In a speech to the Conexus Retirement Conference on Tuesday, senior executive leader, superannuation and life insurance at the Australian Securities and Investments Commission (ASIC), Jane Eccleston said that it is a misunderstanding that without being able to provide personal financial advice to members there is little progress that can be made on retirement outcomes for members.
“Often discussions around the retirement income covenant very quickly become a discussion about the challenges of personal financial advice regulation,” Ms Eccleston said.
“Fundamentally, superannuation funds are product providers and, like other financial service product providers, cannot realistically have a business model whose success is entirely contingent on making individual product recommendations to customers.”
She said ensuring the products available are high quality and meet members’ needs is a more pragmatic approach, adding that super funds need to support member decision making “so that the chances of members ending up in a product suitable for them are maximised and ending up in a product not suitable for them is minimised”.
“This is not a set-and-forget situation – essentially, every day a member stays in a product they are implicitly making a decision to stay in the product,” Ms Eccleston said.
Collecting more data from members, she said, is another way to improve retirement outcomes, but noted many are concerned this leads to trustees making decisions that land in the realm of personal advice.
“I think it is important to clarify that when we refer to the fund’s choice architecture, we are talking about more than just the retirement product or solutions offered by a fund,” Ms Eccleston said.
“I am also talking about the services that the fund provides and the interactions it has with its members through things such as advertising, member communications or other processes which involve members.
“So, when we say that analysing member data can help trustees further enhance their choice architecture, in no way are we suggesting that trustees must use the data they have collected about their members to deliver them personal solutions that are designed specifically for that member.
“Nor do we think that the collection of member data somehow automatically translates into a requirement or obligation to provide personal financial advice or means that any future interactions the member has with the fund will involve the provision of personal financial advice.
“Retirement income strategies need to be consumer-focused and evidence-based. And it is this member data that helps provide that evidence base.”
Ms Eccleston added that ASIC will keep a “close eye” on the way trustees implement their retirement income strategy, with a particular focus on consumer protection.
“More generally, ASIC will continue to have a focus on the delivery of member services. We want trustees to effectively assist their members in a manner that complies with the very laws intended to protect members,” she said.
In July, ASIC and APRA published a joint review that found that super funds have displayed a “lack of progress and insufficient urgency” in embracing the retirement income covenant (RIC).
“A further 3 million members will become eligible to draw from their super in the next 10 years. They are entitled to rely upon their super fund for assistance as they plan for a sound financial future,” commented APRA deputy chair Margaret Cole.
“Some trustees have made a good start, but overall, there has been a lack of progress and insufficient urgency. As more members approach retirement, trustees must step up and deliver both well-considered strategies and action to support members in retirement.”
How many of these APRA and ASIC muppets are mostly covered by massively generous CSS Lifetime scheme’s?
And have zero idea of the real world most of the populations Super Fund / Retirement needs.
NFI Canberra bubble bureaucrats
An example of how to say something without saying anything.
Dear product providers
Welcome to the world of having no idea what the regulator is saying.
Sincerely
Advisers
Another example of why we really need a National Longevity Strategy which identifies and harmonises the roles of government, regulators and providers with the basic needs of the community and consumers. If the government can’t get this together, the ‘industry’ should – maybe starting with Super Funds and Advisers getting together.
“:….maybe starting with Super Funds and Advisers getting together”‘
Conflicts of Interest – seems it was a bad thing – now you want the two parties brought together again? Community Expectations and all that?
“Nor do we think that the collection of member data somehow automatically translates into a requirement or obligation to provide personal financial advice……..”
Is that a fact that is applied equally – or just used for some?
“Fundamentally superannuation funds are product providers and, like other financial service product providers, cannot realistically have a business model whose success is entirely contingent on making individual product recommendations to customers.”
But this is exactly what Michelle Levy has recommended – in her view financial advice is only product recommendations. Stephen Jones sees nothing wrong with super funds providing advice that is purely individual product recommendations. They really don’t get that there is so much more to it than product recommendations.
Incredible the number of senior public servants who’ve never actually had any hands-on experience or real world knowledge related to the areas they preside over with iron fists and ridiculous rules. I was recently told by an ASIC Delegate that “…insurances aren’t rocket science – it’s pretty much cookie cutter what you should be recommending for a client”
They know so little therefore they have little to no clue it seems to how little they actually know? The fact that these Public Servants have little experience is it seems of little consequence to them – perhaps they feel they are born to rule and of a superior class – a true ruling class perhaps? Certainly it seems they have no lack of talent for standing tall and demonstrate their knowledge with complete confidence. Anything lacking in their knowledge – put down to unintended consequences?
And there we have it – a Public Servant believing her role is to make policy?
“A further 3 million members will become eligible to draw from their super in the next 10 years. They are entitled to rely upon their super fund for assistance as they plan for a sound financial future,” commented APRA deputy chair Margaret Cole.
Ummmm, public servants do make policy. The Ministers are only there as the headkine, but the actual policy work (even the crap stuff) is done by public servants.
Thanks for the clarification – do the Public Servants take responsibility for failure or unintended consequences?
Dear Ms Eccleston, have fun spending our hard earned levies this year. Please don’t waste our money on kumbuyaya sessions. Please make sure our levies are well spent and not wasted in the public service cesspool. Please don’t waste all your time on the trustees as we are paying your wages and expect a service for our levies. Please try and keep expenses low so that you don’t come to us again next year with your hand out for more money. We really cant afford to keep paying these increases, when we get no benefit at all from it.
Isn’t there a conflict here with Mr Jones recent support of industry fund advice?
“A further 3 million members will become eligible to draw from their super in the next 10 years. They are entitled to rely upon their super fund for assistance as they plan for a sound financial future,” commented APRA deputy chair Margaret Cole.
Seems they just don’t want Financial Planners delivering the advice – but they can?
This speech sounds like a word salad.
Am I right in thinking she said:
1) Super Funds now can’t realistically provide personal financial advice because there is more to it than just directing people to a product
2) Super Funds should focus on being really good product providers.