ISA warns on defaults and ‘inappropriate advice’
Industry Super Australia (ISA) has again differed with the Productivity Commission (PC) and has warned against people being defaulted into only one superannuation fund citing, amongst other things, the danger of “inappropriate advice”.
In a late submission filed with the PC, ISA said it did not support members being defaulted into one fund for life.
“The risk that disengaged and low-information members will be sold, nudged or defaulted into poor quality funds by their bank, their employer or through inappropriate advice is too great,” the submission said.
“To fulfil the collective social policy purpose of compulsory superannuation, it is appropriate for government to intervene strongly to ensure members are protected from such risks. We have previously explained how this can be achieved in the context of a strengthened industrial safety net,” it said.
The ISA noted in its submission that the PC had indicated that it was trying to get rid of unintended multiple accounts by having members, new job entrants default once and then auto-consolidating accounts thereafter.
It noted that the PC had also referred suggestions that members had one account that followed them through their life, with the member taking their balance with them and rolling it over with every next job.
Recommended for you
ASIC data shows the number of smaller AFSLs with less than $50 million in revenue has increased by 25 per cent in the past year, but the regulator believes they are still under reporting breaches.
Former financial adviser and Coalition backbencher Bert van Manen has introduced a bill in Parliament, building on Michelle Levy’s good advice duty and calling for SOAs to be scrapped.
Following its recent partnership with Otivo, Colonial First State has now announced an arrangement with Viridian Advisory to offer unadvised members with one-off, topic-based financial advice.
Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand.