFAA delivery of that was, and still is right now, at no cost to brokers.

Mr Carson: I unfortunately don't have that information for the FBAA. I could provide a response on notice for that one.

Dr ALY: Yes, could you please.

Hansard, p. 18

30 June 2020

(30 July2020)(PDF353KB)

Industry Fund Services

No.	Member	Question	Hansard page and Hearing date or Written Questions	Response (Publication date)
IFS01QON	Falinski & Wilson	Ms Bowtell: The clients are the funds. We have one team that provides advice directly to individuals— Mr FALINSKI: Sorry, Chair, can I interrupt? I'm finding this a bit confusing. Ms Bowtell, how many people do you have operating in the business-to-consumer market as planners or advisers? Ms Bowtell: None, but let me clarify. We have none who are, at large, accepting members off the street to come and speak to them, if that makes sense. We have one team that receives referrals from a fund— Mr FALINSKI: Sorry to interrupt, but how big is that team? Ms Bowtell: There are four planners in that team at the moment. Mr FALINSKI: Is it just one fund, or is it all the funds? Ms Bowtell: One fund. Mr FALINSKI: Do you mind telling us which one, as a matter of interest? You don't have to. Ms Bowtell: I'd rather get that fund's permission. Mr FALINSKI: That's fine. CHAIR: For clarity, can you take that question on notice, please. We'd like to know the answer. Ms Bowtell: Yes.	Hansard, pp. 46-47 30 June 2020	(26 August 2020)(PDF93KB)
IFS02QON	Falinski	Mr FALINSKI: I'm sorry to interrupt, but what I'm hearing is you think there is a way around the best interest test or there is a way to comply with the best interest test by changing a few of the parameters? Mr Gervasoni: No. We definitely believe there's a way of complying with the best interest duty. In following the safe harbour steps, you can still provide limited scope advice because, if a member's need is only on a single issue or their query relates to a single issue and you follow— Mr FALINSKI: How do you know that unless you've done a full assessment? If I talk to you and say, 'I just want some limited advice on my super,' how do you know, without doing a full assessment, that I only need advice on my super? Do you want to take that on notice? Ms Bowtell: The issue has arisen in the context of the professional standards and the code of ethics and the obligation to take into account the member's long-term position and where the limited advice can sit within that. We take the view that the parliament has allowed for limited advice, the regulators have allowed for limited advice, and the parliament has also provided for a code of ethics, and it expects those two things to be able to work together, and that's how we try and reconcile it. Mr FALINSKI: Have you spoken to ASIC about this? Ms Bowtell: We spoke with ASIC— Mr FALINSKI: Where I'm getting to, very simply, is: has ASIC signed off and said, 'Yes, that's within the legislation and within the code that that's doable'? Ms Bowtell: Representatives of ASIC have certainly said words to that effect at industry conferences, as have representatives of FASEA. … Mr FALINSKI: I was just going to ask this. You mentioned that ASIC has said this at trade shows. One example would be very helpful to the committee. You can take that on notice.	Hansard, p. 51 30 June 2020	(26 August 2020)(PDF111KB)
IFS03QOW	Wilson	(a) In 2004, what proportion of IFS was owned by IFS SET? (b) If the share of IFS owned by IFS SET changed over time, how much of IFS was owned every year it had an interest?	Written	(26 August 2020)(PDF93KB)
IFS04QOW	Wilson	In relation to individuals with an interest in IFS SET: (a) Which individuals had an interest in IFS SET, and in what proportions to one another? (b) If the individuals that had an interest in IFS SET changed over time, or the relative interests changed over time, how much was each person’s interest in each year it existed?	Written	(26 August 2020)(PDF93KB)
IFS05QOW	Wilson	In relation to the IFS SET interest in IFS: (a) What year was the IFS SET interest in IFS bought out? (b) Who purchased the interest? (c) What value was given to IFS SET when it was bought out? (d) How much did each beneficiary of IFS SET profit from the buy-out? (e) Was anyone who had an interest in IFS SET also on the board of IFS, ISH, IFBT, ME Bank or any of the industry funds that were also shareholders? If so, who, and how did they manage their conflicts of interest?	Written	(26 August 2020)(PDF95KB)

IOOF

No.	Member	Question	Hansard page and Hearing date or Written Questions	Response (Publication date)
IOOFF01QON	Mulino	Dr MULINO: …I want to follow on from some questions from the deputy chair on the remediation side of things. I understand the complexity of some of the funds that you're examining at the moment. You say it will take 12 to 18 months. The complexity is fair enough, but there are also, particularly at a time like this, a lot of people who desperately need the money and 18 months is a long time. Do you have a road map that you could provide us, even if it's one with some caveats and estimates within it—a road map of the kinds of processes you're going through, when you expect to complete them and, particularly, how much of the money you expect to be back in clients' hands by the end of this year and by the end of next year? Mr Mota: We can certainly give you a road map that gives you a sense of the timing of that. One of the challenges is that, until you complete the file, you don't know what the file will necessarily throw up. That is a consideration. It's difficult to be completely definitive around that because it's not just about execution. We're analysing as we go and as we pay. We're actually trying to do both at the same time. That's really important. To get money into the hands of people as quickly as possible, we need to get onto this and we need to analyse and pay as we go. Certainly in our case, it is very important to me—to get to your point—that we get this money into the hands of people. We're also resourcing this externally, so headcount is not a constraint here. We will spend what it takes to get this done. We're committed to making sure that we deal with any cases we find. However, we need to be realistic and suggest that it will take another 12 to 18 months to deal with the cases we know of today and are investigating today. We're happy to map that out and give you some— Dr MULINO: That would be good. Thank you. Also, perhaps you could quantify it as much as possible. Of course, there is uncertainty, but it's important that the major organisations in this that have a lot of outstanding money that they have inappropriately taken benchmark, in a sense, against each other so that organisations can't simply rely upon the claim of complexity to delay this unduly…	Hansard, p. 43 30 June 2020	(26 August 2020)(PDF266KB)
IOOFF02QON	Mulino	Dr MULINO: … How many cases are there of active disputes in relation to this or cases that have arisen since the royal commission, in terms of either internal dispute resolution or with AFCA? Mr Mota: I can't be specific on how it relates to the mediation, but, in terms of internal dispute resolution and external complaints, we've had 47 cases go to AFCA in the last 12 months and about 200 internal dispute resolution claims have come through in the last 12 months. Dr MULINO: Could you provide us with some summary data on the 200 internal ones? Mr Mota: Yes.	Hansard, p. 43 30 June 2020	(26 August 2020)(PDF127KB)
IOOFF03QON	Mulino	Dr MULINO: It would be good if you could provide a little bit of detail on some of the predictive IT information. My sense from other witness who have given evidence is that this is seen as cutting edge and probably one of the most effective areas that firms will invest in. Mr Mota: Yes. I'm happy to do that.	Hansard, p. 44 30 June 2020	(26 August 2020)(PDF106KB)
IOOFF04QON	Leigh	Dr LEIGH: Have you always charged twice as much for the Select product as for the Focus product? Mr Mota: We've always had different price points for those two products, yes, since we launched Focus. Dr LEIGH: Could you take on notice to provide me with the trends and fees across those two products? I'm particularly interested in whether that's widened or narrowed. Mr Mota: Sure; no problem.	Hansard, p. 44 30 June 2020	(26 August 2020)(PDF167KB)

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