The Australian Securities and Investments Commission (ASIC) has made a direct call for a “properly resourced code administrator” covering insurance in superannuation the back of revealing the results of a shadow shopping exercise which found some superannuation falling short.
In a new report dealing with industry implementation of the Voluntary Code of Practice covering insurance inside superannuation, ASIC made clear that it, alone, could not do the job.
What is more, ASIC stressed the urgency of the situation by pointing out that the delivery of insurance inside superannuation was now costing more than the delivery of superannuation with premiums costing just over $5 billion a year compared to $3.8 billion for superannuation itself, including investment and administration costs accounting for $3.8 billion.
Further, it said that the cost of insurance was rising at 21% a year – higher than either assets or combined investment and administration expense which had risen by 17% a year since 2014.
“Our work and engagement with the code is not a substitute for proper oversight of the code by a properly resourced code administrator that would have powers to investigate breaches and to sanction funds if breaches were not remedied,” the regulator said.
It did so on the back of a shadow shopping exercise which found that adopting of the code of conduct by superannuation funds has not been universal and that while two-thirds of funds had signed up, there was not always total commitment.
“… we found some signatories (13) have committed to only partial compliance with the code, and trustees’ anticipated timetables to full compliance varies widely,” it said.
ASIC’s reference to the need for a code-monitoring agency with the power to sanction comes as the Government moves to legislate to make the insurance inside superannuation code enforceable but has not yet indicated who will do the enforcing.