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The Australian Financial Complaints Authority (AFCA) has called for industry feedback on its plans to publish a complaints table on super funds and other financial entities from 2018-19.
The table would detail the number of complaints accepted for each relevant financial firm.
AFCA notes that its predecessors had a number of limitations on how they reported particularly in comparing complaints in relation to business size.
In addition, to publishing the number of complaints accepted for each relevant financial firm, AFCA has proposed other changes including reporting twice-yearly and simplifying the sizing measure of businesses.
AIST will be making a submission to AFCA. For any questions and feedback, please contact Senior Policy Advisor, Karen Volpato via email firstname.lastname@example.org before the submission deadline of Friday 3 May, 2019.
The Department of Social Services (DSS) has opened consultation on new means testing rules for lifetime income streams.
The Social Services and Other Legislation Amendment (Supporting Retirement Incomes) Act 2019 was passed on 1 March and establishes new means test rules for lifetime income streams that take effect from 1 July 2019.
In the exploratory memorandum, the DSS states that: “The existing means test rules for lifetime income streams were made for simple income stream products, such as lifetime annuities. Continuing to use them for the wide possible range of complex products that are expected to emerge under the changes to the SIS Regulations in the near future would leave the income support system open to exploitation, and could distort people’s financial decisions in retirement.”
The new means test rules aim to encourage the development of lifetime income stream products and ensure that the assessment of lifetime income streams is fair and reflects the value of the products.
This consultation will be open until 30 April 2019.
The Australian Investments and Securities Commission (ASIC) has called on superannuation trustees to provide helpful and balanced communications to their members regarding the Protecting Your Super package (PYSP) of reforms, which are due to take effect on 1 July 2019.
The PYSP reforms are designed to protect the superannuation savings of Australians from erosion due to inappropriate fees and insurance premiums as well as reduce unintended multiple low balance accounts.
In a media release issued today, ASIC Commissioner Danielle Press said erosion of superannuation through unnecessary fees and premiums for potentially unsuitable insurance was a significant issue for many Australians.
”Most consumers are not aware of the fees and insurance premiums charged to their superannuation accounts or the steps they can take to avoid unnecessary reduction in their super balance,” Ms Press said. ASIC has also updated its MoneySmart webpage to include consumer-focused information regarding the Protecting Your Super reforms to assist trustees to inform members about the PYS changes.
The webpage includes information about the cancellation of insurance, the removal of exit fees, the fee limit on low balance accounts and new ATO powers to transfer inactive accounts.
ASIC has previously written to trustees outlining its expectations relating to member communications associated with the PYS package and is encouraging trustees to refer to this content where appropriate. However it has also warned that a reference to the MoneySmart website alone “is not sufficient to ensure the communications are balanced”.
Meanwhile, the ATO has issued an 'Issues Log and General Questions Register' on Protecting your Super Package.
Some bank and insurance-owned super funds are charging almost twice as much in fees compared to profit-to-member funds, according to updated Superratings research.
The Fee and Performance Analysis 2019 – which received wide media coverage this week including in this consumer-focussed yarn – represents a three year update on previous AIST-commissioned research.
The research drills down into the differences between the fees and returns across the super sector and finds significant disparities between the fees charged by for-profit retail funds and profit-to-member funds. It compares the fees of MySuper products, Choice products and then breaks down the fee difference by product and asset class, to provide insight into the average annual fees paid for super account balances of $5,000, $50,000 and $250,000. The biggest difference is in the fees charged by retail funds on Choice products.
The typical annual fee paid by someone with a $50,000 super balance in a High Growth investment option offered by a retail fund is $942. This compares to an average $591 in fees charged by a profit-to-member for the same product. The research also compares the investment returns of retail funds and profit-to-member funds over the past three years. In terms of returns, SuperRatings data shows that median profit-to-member MySuper funds delivered 6.47% over the past 3 years to 31 December 2018, well above the 4.94% achieved by the for-profit retail super funds. The research notes that historical comparisons between fees are harder now, given that the introduction of new fee and cost disclosure laws (RG 97) has changed the way funds disclose their fees.
The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have written to super funds to reinforce the importance of oversight of fees and other charges being deducted from members' super accounts for third party payments.
Noting the fee-for-no service cases uncovered by the recent Hayne Royal Commission, the joint letter from ASIC and APRA calls on funds to review their governance, risk management and oversight processes to ensure that only authorised and appropriate fees and other charges are deducted from members' superannuation accounts.
Trustees are required to complete the review by June 30 this year and to address any identified areas for improvement in a timely manner.
The Australian Prudential Regulation Authority (APRA) has signalled it will adopt a much tougher approach to enforcement.
APRA’s new Enforcement Approach, published earlier this week, sets out how APRA will approach the use of its enforcement powers to prevent and address serious prudential risks, and to hold entities and individuals to account. It is based on results of its Enforcement Review, conducted by APRA Deputy Chair John Lonsdale, and indicates that the regulator has an increased willingness to use its formal powers, including its new directions powers, particularly where an entity is uncooperative.
APRA Chair Wayne Byres said APRA would implement all seven recommendations from the Review including:
The Insurance in Super Code is being reviewed in response to the Protecting Your Super legislation/regulations.
The Code owners – which include AIST- have agreed to revise the Code and circulate a draft Code to members for comment by early May.
Contact AIST’s head of advocacy, Ailsa Goodwin at email@example.com for further information.
17 April 2019