The proposal to insert the word ‘financial’ into ‘best interests duty’ as part of the Your Future, Your Super bill is Parliamentary overreach and will have upfront negative financial implications for funds and beneficiaries, according to Market Forces.
In its submission to the Senate Economics Legislation Committee, the advocacy group said it strongly recommended to reject the proposal. It said including the word ‘financial’ was unnecessary as the existing duty required no further legislative clarification or amendment.
It said amending the duty:
- Was unnecessary and amounts to parliamentary overreach;
- Would have upfront negative financial implications for funds and beneficiaries;
- Offended existing trust law principles developed cautiously over time by the judiciary;
- Clashed with existing legislative requirements; and
- Was in direct contrast to the final recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission).
“The new duty will create legal uncertainty and is not consistent with limiting the financial burden on superannuation fund members. At the outset trustees will be obliged to incur costs for advice and compliance. For example, a suite of internal processes – those based upon the existing duty and case law that interprets it – are likely to require amendment,” the submission said.