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- Super trustees’ compliance gaps exposed
- Less than one third of Australians know the SG rate
- ASFA lobbies to close the super gender gap
- Compensation Scheme of Last Resort to start next April
- National Anti-Scam Centre launches
- OnePath receives $1.46 million fine
- APRA told to focus more on the superannuation industry
Super trustees’ compliance gaps exposed
The Australian Securities and Investments Commission (ASIC) is calling on superannuation fund trustees to deal appropriately with members’ money when it is first received and to do more to consolidate duplicate member accounts within their funds.
This follows an ASIC review of a sample of 12 superannuation trustees to understand how they met their requirements for dealing with money received as set out in the Corporations Act 2001.
“Our review identified compliance gaps – all but one trustee failed to ensure their practices or disclosure aligned with their obligations,” ASIC Commissioner Danielle Press said.
As financial product providers, super fund trustees are required to safeguard incoming funds in certain ways as prescribed under the Corporations Act 2001.
“While no significant individual member impact was identified in our review, we were very concerned to find the trustees hadn’t given enough consideration to these important obligations, in some cases for decades, potentially putting members’ money at risk,” Press said.
In a separate review of nine trustees of both industry and retail super funds, ASIC assessed how the trustees were meeting obligations to annually identify and automatically consolidate duplicate member accounts within their fund.
“Trustees should be proactively merging duplicate member accounts within the fund to not only help their members avoid extra fees but also to ensure their funds avoid costly remediation in the future. However, our review highlighted that they are not doing enough,” Press said.
Less than one third of Australians know the SG rate
More than two thirds of Australians (71%) do not know the current superannuation guarantee (SG) rate, according to survey commissioned by the Australian Retirement Trust (ART).
The survey of more than 2,000 Australians, run by YouGov, and conducted before the increase to 11% on 1 July, found that men are more likely than women to know the rate (35% compared to 24%) and Gen Z are the generation most likely to be unsure (29% compared to 17% for Millennials, 22% for Gen X and 19% for Baby Boomers).
“Super is the largest and longest-term asset most of us will have and when it comes to engaging with your super fund, the sooner the better,” Australian Retirement Trust chief executive officer Bernard Reilly said.
“These survey results suggest Australians don’t know enough about their super and as we see the SG rate increasing to 11% on 1 July it’s important to take note of where your super is going and how it’s working for you.”
ASFA lobbies to close the super gender gap
The Association of Superannuation Funds of Australia (ASFA) continues to call on the government to reduce the gap in retirement savings between women and men, currently sitting at around 25%.
“Compulsory super should be extended to paid parental leave (PPL), including the Government’s PPL scheme where a family can claim up to 100 days of paid leave at the minimum wage,” ASFA deputy chief executive officer Glen McCrea said.
ASFA also advocates for a ‘Super Baby Bonus’, in which a $5,000 contribution would be made by the government in the super accounts of women on the birth of a child.
Analysis conducted by ASFA shows that the combination of these two policy changes could almost fully offset the impact of a year off work on a woman’s superannuation balance.
“A core goal of superannuation policy should be to improve equity in the super system – including between men and women. These proposed policy changes are a big step in the right direction,” McCrea said.
Compensation Scheme of Last Resort to start next April
Consumers who are victims of financial misconduct will be able to apply for compensation from the the Compensation Scheme of Last Resort (CSLR) from next April, following the passage of The Treasury Laws Amendment (Financial Services Compensation Scheme of Last Resort) Bill 2023 and associated bills through the Senate.
“The CSLR will facilitate compensation of up to $150,000 to consumers who have an unpaid determination from the Australian Financial Complaints Authority relating to personal financial advice, credit intermediation, securities dealing and/or credit provision,” Assistant Treasurer and Minister for Financial Services, Stephen Jones, said in a statement.
The government will fund establishment of the body that will operate the CSLR through to the end of the 2023–24 financial year, after which the scheme will be funded by industry.
Jones said the successful implementation of the CSLR will further strengthen consumer trust and confidence in Australia’s financial system.
National Anti-Scam Centre launches
The Albanese Government has also launched the National Anti-Scam Centre (NASC) in its battle against scammers. The centre will bring together a combination of expertise and resources from government agencies, law enforcement and the private sector into what it calls fusion cells.
The NASC is tasked with disrupting scammers before they reach Australians, raising consumer awareness about the nature of scams and how to avoid them, and linking scam victims to services when they’ve lost money or had their identity compromised.
Fusion cells are time-limited taskforces designed to address specific, urgent problems. The NASC will coordinate a series of fusion cells with different participants to target particular scam types.
It’s first fusion cell will be led by the Australian Competition & Consumer Commission (ACCC) and ASIC and include representatives from the banks, telecommunications industry and digital platforms. It will identify methods for disrupting investment scams, which currently account for over 50% of all scam losses and cost Australians over $1 billion a year.
“Investment scams lead to the highest level of reported individual losses and cause emotional devastation for victims,” ACCC deputy chair Catriona Lowe said.
“That is why the National Anti-Scam Centre is prioritising investment scam disruption as its first fusion cell in an initiative that facilitates timely action by finance, telecommunications and digital platforms to stop scammers.”
OnePath receives $1.46 million fine
OnePath Custodians (OPC) has been fined $1.46 million by the Australian Prudential Regulation Authority (APRA) for failing to direct member contributions to a MySuper product.
After becoming aware that OPC failed to direct 125 default member contributions to a MySuper product from mid-2022 onwards, APRA issued infringement notices for fines imposing a cumulative penalty of $1,464,350. The trustee cannot use members’ money to pay the fine.
OPC is owned by Insignia Financial, which was formerly IOOF Holdings Limited.
“It is imperative that trustees adhere to the law and direct members’ money to the correct product in a timely manner to ensure their best financial interests are protected at all times. APRA takes these provisions seriously and will act swiftly in deploying its enforcement toolkit where trustees fall short of our expectations,” APRA deputy chair Margaret Cole said.
“In addition to today’s enforcement action, APRA is closely monitoring OPC to ensure any members who suffered financial losses as a result of these breaches are fully compensated as soon as possible,” Cole added.
APRA told to focus more on the superannuation industry
Meanwhile, the regulator itself needs to focus on better identification and understanding of risks in superannuation, according to the Financial Regulator Assessment Authority’s review of APRA.
“APRA’s focus on emerging and industry-specific risks relevant to superannuation, is not yet as well-developed compared with its more mature regulation of the banking and insurance industries,” FRAA said in the review.
FRAA said APRA should direct greater attention to risks such as: unlisted asset valuation practices; more members moving to the retirement phase; increasingly complex investment strategies undertaken by trustees; and the development of complex income-stream products.
Recommending APRA increase its efforts to identify risks in super, including emerging and systemic risks, and their potential consequences, was one of five recommendations made in the review.
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