The Government needs to look at legislative gaps which have allowed certain companies to help people gain early access to their superannuation for medical issues such as IVF, according to financial planning firm, Dixon Advisory.
In a submission to the Senate Economics Committee inquiry into Consumer Protection in the Banking Insurance and Financial Sector, Dixon Advisory has pointed to what it believes are legislative gaps which have been allowing such practices.
While acknowledging that the ability to access superannuation under compassionate grounds represents an effective example of how flexible policy could be utilised to assist individuals’ immediate and urgent cash flow problems including access to medical treatment, Dixon advisory expressed concern at how some firms were seeking to manipulate such arrangements.
“We are aware of a company operating that assists superannuation fund members gain early access to their super to finance the individual’s medical treatment, including IVF treatment,” the submission said.
“It is important that this issue is analysed and evaluated from a consumer protection perspective; including the consideration of implementing safeguards into the process like: access to financial advice, full disclosure of fees charged by the company and the long-term implications of the decision for the individual.”
The advisory firm also expressed concern about changes to the protection of small account balances, stating that, in its view, the removal of member protections for small super fund accounts in combination with the changes to the lost super provisions meant that casual workers and younger people with small account balances were often losing out as a result of the current legislative environment.
“Protection for small balances and lost super is a consumer protection area that requires further deliberation,” it said. “Further, development of innovative strategies may be an effective way to address the problem.”
The submission provided the example of introducing strategies which assisted young people with the immediate financial demands and which were not mutually exclusive to a stable retirement – such as allowing access to super for assisting in a home deposit – is expected to incentivise workers to engage with their super as they will see this being more relevant to their needs.