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Advisers involved in ERS scams: ASIC

ASIC superannuation senior executive leader Jane Eccleston has written an article pointing to financial advisers as part of the problem in scams targeting people's super amid COVID-19.

Eccleston said: "ASIC is concerned that some advisers may use the current uncertainty from COVID-19 as part of their pitch to consumers to carry out broader superannuation activities, such as the possibility of early release of superannuation, searching for lost super and consolidating their accounts."

The regulator has observed some 'lost super search providers' re-brand as 'COVID-19 access providers', however Eccleston did not clarify whether registered financial advisers were part of such schemes.

"This is an area we will be monitoring closely for misconduct," Eccleston said.

She encouraged super trustees to have proper oversight practices over third party use of SuperMatch2 authorisation.

"They should do this to curb advisers and other parties from engaging in the concerning behaviours we've identified," she said.

Eccleston did not specify whether action has been taken against any registered financial advisers in relation to these matters.

"In the course of our work, and in cooperation with the ATO, we identified entities (financial advisers, trustees and fund promoters) who were marketing 'free' lost super and consolidation services' searches, these schemes are far from free," she said.

"They typically erode a member's superannuation balance by $500 to $1000 in advice fees that are deducted directly from their account. We have also seen advisers charge a 4% fee based on the consolidation amount."

Consumers can use the ATO's search and consolidation service for free.

"In some cases, the whole of the lost superannuation recovered ends up paid out in fees," Eccleston said.

Poor quality general and personal financial advice was sighted by the regulator as concerning conduct it has identified.

Issues with fees for no service when advice providers offer an upfront consolidation of super service, then charge an ongoing asset-based fee with no further service was also mentioned by Eccleston.

She added that the regulator is concerned about financial advisers falsifying reasons for fees.

"For example, by falsely advising the trustee that they had given personal advice to a member in order to receive advice fees from the trustee," Eccleston said - without clarifying whether this had happened.

ASIC is also concerned that advisers may be inappropriately encouraging members to apply for early release of super and targeting funds that appear to be "more lenient" in granting the release of funds. It is not clear which funds are in question.

Read our full COVID-19 news coverage and analysis here.

Read more: ATOASICCOVID-19Jane EcclestonSuper early release
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