“What can be done to encourage the regulators to act promptly on misconduct or potential misconduct?” That is one of the questions put to the Banking Royal Commission by Counsel Assisting in the closing submission on the recent superannuation hearings.
At this stage the Banking Royal Commission is more questions than answers, though this is likely to change as the issues raised in hearings and submissions lead to recommendations in the interim report in September, followed by the final report by the start of February 2019.
Counsel Assisting Mr Hodge QC raised some questions at the close of the hearings into superannuation, but said at the time there would be further issues raised in the submission – which was published late last week.
Another question about the regulators ASIC and APRA in the submission was: “Is the present allocation of regulatory roles appropriate to achieve specific and general deterrence from misconduct?”
It asks if the allocation of roles between the two regulators are appropriate to deter misconduct, and if the balance between them should be “restructured or significantly altered” to better protect consumers.
At the close of the superannuation hearings Mr Hodge asked if was desireable to prohibit paying commissions from superannuation products and end grandfathering. In the closing submission it is asked: “Are legislative interventions to remove grandfathered commissions and ongoing service fees from superannuation accounts appropriate?”
The submission also asked if this could result in “detrimental effects on the provision of high quality financial advice”
Ban on inducements for employers
The submission asks if the prohibition against inducements in section 68A of the SIS Act should be widened, “as a response to conduct of superannuation trustees that seeks to induce employers to select funds, or affect their decisions as to default funds”.
ASIC has warned employers about such inducements, and concerns about the banks offering employers benefits has been raised on several occasions by Industry Super Australia.
Selling of super in banks
“Is it appropriate that superannuation be sold through bank branches? Is it reasonable to think that there is any prospect that this is likely to produce an outcome that is in the best interests of consumers?”
The submission asks, if there is a problem, if the existing laws around personal and general advice are sufficient, or if legislative reforms are required.
“What is the nature of the ‘advice’ that a customer of a bank receives when told by a bank branch staff member about the availability of a superannuation product offered by a bank?”
Aboriginal and Torres Strait Islander super fund members
The submission asked a number of policy questions about how superannuation can be improved for Aboriginal and Torres Strait Islander super fund members:
- Are the identification procedures used by super funds appropriate for Aboriginal and Torres Strait Islander super fund members, and are these procedures understood and implemented by front-line staff?
- Should super funds be required to record whether their members identify as Aboriginal and Torres Strait Islander people?
- Should super funds that don’t currently allow early release for severe financial hardship change their position?
- Should the lower life expectancy of Aboriginal and Torres Strait Islander people be taken into account in the decision-making of super funds?
- Should the binding nomination rules be changes to reflect Aboriginal and Torres Strait Islander kinship structures?
Advertising by super funds
The submission asks if “political advertising” is consistent with the intention of section 62 of the SIS Act – the sole purpose test.
“Is there identifiable detriment to consumers from advertising by super funds or particular advertising (such as Fox and Henhouse)? Is there identifiable benefit to consumers from advertising by super funds or particular advertising?”
Parties with leave to appear have until the end of August to provide submissions, while the general public have until 5:00 pm on 21 September 2018 to make their submissions – on the Royal Commission’s website.