They’ve taken a hammering over conflicts of interest and dodgy commission deals, and now financial planners are fighting a rearguard action against a Federal Government decision to allow superannuation trustees to provide limited financial advice to super fund members.

The decision is a “mis-selling disaster in the making”, according to the Financial Planning Association (FPA). But the representative body for the funds and life insurers, the Investment and Financial Services Association (IFSA), says the new rule doesn’t go far enough.

The Government says the move will mean cheaper advice for fund members, but FPA CEO Jo-Anne Bloch says it exposes the community to advice that is unprotected by the criminal sanction applying to financial planners.

We fear that millions of super fund members will get short-term advice to encourage them to stay where they are,” she said.

“When the markets turn or their circumstances change no-one will be there to adjust or update the advice, and there will be no recourse whatsoever for the fund member.”

Financial planners, already reeling from the business downturn, stand to lose substantially under the change.

IFSA CEO Richard Gilbert says the new rule is “limited to intra-fund superannuation investments and does not apply outside superannuation where there is also significant need to make advice more accessible”.

He says it has been “unnecessarily expensive” to obtain basic financial advice since the since the Financial Services Reform Act was introduced in 2001.

Association of Financial Advisers CEO Richard Klipin says the move represents “a return to the dark ages when people providing financial advice did not have to have a reasonable basis for that advice”. 

He says the Government’s attempt to democratise access to advice “will result in selling by another name” and ultimately end in tears.