Current regulatory settings surrounding financial advice are not always helpful for superannuation members, according to First State Super.
In a submission to the Retirement Income Review, the fund said consideration needed to be given to help funds provide members with better, more personalised, information and guidance.
“Good advice and information support members with financial outcomes, and are critical in motivating and guiding them to maintain savings pre-retirement, and to staying the course in retirement. Re-regulation following the Royal Commission has been necessary and is important,” it said.
First State Super said the super system needed to be simplified from the members’ perspective through intrafund advice and digital service was critical.
The fund noted there were many challenges and barriers when it came to providing advice to people who needed help including:
- Legal limitations on what “advice” is and who can provide it, which is not all well understood by members. These limitations also make it difficult to allow a member to switch from general advice on some topics and personal advice on others;
- Statement of Advice readability for clients; these are lengthy to ensure no retrospective issues from the Australian Securities and Investments Commission (ASIC) and the Australian Financial Complaints Authority (AFCA) i.e. transparency requires detailed content, and is a potential barrier to providing useful digital advice to members; and
- The recent reduction in the number of firms and planners will be a dilemma for policy makers who want to see members are well equipped to manage their finances in retirement.
“We propose a working group be formed to explore the best way to develop safe and helpful digital advice tools for members,” the submission said.
The fund said the challenge in super and retirement income was that they were wide-reaching across multiple policy areas.
“The panel could consider a co-ordinated body to look at the interconnected-policies, systems and government bodies which support retirement, to improve coordination of planning, regulation and policy setting,” it said.
“This body would facilitate comparison of interlocking policies across superannuation, taxation and social security, and test the impacts of a changing environment or change in legislative policy. The model could be based on the existing Australian Council of Financial Regulators, but be a more publicly visible body.”
It said Australia needed a “coordinated whole of system approach” and could achieve more within budget constraints through effective coordination of government bodies and regulatory planning “to ensure shared purpose and consistent policy across the Australian Taxation Office (ATO), Department of Social Services (DSS), Department of Human Services (DHS) and Treasury, hence our suggestion for a council of retirement and aged care regulators”.