AIST continues push on conflicted remuneration
The Australian Institute of Superannuation Trustees (AIST) has used its preliminary submission to the Financial System Review to re-argue the industry funds' points on conflicted remuneration and, in particular, asset-based fees.
At the same time, the submission has sought an acknowledgement of the workability of the industry funds' existing governance model.
However it is the AIST submission's reference to fees and costs which is likely to cause the most consternation among financial planners, with the opening point being that asset-based fees be "phased out and replaced with dollar-based fees charged on a fee-for-service basis'.
The submission also argues that payments to related parties be disclosed and that "carve-outs of conflicted remuneration should be eventually phased out".
Further, it appears to target the major banks and other financial institutions when it suggests that gross interest margins should be disclosed to superannuation fund members, where money is deposited with related parties and that shelf-space fees and profit-sharing arrangements should be passed through to members to ensure that they benefit from these arrangements in full.
Elsewhere in its submission, AIST supports the retention of the current "twin peaks" regulatory model and suggests that any move towards a single, mega-regulator might serve to undermine consumer protections.
The AIST submission is surprising because it acknowledges the Australian Taxation Office (ATO) as the third peak in the financial services regulatory system and does not argue for self-managed superannuation funds (SMSFs) to be shifted from ATO jurisdiction to the Australian Prudential Regulation Authority.
Rather, the submission states: "AIST's preferred approach is to call for greater and more formal coordination between regulatory bodies, and for there to be a requirement for them to consider efficiency as well as prudential oversight".
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