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End to hawking welcomed
The Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 introduced to Parliament on Thursday will end hawking of poor quality superannuation funds and ultimately boost retirement savings of Australians, according to Super Consumers Australia.
The advocacy group said the cost of being sold into a poor quality super fund could be the difference between a comfortable retirement or struggling to pay the heating bill.
The group’s director, Xavier O’Halloran, said: “We’re especially pleased that the new legislation makes it crystal clear that it’s illegal to hawk a member of a MySuper product into a choice product offered by the same fund.
“The complementary reforms announced in the Federal Budget to end the creation of duplicate accounts make it even more important that people end up in a single quality fund and are not sold a lemon.
“The expanded consumer protections will see much more scrutiny of the conduct of superannuation funds and their impact on individual members. This is about getting the balance right between system wide goals and benefiting individuals.”
O’Halloran said the group noted the government was still to act on the recommendations regarding financial advice, and in particular the charging of ongoing advice in super, as the Royal Commission found the advice was of little to no value and had an impact on eroding people’s retirement savings.
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The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
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