Senator the Hon Jane Hume has provided some clarity about the Morrison Government’s approach to what she describes as “the most comprehensive financial services law reforms since the 1990s.”
By Ben McAlary
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Political perspectives from the Government
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Speaking at the FSC’s premier conference event – The Summit. The Minister for superannuation, financial services and financial technology was quick to remind the audience that it had been over six months since the handing down of the Hayne Royal Commission’s findings.
“The Royal Commission shone a spotlight, unlike we have ever seen before, on the extent of misconduct, that fell well below community standards and expectations across the financial sector, and above all highlighted the effect that this bad behavior had on individuals, on families and on small businesses.
“The Government is genuinely committed to implementing all 76 recommendations in order to make the necessary changes to the financial system for those people.”
The Minister pointed to the roadmap released by the Morrison Government earlier this month to highlight the progress that has already been made.
“We have already introduced measures that prevent superannuation trustees from reducing employees with side benefits to select funds for their employees and also ensuring that trustees and directors of superannuation funds face civil penalities for breaching their best interest obligations.
“Legislation has been introduced to end legacy commissions paid to financial advisers that can track consumers in sub optimal products and have funded the payment of unpaid determinations from the Financial Ombudsman Service and the Credit and Investment Ombudsman.
“We have acted swiftly on the recommendations and others including the APRA capability review.”
Minister Hume managed the expectations of the industry by reiterating the Morrison Government’s timetable to reform, “Over the next 18 months these reforms will dominate The Treasury legislative program.”
Running concurrently to the Royal Commission legislative program will be superannuation reform. The Minister said that while as a whole the system has served Australia extremely well there were a number of structural problems that have eroded consumer confidence and account balances.
Balance erosion through unnecessary insurance premiums is one area that is in the immediate crosshairs of the Government as it seeks to restore trust and protection in superannuation.
“We believe young workers under 25 deserve a fair go, if they want insurance then they should be free to choose. But in many cases the arguments for automatic cover is weak.”
She said some funds such as AustralianSuper already recognised this but other funds had been slow to act.
“Why isn’t the industry itself taking action on these long-standing problems which we know are there instead of being dragged, kicked and screaming by the government towards the right solution over issues such as curbing unnecessary insurance in super.”
“If workers are required to put one in every $10 into superannuation then the system must do better and has to earn that trust, it has to earn that right.
“We need to reframe the superannuation system so it works for all members. Superannuation is not perfect and we know that. It has grown exponentially but not efficiently as for too long it has relied on opacity and complexity and disengagement. If trustees want to meet their members’ expectation they will be at the forefront of these changes and not dragged kicking and screaming.”
When pressed on more details by FSC, CEO, Sally Loane, the Minister said there was no definitive timetable on default superannuation reform but that is was “on the agenda.”
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