The winds of change are blowing in superannuation: renewed emphasis on governance, culture and accountability
Commissioner Kenneth Hayne has handed down his long-awaited report into Misconduct in the Banking, Superannuation and Financial Services Industry and, based on KPMG’s initial analysis, the Final Report will have far-reaching effects on superannuation funds and the financial services industry more broadly.
For the superannuation industry, the Report’s recommendations emphasies trustees’ obligations to their members, seek to adjust the regulatory framework to clarify the roles of the Regulators, and of more significance, enforce accountability through the introduction of civil penalties and the extension of the Banking Executive Accountability Regime (BEAR) to superannuation.
There is no doubt the recommendations will significantly impact the business models and operations of a range of superannuation funds in the industry.
Recommendations calling for a person to have only one default account and a ban on the unsolicited offer or sale of superannuation (and insurance) products will impact how many funds acquire new members, as will the proposed amendments to commission arrangements in respect of superannuation products. The additional restrictions on the payment of advice fees out of MySuper and choice products will also put considerable pressure on many financial advice businesses.
The Report also calls for the Insurance in Superannuation Voluntary Code to become enforceable through law, and seeks to improve the handling of insurance claims within superannuation.
Our analysis focuses on four broad themes likely to have the most impact on superannuation funds and providers to the industry.
These areas are:
- Distribution models in superannuation;
- Governance and culture;
- The regulatory environment; and
- Insurance in superannuation.
Regardless of how, and in what form, the Report’s recommendations are implemented, they will undoubtedly have a significant impact on the structure of the superannuation industry for many years to come.
I invite you to read our full report.
Read more on the KPMG NewsRoom on the Hayne Royal Commission