Anti-hawking laws should be tightened, and current consumer protections locked into law to stop dodgy financial advisers using click-bait social media posts, cold-calls and pressure sales tactics to move unsuspecting Australians into a dud super fund and charging them thousands in fees, the Super Members Council says.
The Super Members Council is calling for the Australian Government to extend anti-hawking laws, so it bans a small subset of financial advisers from using cold-calling businesses to get clients.
Parliament should also swiftly pass the financial advice legislation currently before it, which locks into law the current robust consumer protections that require super funds to check that advice fees charged from a member’s super account are legitimate.
ASIC recently sounded a warning on dodgy cold calling operators using high-pressure sales tactics to lure customers into receiving inappropriate advice to switch super funds. These businesses use click-bait style social media posts to harvest information from unsuspecting Australians and pass it on to cold callers selling advice.
Rip-off merchants exploit a hole in anti-hawking legislation – which bans the unsolicited selling of financial products – to secure exorbitant advice fees from unsuspecting consumers, often charged from their super account.
Many of these shonks can be caught due to super funds monitoring and scrutinising rip-off fees or inappropriate advice charged from super.
Regulators expect super funds to undertake risk-based sampling of the appropriateness of advice charged from a super account, and these vital consumer protections are being codified and clarified in financial advice legislation which is currently before the Senate.
Super Members Council CEO Misha Schubert said the regulator would be far more effective if cold calling to sell financial advice was banned by including financial services in the anti-hawking laws.
She added the financial advice laws that will lock in requirements for super funds to check the appropriateness of advice fees charged from super should be passed without delay and without being watered down.
“Reputable financial advisers do not rely on third parties to cold call Australians to sell their services and using cold call lead-generation for financial advice should be banned,” Ms Schubert said.
“These groups use click-bait style social media posts, cold calls and high-pressure sales tactics to convince people to change super funds.”
“Super fund members are then charged a massive advice fee and plonked into a poorer performing super product. This predatory practice needs to end.”
“One of the ways these shonks can be caught is by super funds checking if advice fees are appropriate.”
“To give the regulator the teeth it needs to end the rip offs, anti-hawking legislation should be extended to also ban the unsolicited selling of financial services.”
“And vital consumer protections that obligate super funds to check the appropriateness of advice charged from super needs to be swiftly legislated and not delayed or changed.”
Because advice is considered a financial service and not a product, dodgy advisers can flout the law and use cold calling or click-bait style social media posts to drum up business and then charge thousands in fees.
Under anti-hawking laws to sell a financial product, a consumer must consent to being contacted, and that consent must be positive, voluntary and clear. These laws do not cover the sale of financial advice though - and disreputable advisers use this loophole to skirt around the anti-hawking laws.
Ms Schubert said the small subset of advisers that used cold calling for lead generation was causing reputational damage to the entire financial advice industry.
“Australians should hang up on unsolicited calls offering to connect them to a financial adviser to review their super, as they likely lead to a shonky financial adviser.”
“While the regulator does crack down on individual advisers offering inappropriate advice after using cold calling lead generation, the practice of cold-call lead generation selling financial advice is not yet banned.”
About us:
The Super Members Council is a strong voice advocating for 11 million members who have more than $1.5 trillion in retirement savings managed by profit-to-member superannuation funds. The Super Members Council will protect and advance their interests throughout their lives, advocating on their behalf to ensure superannuation policy is stable, effective and equitable.
Contact details:
James Dowling: 0429 437 851, jdowling@smcaustralia.com