Frydenberg flags default fund changes far from over
The Federal Government will push on in its efforts to open up the default super system and said it will also work to clarify the remuneration issues around intra-fund advice.
Addressing the inaugural Workplace Super Specialists Australia (WSSA) conference in Sydney yesterday, the Assistant Treasurer, Josh Frydenberg said the Government considered the clarification around the definition of intra-funds advice was the last part of the refinements to the Future of Financial Advice (FOFA) reforms that it was seeking.
Frydenberg said the definition of intra-fund advice would be covered under the Superannuation Industry Supervision (SIS) Act and would deal with any issues around conflicted remuneration as well.
"This will help ensure remuneration structures for these arrangements do not influence the advice provided to retail clients, and do not qualify under the ban on conflicted remuneration, which it was never intended they would be," Frydenberg said.
"Once these refinements are fully legislated FOFA should be considered assettled and given time to work."
He also stated the Government would continue to examine default super options and remained "fully committed to increasing competition in the default superannuation market".
"I firmly believe in the benefits of competition and its power to put downward pressure on fees and increase quality of super products. MySuper is a strong step in the right direction," he said.
However, Frydenberg said it would look at a further opening of the market to competition stating the Financial System Inquiry found that superannuation fees have not fallen as much as expected given the increase in size and scale of super sector.
"Between 2004 and 2013 super fees only fell by 20 basis points while the size of an average fund increased by twelve fold."
"We are committed to opening the market to competition which will require consideration of an alternative of the current poorly conceived Fair Work Commission process and selection of default funds in awards."
"In considering what will be put in place the Goverment will ensure all MySuper products will be of highest quality, not just those under awards, and also ensure the wider regulatory framework is robust and appropriate to move to an open market."
He said this would include an examination of existing protections against funds or related parties offering inducements, or inappropriately influencing employers' choice of fund through threat of industrial disputation.
"We will put in place a framework with the strongest possible competitive forces, for the benefits of every member and see this as the most significant reform opportunity in superannuation."
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