Industry welcomes tougher super stance

Australia’s major industry associations have welcomed the Government’s push to give regulators sweeping new powers to police the $520 billion superannuation industry with a series of reforms announced yesterday.

The reforms, announced by the minister for revenue and assistant treasurer Senator Helen Coonan, will require all superannuation funds to be registered under a new universal licensing regime, submit risk management plans to theAustralian Prudential Regulation Authority (APRA)and improve their disclosure to fund members.

“Superannuation is the only regime regulated by APRA in which it is not necessary to obtain a licence to operate. This must change. It should not be possible to establish a fund and start managing other people’s money without demonstrating the necessary skills or competence to do so,” Coonan says.

The chief executive of theAssociation of Superannuation Funds of Australia (ASFA), Philippa Smith, says the reforms are “well considered and well focussed”.

She says the universal licensing regime would place the onus on superannuation funds to document and demonstrate their competencies before they opened their doors.

“This makes sense, although with two regulators (APRA and ASIC) we need to ensure that there is not too much red tape or duplication,” she says.

The planned reforms are the Government’s response to a paper by the Superannuation Working Group, an inquiry into the safety of the system overseeing Australia’s superannuation savings headed by former ANZ bank chief Don Mercer.

The chief executive of theInvestment and Financial Services Association (IFSA), Richard Gilbert, says the Government’s proposals are balanced and, in relation to the proposal to make risk management plans compulsory for super funds, would bring the superannuation industry into line with the rest of the retail managed investments industry.

“IFSA is pleased to see that features of the compliance and investor protection regime, which operate effectively in retail managed investments, will be applied to superannuation,” Gilbert says.

“This is a good report. It confirms that the superannuation industry is in good shape and builds on the existing firm base. IFSA will work cooperatively with the Government and the regulators to ensure that the new requirements are effective and do not increase cost to investors.”

However the reforms appear to have met with some criticism from the Labor opposition.

While welcoming the reforms, Labor’s shadow minister for retirement incomes and savings Senator Nick Sherry says they do not go far enough.

“Reforms such as universal licensing have in-principle support from Labor, but I urge the Government to go much further,” Sherry says.

“The Liberal Government will not commit to fully compensating those who are unfortunate enough to have their superannuation savings stolen nor will they protect unpaid super in the case of business collapse. This is in stark contrast to Labor’s approach.”