Do new independence disclosures go far enough?
Do new independence disclosures go far enough?
An industry body is calling for asset-based fees to be recognised as conflicted remuneration and disclosed to clients, but concedes the government has shown little recent interest in addressing the issue.
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PIFA president Daniel Brammall said the industry association had been unsuccessful in its bid to amend royal commission legislation around annual renewals and independence disclosures to include asset-based fees, despite “a great deal of interest from all sides of politics”.
“The interest came from the government, the opposition and the cross-bench, as well as from consumer groups like Choice and Super Consumer Australia,” Mr Brammall said.
Super lobby ups ante against âregulatory kill-switchâ
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The governmentâs backflip on the superannuation performance test got a tick of approval by the sector, but lobby groups are pushing for a controversial measure that allows for ministerial influence over investment decisions to be axed.
The government revealed on Wednesday an updated approach it would use to benchmark the performance of superannuation funds, acknowledging that a prior method could have discouraged funds from investing in unlisted infrastructure and property.
The Australian Financial Review on Monday, the government has also done an about-face on the inclusion of administration fees as well as investment fees in the performance test, having conceded that dodgy trustees could game the system.
Checked for accuracy by our qualified fact-checkers and verifiers. Find out more about fact-checking at CHOICE. Need to know
A Bill before parliament will require super funds to provide evidence about how they act in the best financial interests of their members.
Super Consumers Australia says the proposed reform is reasonable as funds are already expected to put the interests of their members first.
At recent Senate hearings, superannuation funds were asked if they currently act in the best financial interests of their members. The majority of super funds said yes. So why is it that so many are trying to block reforms that will enforce that very principle?
What is more, the SCA answer suggested that Australian Prudential Regulation Authority (APRA) data probably failed to fully reveal the level of investment fees.
“For the financial year ending June 2020, approximately $3.6 billion in administration fees were paid to large APRA regulated funds. By comparison $2.9 billion was paid in investment fees and total fees paid equalled $8.5 billion,” the SCA told the committee.
“The remaining fees paid consisted of insurance fees, advice fees and activity fees. However, we note that this APRA data significantly under-reports investment fees as highlighted by the Productivity Commission,” it said.
“The median disclosed administration fee for a MySuper product member with a representative balance of $50,000 in December 2020 is 0.325%. The median investment fee was found to be 0.725%.”