What does APRA's Lonsdale think about banks re-entering wealth?
APRA chair John Lonsdale believes it is a “strategic priority” that there is an appropriate suite of products for people approaching retirement, which could include from banks.
Earlier this month, EY posited that banks could return to the wealth space through the creation of retirement and decumulation products which is being encouraged as part of the Retirement Income Covenant (RIC).
Brought in last July, the RIC encourages the development of retirement income products. As well as super funds, firms such as Generation Life, Allianz Retire+ and Challenger have all entered the space.
Douglas Nixon, EY Asia Pacific banking consulting leader, said: “With their established customer bases, suite of products to serve the end-to-end financial journey and existing infrastructure, banks are well-positioned to offer a range of wealth management and decumulation products. If done carefully, supporting customers towards and into retirement could improve customer experiences and outcomes, provide new sources of growth for the industry, and increase loyalty.
“Such a move would be a logical extension of a holistic approach to support financial wellbeing throughout a customer’s life.”
Answering a question from Money Management at the Citi Investment Conference in Sydney about whether banks should return to the wealth space, Lonsdale said it is up to banks to decide which products they want to offer consumers.
Lonsdale has led the prudential regulator since October 2022, and joined in 2018 from a 30-year career at Treasury.
“We don’t mandate what products banks, super funds, or insurers actually provide, that’s up to them,” he said.
“In relation to products, we now have a covenant that’s legislated. That is something we have identified as a strategic priority for APRA to make sure that as the population ages, there’s an appropriate suite of products out there that really go beyond lump sums and allocated pensions, which is really the prime set of products we’ve got out there.”
For entities venturing into this space, Lonsdale said it is vital they are ticking the right risk boxes in terms of regulation.
“We do say to all our regulated entities that, if you are providing [a product], you need to make sure you’re ticking all the risk boxes that we require ticked. That is where we apply ourselves to make sure those credit standards and risk issues that we need covered are covered.”
Click here to read Money Management's retirement income feature.
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Laura Dew
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So the pain of the last 5 years is worth nothing.
Disgusted.
That would be the final insult to my mental health.
What was the point of the Royal Commission?
We're heading back to where we were.
What a futile exercise.
It's disappointing that the focus of APRA (from this interview anyway) seems to be on the development and regulation of products. A major opportunity is available from better education of super members (and their largely anonymous partners) about their anticipated greater longevity and how they can respond positively to potentially better outcomes. This should begin well before 'retirement'. Increasing evidence suggests our framing of our later life is significantly out of date with likely reality, increasing the risk of poor financial and other decisions, and compounding the growth in the health and aged care costs for the person and the community.
Let the banks back in .lets not learn by the past. Collectively they must have paid about $500ml in fine and reperations.Westpac is closing branches all over the country to help pay it's fines. YOUR JOKING
look at NAB AND IT'S MANAGER WHO SHALL BE NAMELESS. hE CHAIRED ONE OF THE FIRST ENQUIREY'S INTO THE INDUSTRY , Came up with the right answers and was rewarded with the post at NAB That went well ......! jg