The review into the financial system’s external dispute resolution and complaints framework says the “the dispute resolution mechanisms for superannuation are broken and will not withstand future pressures”.
In May 2016 the government announced that an independent expert panel would review the dispute resolutions schemes for the financial system, including the Superannuation Complaints Tribunal (SCT), Financial Ombudsman Service (FOS) and Credit and Investments Ombudsman (CIO). This review has now given its interim report.
The Review has found that the delays experienced with the SCT, particularly in relation to TPD and death benefit complaints, are “unacceptable”. Additionally the SCT can be “difficult to access and navigate”. It is also “hampered” by restrictive legislation which includes a narrow definition of ‘fair and reasonable’.
The Review also finds that SCT funding has been steadily decreasing, with current levels “neither sufficient nor sustainable”.
The interim report says: “The Panel considers that the existing problems with SCT cannot be addressed within the existing tribunal structure, even with substantial reforms to funding, governance, appointment processes or other aspects of the legislative regime, as the rigidity of the statutory model would continue to hamper flexibility and innovation, making it difficult for SCT to respond to unanticipated future challenges.”
“Existing pressures on SCT will, in the absence of significant reform, become more acute as the superannuation system matures and an increasing proportion of the population moves from the accumulation to the drawdown (retirement) phase, and engagement with the superannuation system, as well as the complexity of the system and range of financial products, increases.”
“… the Panel recommends that SCT be transitioned to a new industry ombudsman scheme for superannuation disputes”.
The Panel has recommended there be a single industry ombudsman for all financial, credit and investment disputes, replacing the FOS and CIO, but that superannuation disputes continue to be dealt with by a separate body. Though the Panel says that consideration should be given in the future to having a single ombudsman for all financial system disputes.
However it is unclear if this recommendation, if it is repeated in the final report, will be adopted by the government. Minister for Revenue and Financial Services, Kelly O’Dwyer said: “The Government is committed to a one-stop shop for consumer complaints handling that provides consumers with access to justice, the independent determination of disputes, timely reviews and a robust compensation scheme.”
Submissions in response to the interim report close 27 January 2017. The final report is due to be given to government in March 2017.