The final report from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has targeted the selling or hawking of super funds, as well as the way the default choice of superannuation funds operates in its recommendations regarding the current retirement savings framework.
Commissioner Kenneth Hayne recommended the prohibition of any unsolicited selling of superannuation funds with the exception of situations where an individual is not a retail customer of the financial institution or where the conversation comes about by way of an employee share scheme.
In its response to the recommendation, the federal government has agreed the practice should be prohibited in this manner and that clarification should be specified to include situations where a superannuation fund is sold during a meeting, phone call or other form of contact where the purpose was to discuss an unrelated financial product.
The ban has also been extended to insurance products.
Speaking at the release of the report, Treasurer Josh Frydenberg said the move would help in “preventing some of the most disturbing stories the royal commission heard of vulnerable people being sold, on an unsolicited basis, policies that they didn’t need”.
The final report also recommended a change as to how the selection of default superannuation funds is determined whereby an individual should in the future have one default retirement savings account for their entire working life.
Again the government agreed with the recommendation, stating it fell in line with the recent recommendation from the Productivity Commission’s report, “Superannuation: Assessing Efficiency and Competitiveness”, that individuals without an existing retirement savings account be defaulted once only.
“We will ensure fund members only have one account for new members entering the system, a recommendation that mirrors the Productivity Commission’s report,” Frydenberg said.
The Financial Services Council (FSC) said it strongly supported the practice of having a person defaulted into a superannuation account a single time.
“The Financial Services Council welcomes the release of the royal commission’s final report,” FSC chief executive Sally Loane said.
“Now we need to get on with the task of strengthening Australia’s financial services industry for the future so that we never end up in this situation again.”