The current Parliamentary Joint Committee (PJC) on Corporations and Financial Services has been busy this week needling ASIC about all manner of things. It has revealed that ASIC will be looking at the fairness of advice fees across the superannuation industry. This was followed by a call from the Association of Superannuation Funds of Australia (ASFA) for a comprehensive audit of regulators including ASIC, APRA and the ATO to make sure they are doing their jobs “properly and efficiently”.
During questioning by the PJC, ASIC commissioner, Danielle Press told the committee that the regulator was looking at the fees issue alongside insurance inside superannuation, including claims handling. ASIC will be looking at disclosure costs and fees deducted from superannuation fund member balances and whether they are actually fair and appropriate. Press said, “We're looking at advice in superannuation, in particular around where fees are deducted from superannuation funds and whether or not they are reasonable, and whether or not the services are actually being delivered for those fees,” she said
Back At You - Levies Questioned
Almost simultaneously, the Association of Superannuation Funds of Australia (ASFA) tabled a submission calling for an audit of ASIC, APRA and the ATO by the Australian National Audit Office (ANAO) to make sure they are efficient and accountable – especially in light of the levies they collect from industry to perform their tasks.
The ASFA submission highlighted that superannuation funds will pay over $89.1 million this year in supervisory levies, up from $6.8 million last year. It wants to know whether the industry is getting value for money.The submission also pointed out what it said was a “moral hazard” faced by the regulatory agencies being funded by levies;
“The most significant aspect of agencies being funded primarily by levies is that it represents a form of moral hazard, in that the agencies have a vested interest in increasing the levies with relatively little accountability while the parties providing the funding (industry) have no control over the resourcing decisions made by the agencies. This extends to the type, and in particular the scope, of activities engaged in by the agency and the quantum, and nature, of the resources used.”
ASFA said “it is critical to ensure that superannuation funds only pay levies with respect to consumer protection within superannuation and not with respect to other wealth management sectors, such as managed investments and financial advisers, because neither as neither self-managed super funds nor financial advisers pay levies”. It continued… “it is important to distinguish activities undertaken with respect to these as they should not be funded by levies paid by regulated superannuation funds”.
So – just to confirm; at the same time ASIC is saying it would be looking into whether fees charged in relation to super funds were fair and appropriate, the AFSA was encouraging an audit of the regulators to make sure the costs incurred are justifiable, reasonable and transparent.
It would seem that there may be a bit of standoff at 20 paces from different super industry stakeholders – using the weapon of choice in modern business – the bureaucratic audit/assessment.
To finish of this Super tale, it is worth noting that Stockspot has just released its Fat Cat Funds Report 2019 Report which analysed 600 of the largest super funds to find the best and worst super funds in Australia. It has once again found that fees make all the difference when it comes to Australian retirement savings. The funds were assessed on how they performed, after fees, compared to other super options of similar risk over 5 years.
Top performing super funds came from Q Super, UniSuper and AustralianSuper, with Stockspot naming funds from ANZ/Onepath, AMP and Perpetual and the worst “Fat Cat” funds in the country.