POWERED BY MOMENTUM MEDIA
Rolling the SCT into AFCA a retrograde step
By deciding to roll the Superannuation Complaints Tribunal into the new Australian Financial Complaints Authority the Government has ignored the united voice of the superannuation industry.
It is in these circumstances that the Federal Opposition needs to declare its position on the future of the SCT.
That is why the Government has erred badly in deciding to roll the Superannuation Complaints Tribunal (SCT) into a single ombudsman-style body, the Australian Financial Complaints Authority (AFCA) – a move which was almost universally opposed by the major superannuation industry stakeholders.
When the Government and its advisers decided to accept the recommendations of the so-called Ramsay Review into financial services external dispute resolution (EDR) schemes they should have gone to the trouble of reading the substantial submissions lodged by superannuation funds and superannuation industry representative bodies.
The Government’s advisers would also have done well to have gone to the detail of the actual Ramsay Review report because as much as the Review Panel recommended rolling the SCT into the proposed new AFCA its report provided plenty of very salient reasons why this should not have been allowed to occur.
And primary amongst the reasons the SCT should have been left to carry out its work as an independent statutory body is that it was not broken, it was simply underfunded. To quote from the Ramsay Review report: “The problems facing [the] SCT can be attributed to chronic underfunding and a lack of flexibility in its funding — there is no link between SCT funding and the level of complaints it receives”.
And at least a part of the reason for that under-funding was the mechanism put in place by the Government, specifically that the SCT has been reliant on the Australian Securities and Investments Commission (ASIC) and it is no secret that ASIC was amongst those arguing most strongly for a body such as the AFCA.
It should be lost on no one that ASIC is not the primary regulatory body with respect to superannuation with large funds overseen by the Australian Prudential Regulation Authority (APRA) with self-managed funds being overseen by the Australian Taxation Office. What is more, while ASIC had oversight of EDR schemes such as the Financial Ombudsman Service (FOS) and the Credit Industry Ombudsman (CIO) the statutory nature of the SCT gave it a more independent status.
The Ramsay Review report was right when it stated “the pressures on the SCT will increase in the absence of significant reform”, however the review panel was wrong in assessing that such reform should entail rolling it into a single ombudsman-type body.
The reform measures required to fix the SCT was much simpler than those pursued by the Ramsay Review and should have entailed eliminating the politicking of ASIC by putting in place a much more direct and transparent funding model for the tribunal.
The Hawke Labor Government was absolutely correct in its decision to establish the SCT under its own legislation, recognising that the compulsory nature of superannuation and its deep roots in the Australian workplace relations system strongly differentiates it from financial planning, lending and the other credit services handled by the FOS or the CIO.
Those who adjudicate on disputes for the SCT have a deep knowledge of superannuation and its intricate workplace links, something which risks being diluted over time by a body as broadly-focused as the AFCA.
It is a measure of the complexity of folding a body such as the SCT into the AFCA structure that the tribunal is being allowed two years to clear its existing case-load – a period during which there will be another Federal Election.
It is in these circumstances that the Federal Opposition needs to declare its position on the future of the SCT. Does it support rolling it into an AFCA or does it concur with the majority of superannuation fund trustees who believe it should stand apart as a statutory body dedicated to the resolution of superannuation disputes.
The federal political calendar and the timing of the next election may help avoid a significant retrograde step.
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