Update from FSC CEO Sally Loane
As I write this, with only a couple of weeks of campaigning left before the May 18 Federal election, it's timely to reflect on the very different sets of policies for the economy and financial services presented by the two major parties, some particularly affecting superannuation. Also, as we know, both parties have committed to implementing the recommendations of the Royal Commission, however a couple of key reforms have deliberately not yet been defined clearly by the politicians.
The election verdict? As a veteran of many state and Federal election campaigns (I was a political journalist back in the pre-social media days), my learning is not to base predictions solely on polls or media commentary. Elections are unpredictable beasts and today, even though we have more communication platforms than ever before, they're mostly echo chambers, and rarely reflect what the vast majority of Australians are thinking about how they'll place their vote.
What we can be sure of is that whoever wins will have to deal with yet another hybrid and very likely hostile Senate cross-bench.
Speaking of communications, I hope you're getting value from our new fortnightly FSC Update, where the policy, tax and legal teams deliver just the right amount of information on the latest regulatory and legislative issues, with links to the detailed reports. The content is members-only and the FSC is the only industry organisation which can give its members an integrated view right across the financial services spectrum.
Finally, whichever way Australia votes on May 18, the FSC is fully prepared for advocating for you, our members, in Canberra, and engaging with regulators and Treasury to navigate the enormous range of reform and change in the post-Royal Commission environment.
Below I have detailed some of the current issues.
Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry
The entire financial services industry went through an incredibly challenging time last year, and this included the FSC and all our staff. We provided tens of thousands of documents under mandatory notices to produce, wrote several detailed submissions and developed the policy roadmap for the life insurance industry. Members of the FSC team worked till late at night providing detailed factual reports of the day's examinations, which we distributed to members.
Following the Government's release of Commissioner Hayne's report on February 4, the FSC participated in the Royal Commission lock up in Canberra, enabling us to provide our members a comprehensive briefing and written communications, including FSC positions on all 76 recommendations. The FSC has and continues to develop policy responses for key recommendations.
Corporate Collective Investment Vehicle (CCIV)
In my last update, I said I would have more to say around the benefits to the community from efficient investment products and services. In an important win for the FSC and investors, there have been major improvements in the proposed CCIV regime, particularly relaxing the independence requirements on the CCIV’s depository. This could not have happened without the extensive work of several FSC members - a demonstration of the value of collaborative efforts undertaken by a peak membership body. We continue to push for improvements to the regime to make it work at low cost for fund managers and consumers.
Federal Budget 2018/19
As usual, the FSC attended the Budget lock up, and provided members with updates and reports that evening. We were pleased the Budget largely kept the superannuation setting unchanged, and increased flexibility for accumulation, but we expressed disappointment with the lack of reform around a comprehensive product rationalisation scheme and reform to the non-resident withholding tax issue.
Protecting your Super package
We have continued our engagement with government and stakeholders on the Protecting Your Super package, an announcement of the previous 2017/18 Budget. The FSC has been successful in securing key changes to the draft legislation, including to make the implementation of the fee cap more practical.
We are working with FSC members and ASFA on a comprehensive consumer awareness campaign ahead of the July 1 deadline for the legislative changes. Please use your social media platforms to share the content with as many consumers as possible.
Life Insurance Conference
The 2019 Life Insurance Conference was a great success, hosting more than 300 delegates from across the life insurance industry. The well attended sessions and headline speakers covered diverse, topical issues and really provoked new thought and challenged ideas. Congratulations to all the winners of the KPMG sponsored Life Insurance Awards, handed out at the annual life insurance dinner on March 20.
Regulatory Guide 97
Significant progress has been made on RG97, and we are pleased with the steps taken by ASIC in reviewing RG 97 to improve the quality and consistency of fee disclosure.
ASIC took on board feedback in the FSC submission around ‘implicit costs’ in a transaction not being meaningful for consumers. We are continuing our engagement with ASIC as drafting and consultation progresses.
Life Insurance Code of Practice
The Royal Commission tasked the FSC and ASIC to develop enforceable provisions within the Life Insurance Code of Practice, which is a significant task and crucially, requires new legislation.
Our members are up for the hard work ahead, and we’re not stepping back from any of the additional consumer protections in the draft.
In the meantime, we’ve announced that we will develop a new FSC Standard to introduce some extra consumer protections – for example, the genetics moratorium.
Asia Region Funds Passport (ARFP)
Since my last update, the FSC and members participated in consultations on the ARFP Draft Legislative ASIC Instrument and participated in a pilot program testing how the ARFP will work in practice prior to commencement in Australia. The ARFP formally commenced on 1 February and after months of advocacy, the regulations implement the long-contemplated key policy initiative of the FSC.
The FSC sent senior policy staff Allan Hansell and Bianca Richardson to the Asia Oceania Investment Funds Association regional meeting in Macau. The event brought together 10 asset management associations from the region (including Korea, Japan, Hong Kong and China amongst others) to discuss market insights, regulatory development and cross border funds flow initiatives from their respective jurisdictions.
The Summit 2019
The FSC is the only organisation that represents a diverse cross-section of businesses in the Australian financial services sector and strong leadership in our industry can be achieved through healthy debate and participation in the battle of ideas.
Summit 2019 is shaping up to be a conference packed with excellent speakers and critical topics as we work to develop better outcomes for consumers and industry in the post-post Royal Commission environment.
We are delighted to secure the highly respected former Foreign Affairs Minister Julie Bishop as keynote speaker, and will be announcing other key speakers soon.
The Summit 2019 will be held in Sydney's Sheraton on the Park on August 27 and 28. Register here.
Member Communication Upgrade
As many of you have already seen, the FSC had a website upgrade last month, which is delivering a more valuable member experience with the addition of member-only access to a larger portion of our content.
This extra feature will provide an exclusive portal of current member content including submissions, research reports, papers, thought leadership and industry blogs, podcasts and videos. There will also be certain types of regular insights and information materials specifically developed for members.
FSC Member events
Through our BT Political Series, we have had the opportunity to hear from Assistant Treasurer, The Hon Stuart Robert, MP and Shadow Treasurer The Hon Chris Bowen, MP, the political series’ events provide an insight into the policy driving the political parties and how may affect our industry in the future.
This year we have introduced the “Black Card” CEO Breakfast, sponsored by K&L Gates – the exclusive member CEO-only event provides the opportunity to meet Chatham House-style with high profile insiders including Sky News Your Money star Ticky Fullerton and government relations veteran Brian Tyson.
All CEO members are welcome to attend these unique, high value and exclusive events.