FOFA reforms outweigh need for MySuper

There is no need for the MySuper recommendations to be instituted if the Future of Financial Advice Reforms (FOFA) and the SuperStream recommendations are implemented properly, according to the chief executive of the Financial Services Council (FSC), John Brogden.

Speaking prior to the launch of the FSC annual conference in Melbourne, Brogden said the benefits of MySuper could not be compared to the benefits of implementing the SuperStream proposals.

“MySuper does nothing about account consolidation, it does nothing about reducing the costs in the day-to-day administration [of super],” Brogden said.

“If you combine SuperStream and FOFA, and the reforms that both of these can bring, it demonstrates there is really no need for MySuper,” he said.

In an address to the conference, David Deverall, chair of the FSC, said SuperStream should be top of policy for the Government because of the “massive” savings in the recommendations.

According to estimates by an Ernst and Young study commissioned by the FSC, SuperStream will save up to $20 billion over a 10-year period. The bulk of the savings will come from mandatory electronic transactions and straight through processing.

The cost of implementing the SuperStream proposals are estimated at $1 billion for the industry, according to the study.

“In terms of the cost benefit analysis, it is very clear the investment of $1 billion will deliver, in effect, 19 times savings,” Brogden said.

Brogden said the super industry needed to express a “mea culpa” for not instituting administration savings on its own.

“I think we’ve spent too much time bickering over whose system and whose codes and whose processes will be used, and therefore rather than one area changing, we’ve had no move forward,” he said.