CONSUMERS could be the ones to miss out with the Government rushing its bill to end the grandfathering of commissions on investment products

The Financial Planning Association of Australia (FPA) is supporting the phasing-out of commissions on investment products as recommended by the Financial Services Royal Commission, but it claims the Bill introduced by the Government today has no additional details on how this will be done to ensure consumers benefit from the change.

“Removing commissions must result in a genuine reduction in product fees or the rebating of the commissions to consumers, and we haven’t seen details of how the Government expects this will work,” said FPA CEO Dante De Gori.

"Just because a financial planner stops receiving commissions, doesn’t actually mean the consumer stops paying them through their investment fees," he said. "The cost of the commission is embedded in the fees, which is why the rebating and monitoring arrangements are so important."

Retirees could lose even more by giving up favourable tax and pension treatments on their existing investments if they are forced to move to new investment products, with the bill making no provision to prevent this impact, the FPA chief said.

“We are disappointed the Bill allows only 17 months to complete a change that the FPA has recommended could take up to three years if the Government is to avoid unintended consequences for consumers, and the financial services ecosystem," Mr De Gori said.

“More than 50 percent of FPA members have already made the transition and derive no revenue from commissions on investment and superannuation products. So it’s not about whether our members are willing, they are, it’s about making sure the transition is done carefully and diligently to protect the interests of everyone, especially consumers,” Mr De Gori said.

The FPA is urging the Federal Government to provide a full three-year transition period and release further details of the proposed rebating and monitoring scheme so they can be examined by the industry.

About the FPA
The Financial Planning Association of Australia (FPA) represents the interests of the public and Australia’s professional community of financial planners. With a growing membership of more than 14,000 members and affiliates, the FPA is home to Australia’s 5,700 CFP professionals. Building on a 20 plus year legacy, the FPA represents the changing face of the financial planning profession. www.fpa.com.au

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THE Tax Practitioners Board (TPB) today welcomed the release of a discussion paper in the review of the TPB and the Tax Agent Services Act 2009 (TASA). This discussion paper follows initial submissions on the terms of reference issued in April 2019.

The review, led by the independent review head, Keith James, looks to assess the effectiveness of the TPB and TASA in regulating tax practitioners.

The newly released discussion paper outlines the preliminary views of Mr James on key matters, including the TPB’s governance arrangements, the registration and education requirements, the TPB’s compliance and sanction powers, and the regulation of tax (financial) advisers.

TPB CEO, Michael O’Neill said the board has worked closely with the reviewer, Mr James, to provide all the information needed to support the review.

"The TPB embraces the opportunities presented by this review," Mr O'Neill said. "The discussion paper outlines our preliminary views on certain matters and these have been provided to assist in informing the discussion paper and consultation process.

"From the review, we hope to see law reform that strengthens our role to support and protect the public, including consumers of tax services, to ensure tax advisers act lawfully and ethically, and enhance community confidence in the integrity of the tax system."

All parties with an interest in the review are urged to make a submission on the discussion paper, found at Treasury’s website www.treasury.gov.au/review/tax-practitioners-board

Submissions close on 30 August 2019.
 

About the Tax Practitioners Board:

The Tax Practitioners Board regulates tax practitioners in order to protect consumers. The TPB aims to assure the community that tax practitioners meet appropriate standards of professional and ethical conduct. Follow TPB on Twitter @TPB_gov_au, Facebook and LinkedIn.

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“MASTER Builders Australia urges the Parliament to support the Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill 2019 which will give much needed protection for the entitlements of construction workers and more transparency to the funds that manage them.” That is the opinion of Denita Wawn, CEO of Master Builders Australia. 

“Worker Entitlement Funds are an important part of the building and construction industry and oversee more than $3 billion in workers redundancy money and other leave entitlements,” Ms Wawn said.

“However despite their size, worker entitlement funds, unlike superannuation funds, have almost no specific legislation to govern their activities and ensure workers money is managed properly."

The Heydon Royal Commission examined and exposed dozens of examples where Worker Entitlement Funds were deficient in their operation. Some of these included: 

• Giving union members more services and support than non-union members, despite all workers paying in the same amount of money.
• Providing financial support to union members taking illegal strike action.
• Funding the cost of union officials under the guise of apprentice or welfare 'support officers'.
• Using the interest earned from workers money to pay 'dividends' to registered organisations instead of returning interest back to workers. 

“Although worker entitlement funds are recognised under our industrial regime, there is nothing that stops them engaging in practices which would be otherwise illegal under the Fair Work and Superannuation laws – such as actively discriminating against non-union workers, breaching strike pay laws, and siphoning-off the interest earned from contribution instead of giving it back to workers,” Ms Wawn said.  

