Regulate raters: survey
At the same time ratings houses are calling for ongoing regulatory monitoring of financial planners with respect to superannuation switching, the latest IUS/Super Review Super Outlook survey has revealed a strong belief that financial planning needs to become an integral part of the super industry.
Specialist superannuation fund ratings house joined together with financial services research group in early February to launch SuperRating’s Superannuation Market Analysis Research Technology (SMART).
In doing so, SuperRatings argued that the Australian Securities and Investments Commission (ASIC) needed to maintain monitoring of financial planners with respect to fund switching in circumstances where there was evidence of insufficient research being carried out on the ‘from’ fund potential, placing clients at a disadvantage.
However, the IUS/Super Review survey also found that the superannuation industry harboured a highly cynical view of ratings houses, with a strong majority believing that they should be subject to regulatory scrutiny from both ASIC and the Australian PrudentialRegulation Authority.
The survey, conducted throughout November and December last year, coincided with extensive debate at the Association of Superannuation Funds of Australia (ASFA) national conference in Melbourne on the role of ratings houses and their contribution to the industry.
However, the survey results suggest that most respondents believe ratings houses do not make a particularly significant contribution to the industry, and that both they and their methodologies should be subject to regulatory scrutiny.
Asked how useful they believed ratings houses were to the superannuation industry, the majority of respondents said they believed they made only a small or moderate contribution, with most (64.3 per cent) suggesting their contribution was of moderate importance.
More importantly, the survey revealed that a strong majority of respondents (95.2 per cent) believed the ratings houses and their methodologies should be subjected to scrutiny by the regulators.
Fund representatives contacted by Super Review to discuss the results of the survey said they were not surprised by its findings, with the activities of ratings houses proving to be both costly and time-consuming.
On the question of financial planning, respondents were quizzed on whether they believed financial planning needed to be an integral part of the superannuation industry.
In a significant increase in the number of positive responses over previous surveys, 80.5 per cent of respondents said “yes”.
Chief economist with said the poll finding was significant, but that the responses from those connected with industry funds had been far less positive towards financial planning.
“The breakdown of the survey respondents reveals a higher proportion of financial advisers than in previous surveys, and that may have been a factor in this result,” he said.
“However, more than half of all respondents are directly associated with superannuation funds, so this result is significant in terms of indicating a change of attitude,” Kates said.
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Mike Taylor
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