The submission stated that further statutory reforms were needed to tighten the controls around the sale and distribution of superannuation.

“The current regulation of personal advice and general advice is not operating effectively to prevent mis-selling under a financial advice model,” the submission stated.

“Often, banks or other sellers are not seeking to advise the client, but instead trying to sell a product for the overall financial benefit of the corporate group, or with a direct benefit for the bank itself, depending on the exact model utilised.”

The submission acknowledged that general advice sales are lightly regulated compared to personal advice sales with minimal consumer protections.

However, even under a general advice model, a bank can make a recommendation or a statement of opinion that is intended to influence a person in making a decision in relation to a superannuation product, it said.

“ASIC’s consumer research indicates that consumers do not necessarily comprehend the limitations of general advice conversations and, in spite of the warning, some are likely to think that their personal circumstances have been taken into account,” the submission said.

“That was ASIC’s concern with the way in which superannuation products were being sold within ANZ and CBA branches and, in the case of Westpac, via unsolicited phone calls.”

ASIC said that simply moving the dividing line between general and personal advice is not the answer to revolving some of the current issues.

“Rather, ASIC considers that some types of personal advice could be more lightly regulated, [such as] strategic financial planning and budgeting advice, whereas general advice about a particular product, such as superannuation, in a sales context, should be more heavily regulated,” it said.

“This might take the form of incorporating some but not all consumer protections arising under a personal advice model or including new particular tailored consumer protections.”

ASIC has also proposed a restriction on unsolicited sales of superannuation, whether those unsolicited sales be under a personal, general or no-advice model.

“Unsolicited sales are particularly likely to lead to mis-selling because the consumer is totally unprepared to make a decision,” the submission said.

“Given that most Australians will already have a prudentially regulated superannuation product and the inherent danger in superannuation switching through the loss of insurance benefits and the inherent complexity of the product, ASIC sees merit in considering the banning of unsolicited superannuation sales,” it said.