She said, despite having billions under management, many would be surprised to learn that Worker Entitlement Funds don't even have to: 

• Disclose the commissions and kick-backs paid to registered organisations.
• Explain to workers how and when they are entitled to claim payment from the fund.
• Issue annual reports or provide financial statements.
• Explain or disclose what fees and charges will be deducted from workers money.
• Tell workers how funds will use their money, or give them any say about how it should be used. 

“Worker Entitlement Funds are an important part of the building and construction industry and it is in everyone's interest to ensure they operate properly,” Denita Wawn said. 

“If passed, these laws will simply stop any dodgy practices and prevent accusations that Worker Entitlement Funds are nothing more than union slush funds which skim workers' money behind closed doors,” she said. 

“Nothing in the proposed laws will stop or prevent those Worker Entitlement Funds who do the right thing continue their important role in managing billions of workers leave and redundancy money.

“There is absolutely no justification or plausible reason why these funds should not have to comply with basic governance and financial management standards that apply in other funds, such as superannuation funds,” she said. 

“Building and construction workers deserve the same protections that all other workers enjoy and the community rightly expects,” Ms Wawn said.

www.masterbuilders.com.au

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NEW data from an industry association has revealed that one in three Australian organisations admit to making employee payment mistakes every pay run, and the CEO and CFO never know about it.

Across 45 percent of organisations, it’s the employees who alert managers to the errors.

The Australian Payroll Association (APA) – Australia’s leading network for payroll training, consulting and advisory – surveyed 601 payroll managers across the country’s big and small businesses, and across myriad industries.

The research found that of the 33 percent of payroll managers admit to making employee payment or entitlement blunders at least once a month, and a further 21 percent admitted to making mistakes every quarter.

Surprisingly, across 45 percent of these organisations, the employees are the first to alert the organisation about the mistake. In 32 percent of these organisations, the CEO, CFO or equivalent are not told about the payment errors.

The bigger the organisation, the more mistakes made

The survey also revealed that the bigger the organisation, the higher the rate of mistakes across employee pay and entitlements. Sixty-nine (69) percent of organisations with more than 10,000 employees made errors at least every month, compared with 55 percent of organisations with 1001-5000 employees, 45 percent of organisations with 500-1000 employees, 24 percent of those with 201-500 employees, 21 percent of those with 51-200 employees, and just 16 percent of businesses with up to 50 employees.

CEOs and CFOs are less likely to be privy to these mistakes in larger organisations. In 49 percent of companies with more than 1000 employees, CEOs and CFOs are not told about employee payment errors. In companies with 200 or fewer employees, just 18 percent of CEOs, CFOs or the equivalent are not told about the errors.

On the other hand, smaller companies had a higher incidence of late payments and delayed superannuation contributions. One in five (20 percent) of micro-businesses (1-10 employees) made late salary payments compared with just 11 percent of large organisations with more than 1000 employees. Twenty-two (22) percent of micro-businesses also admitted to paying superannuation contributions late compared with just 3 percent of organisations with more than 1000 employees.

Healthcare organisations make the most frequent errors

Organisations in the healthcare, social assistance and disability services industries had the highest rate of employee payment errors, at 43 percent, compared with other industries. This sector also had the highest rate of late payments, at 12 percent.

Surprisingly, 18 percent of financial services organisations admitted to making late superannuation contributions – higher than in any other industry.

Australian Payroll Association CEO Tracy Angwin said, “With more companies facing employee underpayment scandals it has become crucial for organisations to minimise the incidence of payroll errors. Accurate pay and entitlements involve making not only the correct pay and award calculations, but accurate leave entitlements and superannuation contributions within the correct timeframe.

"When payment mistakes occur, companies need to be transparent not only with the employee but with their superiors so that the errors can be corrected, and steps taken to avoid them in the future.

“While our data found that most of these payment inaccuracies were discovered by payroll personnel a large portion were only alerted to these errors when the affected employee flagged it as an issue. Companies can mitigate the risk of widespread payroll miscalculations by ensuring payroll staff are adequately trained or by using a specialist external payroll advisor, such as the Australian Payroll Association.”

About Australian Payroll Association

Australian Payroll Association is Australia’s leading network in payroll training, consulting and advisory for employers. It offers end-to-end payroll process reviews, compliance auditing, specialist recruitment services, payroll qualifications and training courses, and a membership program. Established in 2010, Australian Payroll Association offers the only nationally accredited payroll qualifications at Certificate IV and Diploma level through its registered training organisation, Australian Payroll Institute. It also holds annual events including its national conference and end of year seminars, in addition to releasing an annual Payroll Benchmarking Report. It also has a regular digital podcast series called ‘Talking Payroll’. 

austpayroll.com.au

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