Keeping ‘best interests duty’ could protect super fund members: AIST

If safe harbour provisions are removed, the existing ‘best interests duty’ could ensure super fund members are not taken advantage of, according to the Australian Institute of Superannuation Trustees (AIST).

Voicing support for super funds providing advice to its members, AIST senior policy manager David Haynes pointed out that some of the proposals in the Quality of Advice Review required “fleshing out”.

“Firstly, the existing ‘best interests duty’ might provide more protections than the ‘good advice’ obligation proposed by Michelle Levy, particularly if the existing safe harbour provisions are removed,” he said.

“Secondly, the people who provide personal advice in contact centres are going to need to meet minimum standards. 

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“We’re waiting on the Government to announce the consultation on the review’s recommendations, so there will be plenty of opportunity for discussion about these issues. 

“The Government has said they are not going to be having a review of a review, but it will be interesting to see if they intend to consider and progress all of the recommendations at the same time, or if they opt for a staged approach — my money is on the latter”. 

Still, the review had addressed a lot of problems facing access to advice and its affordability, Haynes acknowledged. 

Among one of the most welcomed proposals was the decision to do away with statement of advice (SOA) requirements. 

“This should help contact centres and super fund websites to be able to both answer a wider range of members’ questions and to be able to do so without getting bogged down in paperwork”, Haynes said.

He added that providing advice could be enhanced by broadening the scope to provide intra-fund advice i.e. limited advice that is ‘collectively-charged’ built into the administration fee. 

With the slew of proposed changes in the pipeline for the super system apart from the review, such as the defining the objective of super and increasing the concessional tax rate on super balances over $3 million, the AIST believed there were some significant challenges ahead. 

Hayne explained: “In terms of what this range of changes could mean for funds, there will be more engaging call centres, more dynamic use of websites, greater definition of cohorts, greater diversity in terms of product offerings while still maintaining the focus on account-based pensions for retirement as the bedrock and effectively the default position. 

“And with member experience, or the members interests and member experience being the drivers for all of this.”