Australia has a strong record in the field of superannuation with the world’s first industry superannuation fund being established in 1984. Since 1984 superannuation has undergone many challenges and exponential growth. With such success comes greater responsibility, with Australian superannuation funds managing more than $2.3 trillion dollars on behalf of workers and their families. Over recent years superannuation funds and their insurers have found themselves in the spot light for failing to properly manage these investments and providing members with “junk” insurance policies providing little to no benefits to members when in their greatest need.
Currently, superannuation funds and insurers are regulated by the Australian Securities and Investments Commission and the Australian Prudential Regulation Agency. These agencies have the responsibility to ensure that your superannuation is being managed in keeping with the principles of superannuation, however are restricted in what action they may take when a fund or an insurer breaches those obligations. One such example of the limited scope for corrective and preventative measure was the Commonwealth Bank saga which found both APRA and ASIC unable to protect superannuation members and insurance policy holders from the commercial practices of the Commonwealth Bank.
In order to correct the path taken by superannuation funds new laws have been introduced with the stated goal to “deliver all Australians a strong and modern superannuation system that is solely focused on outcomes for all Australians who rely on these funds to secure their retirement,”( Kelly O’Dwyer MP). These reforms seek to increase accountability on advisors and executives in instances where they failed to meet the standard of governance expected of such highly specialist people. Impose upon directors of superannuation funds who breach their duties to members the same civil and criminal penalties as directors of ordinary managed investment schemes and in certain cases APRA will have the capacity to refuse or cancel a MySuper authorisation where it believes a licensee will fail to meet its obligations.
Overall these changes seek to put the power back into the hands of every day Australian’s through greater transparency in the annual reporting of superannuation funds to their members and increase consumer protection. The proposed changes are welcome indeed.