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Industry funds urge comparability on member switching
The fees, costs and performance reporting of retail superannuation funds should be aligned with those of MySuper funds to provide greater transparency when members are switched into poor performing, high cost super products, according to the Australian Institute of Superannuation Trustees (AIST).
Reflecting concerns about members receiving advice to switch funds, the industry funds body has told the Australian Prudential Regulation Authority (APRA) that such a move represents an “important baseline issue so that prudential standards may work more effectively”.
“Without such alignment, APRA cannot easily identify, for example:
• The poor value impact of conflicts of interest and other forms of misconduct on member retirement savings.
• Systemic switching of members into poor performing, high cost superannuation products.
• Whether investment performance is delivering fair value.”
Elsewhere in its submission to APRA, the AIST has pointed to issues raised before the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry around superannuation funds operating within vertically-integrated structures.
It said it believed prudential standards needed to aid meeting the members’ best interests test and noted the issues raised before the Royal Commission including:
• Conflicts arising from multiple directorships.
• Conflicts associated with related party arrangements.
• Conflicts arising from a responsiveness to shareholders as opposed to members of the superannuation fund.
• Conflicts arising from entities which are the trustees of an RSE as well as the RE of a managed investment scheme.
• How conduct which is deliberately not in members’ best interest is to be addressed.
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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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