Tell 'em they're dreamin': AMP says vibe of new super plan hurts
WEALTH management giant AMP has invoked the section of the constitution made famous in The Castle in a push to water down laws requiring the transfer of billions in superannuation savings to commission-free accounts.
WEALTH management giant AMP has invoked the section of the constitution made famous in The Castle in a push to water down laws requiring the transfer of billions in superannuation savings to commission-free accounts.In the 1997 film, fictional Melbourne man Darryl Kerrigan wins a High Court battle to stop the government from acquiring his home because the purchase would not have occurred "on just terms".Now AMP says the same section of the constitution is at risk of being breached by bills before Parliament.But while the legal debate in the film was about acquiring a house, this is a dispute about taking away advisers' income. Under the proposed laws, trustees of super funds will be required to transfer all balances held in default super funds to low-cost, commission-free, MySuper products by July 2017.The government says this will save fund members hundreds of millions in fees a year because they will no longer be paying for services many don't use.But AMP, which has the largest financial advice network in the country, says it has obtained preliminary legal advice that raises "doubt about the constitutionality" of the forced transfer of default balances.In a submission to a parliamentary committee, AMP said the compulsory transfer would deprive fund trustees and advisers "of their entitlement to fee income" that had been agreed to in a pre-existing contract.It also rejected claims that the government was allowing a gradual "transition" to the new regime by delaying the start date to 2017."The requirement . . . does not really provide a transition at all," AMP's submission said."On the contrary, it is an overt taking away of the existing entitlement to the remuneration that the advisers currently receive through existing contractual arrangements."AMP said it had sought the legal advice after a number of non-employee advisers raised concerns about a breach of section 51 (xxxi), which deals with the acquisition of property "on just terms".It urged the government to scrap the "retrospective elements" of the bill, saying this would "remove constitutional doubts".The chief executive of the Association of Financial Advisers, Richard Klipin, said there was likely to be a legal challenge to the bill from advisers in its current form."It will absolutely end up being tested in court at some point in time if it goes through as is," Mr Klipin said. The government, however, appears less concerned.Treasury officials who were asked about the constitutional concerns said the government had received legal advice that the legislation would operate as intended.Labor members of the parliamentary joint committee on corporations and financial services this week called for the bill to be passed. But committee members from the Coalition which opposes the changes cited the constitutional issue as a concern in a dissenting report.