Members of a key parliamentary committee have pointed out that superannuation funds are not under the same obligations as financial advisers to be transparent about the amounts they receive from product manufacturers such as insurers.
Queensland Liberal Party Senator, Bert van Manen used public hearings of the Senate Economics Committee inquiry into the Life Insurance industry to question whether superannuation funds should be under similar obligations.
He noted that there had been a push over the last few years in terms of transparency and disclosure of commissions and income earned in the adviser market.
“…but [that] does not apply to the group life market,” he said. “I would be interested in your views on both of those as to whether the disclosure regime should apply to the group life market equally, as it does to the retail market or advice market.”
The Senate Committee had earlier heard that some instances of profit sharing arrangements between insurers and superannuation funds continued to exist with specialist lawyer, John Birrell acknowledging the existence of claims experience rebates.
“There are things called claims experience rebates, under which, if there is a profit-sharing arrangement, there are specific contractual arrangements between the trustee and the insurer by which those rebates are directly re-credited to members,” he said.
Berrill said he believed the conflict of interest issue was more of a problem in the retail sector than it is in the not-for-profit sector, “because the not-for-profit sector does not have that profit motive to minimise claims”.
“If it is dealt with by these arrangements under which the profit share is then directly rebated to members that deals with the issue, but the mechanism for that needs to be properly scrutinised to make sure it happens,” he said.