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Financial advisers to be banned from taking commissions

Financial advisers may be banned from charging commissions on investments and pension sales, under recommendations contained in the Cooper Review of superannuation, according to The Australian.

Industry SuperFundThe Cooper Review of superannuation could also recommend measures to prevent advisers burying their charges in the price of products, as well as ensuring all charges  set by financial advisers are set out in dollar terms. The changes could be introduced as soon as the end of 2011.

The review, chaired by Jeremy Cooper, a former deputy chairman of corporate regulator the Australian Security and Investments Commission, is due to present its final report on June 30, but has announced a number of proposals, the most far-reaching of which is the creation of universal funds for ‘disengaged’ investors.

“Most members don’t engage with super, and for them we envisage a fund where the product is simpler and cheaper,’’ Mr Cooper said in December.

David Whiteley, chief executive of the Industry Super Network indicated in an address last week to the Committee for the Economic Development of Australia that he believed the superannuation industry needed changes to effectively deal with the 60 percent of men and 75 percent of women did not have any superannuation savings prior to the introduction of the industry super funds.

“Super must be improved to maximise how much they put in, the net returns they achieve, and the tax treatment their super receives,” Mr Whiteley said.

The Industry Super Network has continued in its criticism of the fee structures and commissions inherit in private super funds.

“The data shows that the more you pay for super the less you get,” Mr Whiteley said.

“On average, for each additional 1 per cent paid in fees, members of the largest public offer super funds lost almost 1.5 per cent in net returns.

“Only all-profit-to-member funds were found to have had above-average returns and below-average fees. Conservatively, 4 million Australian workers pay year by year for financial advice they don’t receive.”