Tell em' they're dreamin': AMP says vibe of new super plan hurts
THE 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.
THE 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, Darryl Kerrigan wins a High Court battle to stop the government 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 laws 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 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 in a pre-existing contract.It also rejected claims 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 because a number of non-employee advisers has 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, though this was still a long way off."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 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 influential parliamentary joint committee on corporations and financial services this week called for the bill to be passed. However, committee members from the Coalition - which opposes the changes - cited the constitutional issue as a concern in a dissenting report.