Richard Gilbert
The Investment and Financial Services Association (IFSA) has called for the rationalisation of ‘legacy products’, which includes certain financial products such as managed investment schemes, superannuation fund and deposit funds, and has lodged a submission to the Treasury in relation to the Product Rationalisation Issues Paper released in late June.
IFSA said both consumers and the industry would be better off with a single permanent rationalisation mechanism, or a ‘one-stop shop’. It contends that financial products such as managed investment schemes, superannuation funds, approved deposit funds, pooled superannuation trusts, retirement savings accounts and life insurance products can eventually all be categorised as ‘legacy’ products.
IFSA CEO Richard Gilbert said that the rationalisation of legacy products accommodated the ongoing evolution of the financial services industry and enabled the product provider to act in the interests of customers.
“The submission states that a range of commercial drivers may exist for the termination of a financial product and our industry needs relief so that the rationalisation process is tax neutral for consumers,” he said.
“IFSA has found cases where there are products with a just a single member or handful of people left in them, yet all the associated compliance and administration burden remains. Clearly this is economically unviable and in any case, the member or members would undoubtedly be better off and at less risk in a more modern product offering.”
“Our submission recognises that it should be the product provider who will bear the costs of the rationalisation process and that there should be ‘no net detriment’ provisions for the investor,” Gilbert said.
IFSA’s submission stated that types of financial products suitable for rationalisation should include products that are administered on old technology platforms, are not economically viable or have been made redundant through duplication.
