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The Superannuation Industry (Supervision) Act would be amended and the superannuation industry would be based on a new, member-focused architecture under changes flagged in the first preliminary report of the Cooper Review into superannuation.
While making clear that it would be avoiding publishing hard and fast recommendations on changes to the superannuation industry, the interim report indicated a key change in direction with a new system architecture based on members rather than funds as products.
At the same time, the Cooper panel wanted to make superannuation trustees more answerable to their members for the decisions they take, while it wanted the performance of superannuation funds to be measured on the basis of returns to members.
And while acknowledging that Australia’s superannuation system is not broken, the Cooper Review panel insisted that change is necessary to take the industry forward over the next 15 to 20 years.
It argued that while industry competition has been successful in shaping the industry, there would be a continued need for “using regulatory shaping where markets have been less effective”.
In doing so, however, the Cooper panel insisted that it does not “have a general appetite for increased regulation”.
On the question of governance, the panel has suggested that superannuation funds regulated by the Australian Prudential Regulation Authority (APRA) be subject to the same standards required of publicly-listed companies.
While the chairman of the Cooper Review, Jeremy Cooper, has made a number of references to a future superannuation industry made up of fewer but larger funds, the panel’s preliminary report stated that it does not believe consolidation of the industry should be prescribed. It said consolidation should occur as a matter of course, in the same manner as had occurred in the past.
