- AIST Policy News – 23 May 2019
Federal election | new research | complaints handling
Coalition Government and superannuation
With the outcome of the federal election now determined, AIST is committed to working productively with the new Coalition Government on policies that improve the retirement outcomes of all Australians.
Over the coming days, the Prime Minister, the Hon Scott Morrison MP, will finalise the appointments he will make to Cabinet and Ministers. Similarly, it may take a few days until the results of the Senate are clear, with several minor parties and independents winning seats. At this stage, it seems likely that the cross-bench senators will hold the balance of the power in the upper house and, therefore, the ability to pass or reject legislation.
While the Coalition headed into the election with a superannuation-lite agenda, there are plenty of meaty issues that it must deal with in its third term.
Once we have the announcement of the minister(s) in charge of Treasury and superannuation, AIST will resume its pro-active engagement with the Government on key policy reforms and other pressing industry issues.
AIST will continue to strongly advocate for policies that improve the fairness and sustainability of superannuation for all Australians which includes; a commitment to raising the Superannuation Guarantee to 12 per cent as scheduled; recognising the need for a strong default system and a targeted approach to tackling the gender super gap.
Another priority will be engaging with the Government on widespread industry concerns regarding the Protecting Your Super package of reforms. This includes seeking clarity on various definitions in the legislation which could make it difficult for funds to meet the implementation deadlines.
AIST research highlights need for tool to compare super funds
New AIST research showing a high level of confusion among members of poorly performing super funds points to the urgent need for a Government-sanctioned online tool to help Australians compare super funds.
The research – commissioned by AIST and conducted by Essential Media – examined the decision-making process of members of bank-owned retail funds. It found that while many retail fund members were confident about their decisions, many were unsure as to how their fund was performing and one in four mistakenly thought they were in an industry fund.
In this week’s media coverage of the research, AIST CEO Eva Scheerlinck said the results showed there needed to be a uniform super comparison tool so that everyone could see how their fund stacked up against its peers.
“Many Australians are languishing in poorly-performing super funds with no easy way of knowing that their fund is a dud,” Ms Scheerlinck said. “In the 21st century, comparing super funds shouldn’t be that hard”.
Ms Scheerlinck said while a robust default fund selection process directed workers into high performing default funds, this was no help to those in non-default or “choice” funds.
“In a compulsory super system, Australians should be able to access independent, reliable and easy-to-understand information to assist them in making informed choices,” Ms Scheerlinck said. “Right now, this isn’t possible, and we know this is a glaring failure of our system.”
ASIC to raise standards, transparency of complaints handling
The Australian Securities and Investments Commission (ASIC) is currently consulting on new standards for Internal Dispute Resolution (IDR) arrangements.
ASIC has previously released research on the consumer experiences of making a complaint and found evidence of ‘consumer fatigue’ and IDR shortcomings.
ASIC’s two key proposals include:
- Updating the existing IDR requirements
- Introducing a mandatory IDR data reporting framework
ASIC’s updated standards would reduce the maximum timeframe for IDR responses from 90 to 45 days. It would also set standards about what funds must include in written reasons for decisions.
Additionally, ASIC is seeking to expand the definition of ‘complaint’ to include complaints made via social media platforms.
Consultation closes on 9 August 2019, with ASIC aiming to release new IDR standards (in a new Regulatory Guide 165) by the end of 2019.
AIST will be making a submission. For further information please contact Karen Volpato via email firstname.lastname@example.org
Super funds to own majority of ASX within decades
New research has predicted superannuation’s rapid growth could see half of the ASX held by super funds by 2033.
The research Rainmaker shows that super funds currently hold 40 per cent of the ASX, growing by 9.4 per cent over the last decade. Within ten years it is expected that 50 per cent of the ASX will be held by superannuation.
Of the portion of the ASX held by superannuation funds, profit-to-member funds own the largest share of the three sectors. 48 per cent is held by profit-to-member funds, 24 per cent by retail funds, with SMSFs accounting for 27 per cent of shareholdings.
The profit-to-member fund sector is the only sector to have grown its shareholding in the past decade.
Rainmaker suggests the rapid growth of superannuation assets may challenge companies that are not used to dealing with larger, active investors.
Despite SMSFs accounting for a large amount of money invested in ASX companies, they were found to have a weak voice among company boards because share ownership is diluted across hundreds of thousands of separate super funds.
How the percentage of Australian equities held by super funds has grown over 10 years:
ASIC issues industry funding reminder to licensees
The Australian Securities and Investments Commission (ASIC) has reminded all financial service entities who have industry funding obligations to factor in the time it may take ASIC to assess applications to cancel or vary their licence, as part of any measures by licensees to reduce the industry levy they are charged for the 2019-20 financial year.
ASIC Commissioner Danielle Press said that ASIC has a licensing service charter that aims to assess 70 per cent of all complete applications within 150 days of lodgement and 90 per cent within 240 days. The application must include all mandatory supporting documentation and information.
Licensees with authorisations which are current on 1 July 2019 are liable to pay various types of industry funding levies related to the 2019-20 financial year, depending on the authorisations and conditions of the licence. Invoices to recover ASIC’s regulatory costs for 2019-20 will be issued in January 2021.