'Suggestions' shouldn't trigger event notices: ASFA
Super funds should not have to provide a significant event notice to their members if the replacement of a MySuper product is 'suggested', according to the Association of Superannuation Funds of Australia (ASFA).
In a submission on the proposed amendment to the Corporation Act 2001 as part of the Stronger Super regulations, ASFA objected to the proposed inclusion of 1017B(1A) (c), which states that an event notice must be provided on "the transfer, on the suggestion or recommendation of the trustee, or an associate of the trustee, of a member's interest in a MySuper product to another class of beneficial interest in the fund is specified".
According to ASFA, it is not clear what is meant by the term 'suggestion' - a term that has not been defined in the legislation.
Furthermore, a Statement of Advice is the "appropriate mechanism" through which information about investment switching should be relayed to the member, said ASFA.
"It is not readily apparent why advice provided by an adviser employed by the trustee, or by an adviser who is an associate of the trustee, would be considered to trigger the significant event notice requirements," said the submission.
The proposed amendment would also be "largely unworkable" from a practical perspective, according to the ASFA.
"It would mean that, if the recommendation involved an increase in fees for that member, a trustee would be required to give the member the significant event notice 30 days before the recommendation can be acted upon," said the submission.
In the case of an investment choice switch, the 30-day advance notice requirement could mean that a member would end up being penalised because the trustee would be unable to give effect to the switch when the member wanted it to happen, said the submission.
Recommended for you
Unveiling its performance for the calendar year 2024, AMP has noted a “careful” investment in bitcoin futures proved beneficial for its superannuation members.
SuperRatings has shared the median estimated return for balanced superannuation funds for the calendar year 2024, finding the year achieved “strong and consistent positive” returns.
The second tranche of DBFO reforms has received strong support from superannuation funds and insurers, with a new class of advisers aimed to support Australians with their retirement planning.
The financial services technology firm has officially launched its digital advice and education solution for superannuation funds and other industry players.
