The Opposition has slammed the final choice of fund regulations released by the Federal Government yesterday as costly, complex and unsafe.
Senator Nick Sherry said the final regulations, including the standard choice form (SCF), would be detrimental to the interests of employers and employees.
Rejecting yesterdays proclamation by the government that the regulations provide certainty, Sherry said the only certainty was increased cost for employers and industry.
“All of it has to be paid for by the employer. Not since the GST have employers seen anything like it,” Sherry said.
Sherry described the regulation as a massive new compliance burden for 400,000 employers, with small business likely to be hardest hit.
He said there were 34 steps for employers to comply with, including “handing out five million forms collectively to existing employees, and over one million each year thereafter”.
“There are also thousands of different funds that employers will have to make payments into on behalf of employees, and funds nominated can be changed every 12 months,” he said.
Employers will also face significant legal liability if they give advice to employees, he said, even if they are asked. “There are fines up to $500 per employee on employers if they get it wrong.”
Sherry said that for employees the regulations represent an “unsafe regulatory framework that fails to protect consumers against fee rip offs”.
“For example, entry and exit fees and commission based selling is still permitted provided it is ‘disclosed’ in complex, lengthy 50 page plus disclosure documents.”
Labor will hold the Government accountable to its promise that super fees and charges will come down due to “competitive pressures” under the regulations, Sherry said.
He said the inclusion of Retirement Savings Accounts (RSAs) as a default fund “clearly favours banks” which offer this type of account.
“It is also not a level playing field in that the RSAs have no insurance coverage under the regulations, when it is a requirement under the regulation by other types of funds.”
