Update from FSC CEO, Sally Loane

It’s been an incredibly challenging time for the entire financial services industry as we confront issues in every corner of our sector.  The Royal Commission is about to enter its seventh round of hearings, and this week it released many of the submissions made to the interim report, including the FSC’s. We are determined that where things have not been right, we will work to fix them and restore the standing of financial services in this country. We believe a policy response must be enacted quickly to improve outcomes for consumers and set us on our long path towards strengthening trust.

The strength of our market economy built on capitalism is resilient and we need to continue to focus on and deliver the enormous community benefits that flow when profits are invested into innovation and efficient products and services. This is being achieved in our sector every single day by a new generation of highly competitive innovators in our member body right across funds management, life insurance, super and advice. Not a week goes past when I don’t see evidence of this in the wealth sector  – I will have a lot more to say about this in the coming months.

Life Insurance Code of Practice Consultation

Next week we will release the new draft FSC Life Insurance Code of Practice for public consultation. We have been working with ASIC, consumer advocates, mental health groups and geneticists for more than 18 months to draft the new Code, which is being strengthened across the board in sales, underwriting, product design and claims.

For the first time, we are enabling public consultation by hosting public forums in Melbourne, Brisbane and Sydney. We want to make sure consumers have the opportunity to hear what we propose and give their feedback to us directly. Dates and locations are available here.

At the recent FSC BT Political Series breakfast I announced that life insurers will begin consulting on a moratorium to stop using genetic test results as part of insurance applications. This will mean every Australian can get up to $500,000 of life cover without having to disclose an adverse test result. The moratorium will mean that people can take part in genetic research, or take a test individually, without fear that the result will stop them taking out life insurance.

Retirement Incomes

We continue to advocate for superannuation as an important public policy, which is beginning to help more and more Australians fund their retirements, making us as a nation less dependent on the age pension. We are doubling-down our focus on a core strength of our wealth members, retirement products and quality advice, which are becoming more and more important for all Australians, particularly those moving from accumulation to pre-retirement. We remain committed to our policy of raising the SG to 12 per cent, which has been challenged by the Grattan Institute. I have written a blog arguing that financial and retirement savings adequacy for women – still woeful, as will be revealed in a new study by the Sydney Women’s Fund on Monday - continues to be ignored by policy makers who are still basing their arguments on the same old-fashioned version of superannuation designed for and delivered by the trade union model of a full time working male. We need to improve women’s futures, and the current system can’t do it without changes.

Asia Region Funds passport

While we continue to have a constructive dialogue with the Government about by fixing the non-resident withholding tax issue on the Asia Region Funds passport, we remain very concerned that if it is not resolved, Australian fund managers will be uncompetitive once the regime commences on 1 February 2019. We don’t want to see years of work and taxpayer’s investment go to waste. We continue to urge the Government to undertake this critical micro-economic reform.

Early Intervention

Lastly, we were deeply disappointed that the FSC’s proposed reforms to help vulnerable Australians return to wellness were rejected by the Parliamentary Joint Committee in late October. We remain convinced of the benefits of “early intervention” for people needing medical treatment, for reducing hospital waiting lists and for shrinking the Budget bottom line. We will continue to advocate for this reform, which we believe is in the national interest, not to mention assisting up to 10,000 Australians every year.