FHSA election promise less than reality

The Government’s departure from the First Home Saver Account (FHSA) proposal it outlined during last year’s Federal Election could see it being offered by fewer superannuation funds than originally envisaged, according to the Association of Superannuation Funds of Australia(ASFA).

ASFA has used a submission to the Treasury to point out that the Government’s proposals for FHSA differ from those outlined during the election and have created “significant commercial and operational risks/costs for registrable superannuation entity (RSE) licensees”.

The submission, filed with Treasury earlier this month, said the proposal as outlined during the election suggested that existing superannuation funds would be free to offer the FHSA accounts and led the industry to understand an RSE licensee would be able to offer the loans through its existing trust structure.

“The Government had recognised that enabling superannuation funds to offer these accounts took advantage of existing processes, thus constraining costs and increasing the likelihood of an FHSA being delivered as a low cost account within existing prudential regulation,” it said.

However, it said that the FHSA arrangements as outlined in the Government’s discussion paper released this year had departed from the original announcement and ASFA members had indicated that offering a FHSA under the current proposal would pose significant commercial and operational risks/costs for a RSE licensee.

It said this might result in very few RSE licensees offering such a product — something that would limit consumer choice of investment options and product providers and could significantly impact on the delivery of the Government’s FHSA policy.

The ASFA submission suggests that to ensure the robust supply of FHSAs, the regulatory framework be modelled on the existing product offerings in the various market segments, with reference to an over-arching set of rules for the actual account.