The Australian Securities and Investments Commission (ASIC) today provided some general guidance on the application of the financial services licensing regime to providers of superannuation calculators.

ASIC is of the view that the mere provision of a superannuation calculator does not mean the provider will always need an AFS licence or authorisation under the Corporations Act.

Superannuation calculators, typically accessible online, are mathematical tools that allow consumers to input various facts such as estimated future contributions and estimated retirement age. The calculator then derives an estimated final superannuation lump sum or pension, based on assumptions relating to matters such as future fund earnings and inflation. Superannuation calculators have been established by some superannuation fund trustees, amongst others.

Superannuation calculators can assist consumers in planning for their retirement. They can help a consumer assess if their current superannuation contributions are likely to yield sufficient income in retirement, to satisfy the consumer’s needs and aspirations. They can also assist consumers to understand the impact of certain costs on their superannuation savings. They are useful educational tools as they can help illustrate the beneficial effects of making regular contributions over a long period of time or salary sacrificing into superannuation. While calculators are useful, it is important that consumers are made aware of their limitations.

‘ASIC is aware that concerns have been expressed that an AFS licence or authorisation is always required for the provision of a superannuation calculator. This concern is based on the view that the provision of a calculator involves the giving of financial product advice. We are issuing this guidance to clarify that we do not think a licence or authorisation will always be required’, Executive Director of Financial Services Regulation, Mr Ian Johnston said.

In administering the law, ASIC accepts that superannuation calculators can often be provided without a licence or authorisation, particularly where all of the following are satisfied:

1. The calculator allows the consumer to alter all ‘default settings’ for the various assumptions;
2. any default settings are based on industry-wide rather than fund-specific information ;
3. the calculator is accompanied by a clear explanation of its purpose and limitations, including an explanation of the assumptions (including the limitations of those assumptions) and a clear statement that the calculator is intended to illustrate the broad impact of consumer choices and is not a prediction of a consumer’s final superannuation benefit;
4. the calculator is accompanied by a clear statement to the effect that the calculator is not intended to be relied on for the purposes of making a decision in relation to a financial product, including a decision in relation to a particular superannuation fund or strategy, and that consumers should consider obtaining advice from an AFS licensee before making any financial decisions;
5. the calculator forms part of, or is linked to, other educational material and is distinct from any fund’s promotional or marketing material.

A licence or authorisation is more likely to be required if, the calculator is intended to, or might reasonably be regarded as intended to encourage consumers to make a decision about a particular financial product or strategy.

‘The need for a licence or authorisation will always depend on a consideration of all the circumstances (including whether an entity can rely on an exemption under the Corporations Act). In general, if you provide financial product advice in addition to the operation of a calculator, you will need a licence or authorisation for providing advice, whether the superannuation calculator involves the provision of advice or not’, Mr Johnston said.