The Financial Services Council (FSC) has welcomed the federal government’s policy response to the Your Future, Your Super (YFYS) review undertaken by Treasury.
On Tuesday, the government announced that it intended to address several unintended consequences of the YFYS performance test that were identified by Treasury in the review and put forward draft regulations for consultation.
Reacting to the move, FSC chief executive officer Blake Briggs called attention to a number of proposed key changes, including the addition of new benchmarks for the test.
“The government has responded to feedback from the investment and superannuation sectors by including 10 new benchmarks into superannuation fund performance assessments that will ensure consumers continue to benefit from investment diversification and higher investment returns,” he said.
“In the highly complex and technical field of investment management, the government should be congratulated for taking the prudent approach of listening and responding to evidence-based policy.”
Mr Briggs said that the government’s decision to continue using current administration fees when benchmarking product performance is “the best outcome for consumers”.
He said that evidence from the Australian Prudential Regulation Authority (APRA) has shown that this focus has led to a reduction in administration fees for those in MySuper products.
The FSC also pledged to work with the government during the consultation period towards the goal of applying the YFYS test to trustee-directed products.
“In extending performance testing to new categories of products, the government should also commit to facilitating an improved superannuation product modernisation regime by extending CGT roll-over relief for consumers when rationalising individual products and investment options,” Mr Briggs added.
“A product modernisation regime for superannuation products will expedite the closure of underperforming investment options by removing tax consequences for consumers.”
Additionally, Mr Briggs welcomed the government’s commitment to not make changes to the legal framework for stapling and the best financial interest duty.
“These reforms are important new consumer protections and changes to these regimes would create unnecessary disruption and costs for superannuation consumers, employers, and superannuation funds,” he concluded.
