Super funds warned on member best interest

australian prudential regulation authority APRA eligible rollover funds Protecting Your Super Package PYSP

9 May 2019
| By Mike |
image
image
expand image

Superannuation funds have been placed on notice that they need to adopt a higher duty to member best interests when shifting member balances into eligible rollover funds (ERFs).

At the same time, the Australian Prudential Regulation Authority (APRA) has raised questions about the ongoing viability of ERFs under the terms of the Government’s Protecting Your Super Package (PYSP) legislation.

The viability of ERFs has been raised in the context of the legislative package imposing a three per cent fee cap on member account balances below $6,000, prohibiting exit fees and limiting the provision of insurance on inactive accounts as well as the sweeping of low balance accounts to the Australian Taxation Office (ATO) for the purpose of reunifying accounts.

APRA has written to superannuation fund trustees warning them of the need to review their policies governing the transfer of accounts to ERFs and the need to take member best interests into account.

The letter said APRA had also written specifically to RSE licensees authorised to provide an ERF on the implications of the fee caps and the ATO account sweep on the future viability of ERFs, and the capacity of RSE licensees of ERFs to meet their fiduciary duties to members.

 “We expect all RSE licensees to review their policies governing the transfer of accounts to ERFs and determine whether these policies remain in the best interest of members,” the APRA letter said.

“We further expect that in undertaking any account transfers, including successor fund transfers, RSE licensees consider the implications of these transfers for the ATO account sweep under the PYSP reforms to ensure that account consolidation is not averted or delayed, contrary to the best interest of members,” it said.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

This verdict highlights something deeply wrong and rotten at the heart of the FSCP. We are witnessing a heavy-handed, op...

2 days 10 hours ago

Interesting. Would be good to know the details of the StrategyOne deal....

6 days 16 hours ago

It’s astonishing to see the FAAA now pushing for more advisers by courting "career changers" and international recruits,...

3 weeks 4 days ago

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....

2 weeks 6 days ago

A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments ...

5 days 14 hours ago

Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million....

4 days 17 hours ago