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Govt legislates on industry fund corporate boxes

In what represents some of the first legislation flowing from the final report of the Royal Commission, the Federal Government has moved to expose superannuation fund trustees to civil penalties for breaches of their best interests obligations.

The move appeared directly aimed at industry funds which have spent money entertaining employers to garner support for their default products.

The Treasurer, Josh Frydenberg confirmed that the Government had moved on the issue via amending two superannuation bills currently before the Parliament and likely to be dealt with before it rises at the end of next week.

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Frydenberg said the amendments reflected Recommendation 3.7 of the Royal Commissions final report as well as recommendation 3.6.

“The Commissioner remarked that the existing ‘enforcement measures are less direct than they should be, given the central importance of the obligations’,” Frydenberg said. “The Government has already introduced legislation that would see directors subject to civil penalties for breaches of their best interests obligations and now we are immediately acting on Commissioner Hayne’s recommendation that these penalties extend to trustees.”

“The Commissioner also recommended [Recommendation 3.6] that trustees be prohibited from ‘treating’ employers in return for ‘having the recipient nominate the fund as a default fund or having one or more employees of the recipient apply or agree to become members of the fund’,” the Treasurer’s statement said.

He said the Commissioner had found, “The evidence given in the Commission showed that some large funds spend not insignificant amounts to maintain or establish good relationships with those who will be responsible for nominating the default fund for their employees.”

“The Government is also immediately acting on this recommendation, amending the Superannuation Industry Supervision Act 1993 to prohibit trustees from ‘treating’ employers,” Frydenberg said. “The amendment tabled will be made to the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017.”

“This legislation is currently in the Senate and the Government calls on Bill Shorten and the Labor Party to support the amendment which acts on two of Commissioner Hayne’s recommendations and would immediately enhance accountability of superannuation funds and strengthen protections for consumers.”




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So, Australian Super is now offering new members who join the fund 20,000 Qantas Frequent Flyer points .
Australian Super states " SWITCH TODAY..and you will earn 20,000 bonus Qantas Points"......
It goes on to state that the offer is only available to new members and not existing members.
So, it is a carrot to join the fund and there is a closing date of 5th May, 2019 effectively manipulating the sense of urgency to join or you will miss out.
The bonus points will only be offered to the new member 2-3 months after they have contributed a minimum amount of $350.00 within 6 months of joining.
And here is the real eye opener:
" This communication is not financial product advice, IT IS NOT INTENDED TO INFLUENCE A PERSON IN MAKING A DECISION IN RELATION TO A PARTICULAR FINANCIAL PRODUCT."
Really?????.....so what is the offer of a bonus 20,000 frequent flyer points only applied after joining within a specific time frame and after contributing to the fund designed to do Australian Super ???????
It's not designed to encourage members to leave the fund or to not join the fund.
It is very clearly an incentive and a carrot to influence a persons decision to join a superannuation fund when the benefit offered has nothing at all to do with retirement savings or the Sole Purpose Test.
The bonus points will quite obviously have no benefit to the members accumulation , asset allocation and investment performance, insurance options etc etc.
The fact this offer is not available to existing members only reinforces the new business strategy.
This is a superannuation fund effectively influencing membership through what would be perceived to be a free or BONUS offer to the new member.....but it isn't free, because you wont get the points until you commit $350 for the privilege and then you may receive the bonus points 3 months later.
This is a direct and targeted incentive to switch superannuation funds and they cover themselves by stating that it is not product or personal advice.
If a financial adviser were to offer non-related bonus incentives to the public to switch superannuation funds, how would ASIC view that practice ????????
This is a clear demonstration that it is one set of rules for some and another set for others.
This is fundamentally wrong and needs to be addressed immediately as more industry funds seek ways to entice membership growth through non-related incentives, gifts and offers.

Agreed, though having said that I started one for myself, my wife, my two children and intend in 3 months to roll all 4 small amounts out to our normal super plans. Aggregate the family transfer in QFF to 80,000 points for some accommodation on our next holiday, thanks Aus Super, and they won't make anywhere near that return out of us :)

Would obtain Qantas Points for joining a particular superannaution fund be a breach of the sole purpose test I ponder. Especially since this gives an immediate non-retirement, death or disablement benefit.

Now I understand why QANTAS is giving free Qantas Club membership to ASIC. WOW.

Do the Board Members of Australian Super receive Qantas Club membership as an included benefit ?
Does any executive within Australian Super receive Qantas Club membership as part of their package ?
If so, could this be deemed a conflict of interest if Australian Super executives are receiving a benefit from Qantas and then promoting Qantas Frequent Flyer points to potential members ?

What if Qantas was providing it to Aussie Super Board members for free? I believe it does for ASIC Commissioners and senior staff.

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