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Trustees raise concerns with AFCA funding
The superannuation sector is concerned about issues arising around fairness if the Australian Financial Complaints Authority (AFCA) moves to a user-pays model for superannuation trustees.
In an independent review of the organisation, the first since AFCA was formed in 2018, the report discussed incentives for early complaint resolution.
“A number of financial firms (both small and large) expressed concerns about the unfairness of situations where firms have to pay substantial complaint-handling fees to go through AFCA’s process, just to be found not at fault,” it said.
“The superannuation sector was also concerned about this becoming an issue for it if AFCA moves to a user-pays model for superannuation trustees, especially because fees are ultimately borne by the members of the superannuation fund and superannuation trustees are required to consider the best financial interests of members.”
Currently, super trustees paid a single super levy each financial year based on projected number of super complaints annually and associated complaint costs, and a proportional contribution to AFCA’s indirect costs not covered by complaint fees. This was divided by trustees based on their size.
Complaints about super fund trustees or advisers made up over 11,000 complaints between November 2018 and October 2020, the fourth most-frequent sector to be complained about.
Super respondents also reported the burden to raise jurisdictional issues had risen under AFCA compared to its predecessor, the Superannuation Complaints Tribunal (SCT).
“Feedback from the superannuation sector in particular was that the SCT was much more proactive in closing matters outside its jurisdiction very early in the piece, while the burden to raise jurisdictional issues falls more to the financial firms when it comes to AFCA,” it said.
“It was also said that this can have an adverse impact on the complainant by raising their expectations, only to be disappointed later in the process.”
AUTHOR
Laura Dew
Laura Dew is editor at Super Review. Prior to joining SR, she spent five years working at Investment Week in the UK covering asset and wealth management.
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