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Quality of Advice Review handed to government
The Financial Planning Association (FPA) chief executive officer Sarah Abood has called on the Financial Services Minister Stephen Jones to act quickly on the Quality of Advice Review. The final report was handed to the government in December last year.
“The Review is a critical opportunity to reduce the cost of providing advice in Australia and improve the ability of Australians to get access to high-quality professional financial advice,” she said.
“The FPA believes the regulatory costs of providing personal advice must come down to help improve the affordability of advice for consumers and ensure there is a level playing field for the regulatory requirements and standards imposed on advice providers.”
The FPA and its members were encouraged by the principals included in Michelle Levy’s proposal paper last year and its focus on a ‘principles-based approach’ to regulating financial advice.
The FPA says new regulatory requirements must build consumer trust, reduce input costs, facilitate an increase in financial advice providers, ensure accountability and be fair and equitable.
Fees and costs fall for most MySuper superannuation products
Fees and costs fell for most MySuper products in 2022 according to the Australian Prudential Regulation Authority’s 2022 MySuper Heatmap, with APRA estimating that 56% of accounts experienced a drop in disclosed total fees and costs over the year.
The total estimated annual savings to 8.1 million members was $210 million.
“Since [the heatmap’s] introduction, we have seen costs to members reduced, many underperforming products closed, and a drop in the number of members in funds with significantly poor investment performance,” APRA deputy chair Margaret Cole said.
APRA also reported that 28 MySuper products have closed since the first heatmap in 2019. In addition, 1.5 million member accounts with a total $51.6 billion in member benefits have transferred to other products.
APRA also noted that most super funds posted negative growth over the past three years across one or more of the heatmap’s sustainability metrics.
However, the Association of Superannuation Funds of Australia (ASFA) was concerned about APRA’s comments on sustainability.
“APRA’s use of net cash flows as a measure of sustainability is misguided. The purpose of the superannuation system is to pay out pensions in retirement, not hold on to the money in perpetuity,” ASFA CEO Dr Martin Fahy said.
“As the number of people with more superannuation as they head into retirement increases, so too will the amount of money paid out of the system. And that’s a good thing. It demonstrates the system is working.”
New enforceable standard for super funds on insurance
The Financial Services Council (FSC) has released a new standard for how super funds handle group life insurance claims. It sets out a minimum level of service consumers should receive when making a life insurance claim within super and replaces current voluntary guidelines.
The standard includes commitments such as requiring trustees to assist members in making claims by “helping them to complete the form with any supporting information, carrying out an initial eligibility assessment and providing the member with a summary of the claims process”.
It also requires trustees to commit to ensuring life insurers only ask for evidence that they “reasonably need” and to be able to explain to members the relevance of any information requested.
If a life insurer decides not to pay a claim, the fund is required to carry out a review of the life insurer’s decision and to “advocate on the member’s behalf if it believes the claim has a reasonable prospect of success”.
The standard commenced operation on 1 January 2023 on a voluntary compliance basis but will become mandatory on 1 July 2023.
Compliance with FSC’s Standards is compulsory for FSC Full Members and it is designed to complement the new Life Insurance Code of Practice.
UniSuper expands industrial property portfolio
UniSuper has acquired a 13-hectare infill industrial property in Yarraville, Victoria for $105 million, boosting its direct property portfolio.
The acquisition is part of the $115 billion fund’s new advisory mandate to build an industrial property portfolio across major Australian capital cities.
The Yarraville site is expected to benefit from nearby projects including the West Gate Tunnel and the Fishermans Bend Urban Renewal project.
“We are very pleased with this acquisition which we believe when fully redeveloped will be very attractive to industrial and logistics occupiers and an excellent addition to our $6.3 billion unlisted property portfolio,” Nick Stephens, UniSuper senior manager property, said.
“We intend to redevelop the property over the medium term into a modern infill logistics estate and look forward to considering additional opportunities to grow our industrial property portfolio further.”
UniSuper said the relationship with Richmond Bridge (as provider of investment and asset advisory services for the project) and its affiliate HB&B Property (which will provide development management services) will improve UniSuper’s access to investment opportunities in the Australian industrial market.
More SMSF trustees disqualified
The Australian Taxation Office (ATO) has reported that more than 261 SMSF trustees were disqualified in the first quarter of this financial year alone – more than the 253 SMSF trustees that were disqualified in the entire 2021–22 financial year.
The ATO can disqualify trustees if they fail to comply with superannuation laws, or if it is concerned about their suitability to be a trustee.
The ATO says the increased number of disqualified trustees follows an increased compliance effort by the regulator.
The penalty unit amount for breaches also increased from $222 to $275 on 1 January 2023, a 23% rise.
This means trustees that commit some of the most serious breaches – such as lending to members and relatives – could now face a financial penalty of up to $16,500 per trustee.
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