Martin Spedding, CEO of DST Bluedoor, said in the 14th annual FSC-DST CEO Survey that:
“Preparing for MySuper, SuperStream and FoFA has been disruptive and costly, diverting resources and attention away from other more productive areas. As this implementation phase nears its end-point, the industry’s leaders are re-focusing on the opportunities of the future.”
However there are impediments to introducing something new, with 42% of respondents saying they were unable to release a new product or process due to regulation.
Some of this regulation includes the introduction of MySuper, which many respondents agreed had “discouraged product innovation in the superannuation sector, as the sector moves to a one-size-fits-all product base”. SuperStream was also viewed as taking resources from innovation and putting it into the “digitisation of existing process”, with 45% saying they had been “forced to spend money and time on regulatory compliance rather than new projects”.
The top three concerns for the “future prospects of superannuation” among CEOs in the survey were:
1. Cost and volume of regulation
2. Implementation of MySuper/Investment returns
3. Changes in the tax treatment of superannuation
‘Cost and volume of regulation’ has made the top of the list since 2012. Though ‘changes in the tax treatment of superannuation’ is new on the list, replacing ‘investment returns’, likely following from the GFC.
The survey also showed a concern in the financial sector that slowing returns could “impact on discretionary flows into superannuation”. Discretionary super contributions are also reduced by the “prospect of change” as people don’t want to have their retirement savings “locked-up” in a changing system.
Echoing the Financial System Inquiry interim report, 77% of the respondents “do not believe the financial services sector is prepared for the large increase in demand for superannuation products suitable for retirees”.
The survey also finds that “a number” of fund managers are working on products which will help SMSFs, though with “varying success”.
The full report can be found here.
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