The Super Members Council (SMC) has called for stronger consumer protections in regards to superannuation switching, particularly where an SMSF is involved, including tracking and flagging when a rollover from a retail or industry fund occurs.
SMC chief executive Misha Schubert said the advocacy group supported recent comments by Australian Securities and Investments Commission (ASIC) chair Joe Longo in relation to the introduction of cooling-off periods during the super switching process to allow people to seek third-party help or advice in the wake of the collapse of the Shield and First Guardian master funds.
Alongside this change, SMC also suggested the corporate regulator reintroduce its 2010 Investing Between the Flags initiative and create alerts for consumers who may be moving their retirement savings outside the safeguards of the Australian Prudential Regulation Authority (APRA) super system that would prompt them to confirm they understand the risks.
Additionally, the use of data-driven surveillance could be introduced to monitor the risk in high rates of super switching or SMSF establishment to identify consumer harm and enact preventative measures sooner.
The council also suggested ASIC reintroduce on its MoneySmart website a minimum recommended balance for the establishment of an SMSF and expand anti-hawking laws to pick up new methods used to target people to switch their superannuation.
Specifically, the laws would cover social media lead-generation, click-through ads and online sales funnels, and included the regulation of seminar, telemarketing and referral-based tactics that label switching and SMSF set-ups as ‘education’ or ‘coaching’.
In regards to advice provided by licensed firms, SMC called for ASIC to comprehensively review its conflicted remuneration guidance in light of referral and commission practices undertaken by Shield and First Guardian and related entities.
At the same time, ASIC, APRA and Treasury should close any consumer protection gaps in governance and executive accountability under the Financial Accountability Regime and reassess the trustee-for-hire model.
“The social licence of the whole system relies on strong trust in super and strong trust in good advice, and Australians rightly expect there to be strong uniform consumer protections across the entire system,” Schubert said.
“The collapses of Shield and First Guardian show the current consumer protections are not uniform enough and we all have a responsibility to work together to ensure they are.
“Many Australians are vulnerable to tactics that encourage them to switch their super into options that are more expensive, risky or not in their best interests. We need a system that universally prevents consumer harm.”
