While financial planning practices will come in for scrutiny in the Royal Commission into the Banking and Financial Services industries, industry superannuation funds appear to have been specifically singled out for attention.
The draft terms of reference outlined by the Treasurer, Scott Morrison include “the use by a financial services entity of superannuation members’ retirement savings for any purpose that does not meet community standards and expectations or is otherwise not in the best interest of members” – something which is seen as a direct hit at sporting sponsorships, advertising campaigns and transactions involving trade unions.
It is a term of reference which may cause some discomfort for the financial services regulators which, to date, have raised few qualms about whether some industry fund advertising and sporting sponsorships represent a breach of the sole purpose contained within the Superannuation Industry Supervision Act.
Financial planning organisations yesterday gave a qualified welcome to the calling of the Royal Commission, with the SMSF Association noting that the SMSF sector had actually been excluded from the inquiry.
SMSF Association chief executive, John Maroney said that while the sector had been excluded, it had already been the subject of significant scrutiny from the Cooper Review in 2010 and the Murray Inquiry in 2014.
The Association of Superannuation Funds of Australia expressed disappointment that superannuation had been included within the terms of reference, with its chief executive, Dr Martin Fahy claiming it had been subject to “a plethora of never ending inquiries, review and regulation”.
It said this was at odds with maintaining a system that was serving Australians tremendously well.
Association of Financial Advisers (AFA) chief executive, Phil Kewin said there clearly existed public pressure for the calling of a Royal Commission but it was to be hoped it did not erode the good work that had been done with respect to the financial planning industry.
“We have been subject to a lot of scrutiny and we have come a long way,” he said. “We would not like to see measures such as improved professionalism slowed or delayed.”