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AIST Policy News - 5 December 2019

Policy News

ASIC report highlights need for continuous improvement in financial advice

Following its report last year into how the major banks and insurers offer and deliver financial advice, ASIC has this week released a similar in-depth analysis of financial advice in superannuation.

While ASIC’s report found that personal advice provided by super funds was ‘generally appropriate’, it also points to some funds needing to lift their game.

Overall, one in two pieces of advice provided by the 25 super funds (from across the industry) surveyed by ASIC were found to be fully compliant, 36% were not fully compliant (though the member was not at risk of suffering detriment), while 15% were not compliant.

Commenting on the report in the media this week, AIST’s CEO Eva Scheerlinck noted the report’s overall findings reinforced that – on average - members were better off getting financial advice from their superannuation fund than from the four major banks or AMP, where only one in four pieces of advice were fully compliant in a similar survey across those entities conducted by ASIC in 2018.

Ms Scheerlinck said ASIC’s latest report – which provides practical tips and guidance to improving the quality of financial advice in superannuation – would be a useful tool to help all super funds focus on continuous improvement.

Govt moves to set up super consumer body

The Government has this week called for expressions of interest on its plans to establish a consumer advocacy body for superannuation.

This follows the government’s commitment in the 2019–20 Budget to support the establishment of the advocacy body, which was a recommendation of the Productivity Commission’s report Superannuation: Assessing Efficiency and Competitiveness.

Interested parties are invited to respond to the EOI to provide feedback on how the body should be established and funded, its functions, and its governance and accountability arrangements.

The EOI will be open for a period of six weeks until 13 January 2020. Further guidance on responding is available on the Treasury website: www.treasury.gov.au/consultation/c2019-38640

ASIC releases updated RG 97 on fees and cost disclosure

ASIC has released an updated version of Regulatory Guide 97 Disclosing Fees and Costs in Periodic Statements which explains how product issuers and platform operators should disclose fees and costs.

The revised guidance follows an external review undertaken on fees and costs disclosure by Darren McShane and consultation on ASIC’s response (CP308) to the review. The main changes to fees and costs disclosure made through the updated RG 97 are:

  • a re-grouping of values in the re-named fees and costs summary to more clearly show fees and costs that are ongoing and those that are member-activity based;
  • a simplification of on-going fees and costs into three groups – Administrative, Investment and Transaction;
  • not requiring the disclosure of property operating costs, borrowing costs and implicit transaction costs;
  • including a single ‘Cost of Product’ figure in a PDS; and
  • simplifying how fees and costs are presented in periodic statements.

The new fees and costs disclosure requirements in updated RG97 will apply to:

  • PDSs issued on or after 30 September 2020, and
  • periodic statements (ongoing or on exit) for a reporting period that commences on or after 1 July 2021.

In the first quarter of 2020, ASIC intends to hold a series of public roundtables with industry to ensure the requirements are fully understood.

AIST remain concerned that ASIC has continued to defer platform disclosure recommendations made by the external review and will continue to advocate that the fees and costs of underlying accessible products should be disclosed on the same basis as for equivalent non platform operators.

It is understood that ASIC will undertake focussed work on fees and costs disclosure on platform arrangements in 2020.

For further information please contact AIST’s Policy Analyst, Zach Tung at ztung@aist.asn.au

UniSuper’s Benedict Davies recognised for his contribution to policy

UniSuper’s Benedict Davies has taken out the AIST ‘Outstanding Staff Member’ Award at last night’s Awards night.

Mr Davies, who is UniSuper’s Manager, Industry and Public Policy, received the Award for his contribution to the analysis and debate of super policy issues. A long-standing member of AIST’s policy committee, Mr Davies has been actively involved in helping shape superannuation policy, always paying close attention to any reforms that may impact UniSuper’s defined benefit division.

This work has delivered benefits for his fund, its members and the wider public.

For a full list of the recipients at AIST’s Awards night please click here.

MTAA and Tasplan finalise move to merge

AIST member funds MTAA Super and Tasplan have now finalised an unconditional agreement to merge on 1 October 2020.

MTAA Super oversees over $13 billion in retirement savings for workers in the motor trades and allied industries. Tasplan is a multi-industry not-for-profit fund managing $10 billion in assets. The merger will create a combined national super fund with more than $23 billion funds under management and approximately 335,000 members.

The combined fund’s corporate and trustee functions will be based in Canberra, with satellite offices in Tasmania and other locations, in recognition of the merger’s ‘best of breed’ approach. MTAA Super’s administration services will be moved in-house to Tasplan’s Hobart facilities.

ASIC bans cold call sales of direct life insurance

ASIC has today announced the implementation of a ban on unsolicited ‘cold call’ telephone sales of direct life insurance and consumer credit insurance (CCI).

The ban -to take effect from 13 January 2020 - will address poor sales practices that have led to unfair consumer outcomes.

The ban is consistent with recommendations made by the Financial Services Royal Commission and provides protections to consumers that complement broader legislative reform by the Government.

The ban complements enforcement action ASIC has undertaken for past poor sales conduct by insurers.

Last week, CommInsure was fined $700,000 after pleading guilty to unlawful unsolicited telephone sales of life insurance.

ASIC and APRA issue updated MoU

In an updated Memorandum of Understanding (MoU), ASIC and APRA have committed to strengthen engagement, deepen cooperation and improve information sharing.

The MoU sets out a framework for engagement, including coordination, cooperation and information sharing, between APRA and ASIC and reflects the agencies’ intention to maintain a proactive, open and collaborative relationship.

The updated MoU follows on from the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry requiring formalised co-ordination and co-operation between the regulators. APRA and ASIC are also working closely with Government on the legislative changes required to implement these recommendations.

05 December 2019