AIST Policy News - 12 July 2018

AIST Policy News - 12 July 2018


Royal Commission set to examine super in Melbourne

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has today confirmed that it will begin its super-focused hearings in Melbourne on 6 August.

The Commission will be publishing further information on topics to be covered prior to the hearings commencing.

Applications for leave to appear for Round 5 are not yet open.


Senate consults on Budget super measures

AIST has reiterated its concerns about key super Budget measures, which are currently being considered by a Senate Committee.

While AIST is pleased that some of our recommendations to Treasury were incorporated into the bill that contains the ‘Protecting Your Superannuation’ measures, we remain concerned that the proposed fee capping measures and exit costs could be subject to gaming.

Regarding the Budget measures on insurances, AIST recommends that trustees retain the discretion to provide default cover to members aged between 21 and 24 to ensure that members aren’t disadvantaged by the loss of insurance.

Our submission is available here. Senate Economics’ report is due to be released 13 August.


ASIC acts on banks cross-selling super

Australian Securities & Investments Commission (ASIC) has accepted court enforceable undertakings from CBA and ANZ in relation to bank staff providing services determined to be personal advice when they were unauthorised to do so.

The actions of both banks saw customers rolling over their super into bank-owned products.

ASIC has secured an outcome where each bank will pay $1.25 million into a community benefit fund, and cease promoting their own super products when providing general advice to customers.

The case highlights the need for financial institutions to adhere to strict laws around the provision of financial advice and have a clear understanding of the difference between general advice and personal advice.

AIST has long called for legislative amendments to fix the cross-selling of products where sufficient consumer protections are not in place.

Currently, there are no requirements on those providing ‘general advice’ to act in the best interests of their clients.


RG97 fees and costs – review report set to be released

AIST understands the expert review report of RG97 will be publicly released within the next few days.

The expert review of RG97 was initiated by ASIC and is being conducted by Darren McShane.

AIST’s advocacy has consistently centred around the objectives of transparency, comparability, and a level playing field from RG97 outcomes.

We will compare these objectives with the report’s recommendations. 

It is critical that these objectives be achieved so that members’ best interests are protected, and the system can be more efficiently analysed.

For more information, contact Karen Volpato, Senior Policy Advisor at kvolpato@aist.asn.au or on 0419127496


AFCA transition must work for all members: AIST

In a submission to the newly-established Australian Financial Complaints Authority (ACFA), AIST has outlined the importance of ensuring consumers are no worse off as a result of the transition to AFCA.

AIST has identified several issues that need to be resolved to ensure AFCA will be an appropriate, efficient and effective dispute resolution system. This includes the risk that AFCA will not have the required expertise and resources to resolve complaints.

 AIST also called for greater clarity on how financial advisers will be treated under the new framework, the criteria AFCA will apply when referring a complaint back to the trustee, and objectives for publication of dispute data.

Additionally, we have reiterated our concerns about the limited nature of member appeal rights.


AFCA releases funding model

The Australian Financial Complaints Authority (AFCA) has released a consultation paper on the proposed three-phase funding model covering transition, interim and long-term funding.

AIST is preparing a submission which will emphasis that each phase of AFCA funding, particularly the interim model which is to operate for three years, must be transparent and fair, and AFCA should be accountable to their members on funding expenditure.  We will also be pointing out that funds should not cross-subsidise the EDR process for non-super related matters.

AIST will be preparing submission and are interested in your views, if you would like to comment please contact Jake Sims at jsims@aist.asn.au or on (03) 8677 3855 byTuesday 17 July 2018.


Indigenous roundtable

AIST is holding an industry roundtable on August 6 to further explore the experiences of Aboriginal and Torres Strait Islander peoples when interacting with the superannuation system.

The roundtable – which will reflect on relevant evidence presented to date during the Royal Commission hearings - will bring together industry and regulators to examine and better understand the member experience of Aboriginal and Torres Strait Islander peoples. The event will be on 6 August and if you would like more information please contact Jake Sims, Policy & Regulatory Analyst on (03) 8677 3855 or at jsims@aist.asn.au