Home' Superfunds : Superfunds April 2019 Contents In an era where governments and regulators have signalled zero
tolerance for any failings by financial services organisations, how
can superannuation set itself up to meet the challenges of the post-
Hayne world. Indeed, what will success look like?
In the Royal Commission into Misconduct in the Banking, Superannuation
and Financial Services Industry, Commissioner Hayne handed down 76
recommendations that both sides of politics said they would support, and
no doubt organisations will be moving to implement reforms and tick these
off their list. But is there greater value for superannuation to focus on his six
principles in terms of creating a stronger and more transparent industry?
The ASFA Spotlight on Insurance unpacked the Royal Commission and
looked at the journey on which superannuation needs to embark to ensure
the industry delivers for its members.
With an opening address from Deanne Stewart, chief executive of First
State Super, and a robust panel discussion also featuring TAL chief risk officer
Anne Clarke, and Rice Warner’s executive general manager of insurance
Jenni Baxter, the session acknowledged that super and insurance has work to
do to meet criticism, regain trust and continue to develop good public policy
DELIVERING ON COMMUNITY EXPECTATIONS
Deanne Stewart said the clear message from the Royal Commission is the
need for insurance in super to deliver on community expectations.
“As we think of that, and setting the standards or the benchmark for the
industry, it’s important to recognise the purpose of superannuation and the
role insurance plays inside that, whether in default mode or not.
“If, as a result of the Royal Commission, insurance hawking and
commissions get dialled back, there may be quite a role for us to play for
insurance inside super that is not default. It certainly warrants thinking about.
And we clearly need to reinforce the benefits. This is a critical part of all the
debates and discussion of insurance inside super.”
Stewart called out three specific challenges for insurance within super from
the Royal Commission. “One is affordability – as an industry we try to pre-
empt that and it’s certainly a core element of the insurance in super code.
The second is account erosion, which is being tackled by the Code and also
what comes out of the Protecting Your Super package.
“So, what are the community expectations here? What are we hearing
from the great majority of 21 year olds? How do we make sure we actually
stand up for them as opposed to protecting any vested interests.
“And the third is helping members make informed decisions. I’m sure if
you stood around a barbecue and you turn to your family and friends and
ask: ‘are you exactly aware of what insurance you’ve got inside your super?’
it would be miraculous if they could tell you. But if you followed that up
with: ‘can you define when you would or wouldn’t be able to get TPD?’, the
conversation wouldn’t go much further.
“So how do we make it simple? How do we make it more standard,
possibly, so the average Australian worker can get to grips with what they
have inside their superannuation? We have a code in place, which touches on
more timely complaints handling as an example, but the Royal Commission
is looking to take that further in terms of making it law. It’s great to have a
code but if everyone’s breaching it how can it be enforceable and how does
it lead to stronger member protections and rights?”
SIX KEY PRINCIPLES TO GUIDE BEHAVIOUR
Given the work the super industry has already commenced to address,
affordability and account erosion in particular, Stewart believes Commissioner
Hayne’s preamble to the report—featuring six key principles—is of significant
value for the industry.
“Does there need to be a whole bunch of laws changed, or powers
increased? I would challenge us to think about what his six principles mean
for our industry and how we can use them to guide us to a higher order of
behaviours, standards and benchmarks that we set,” Stewart said.
She outlined Hayne’s six principles and what they mean in the context of
• Obey the law
“This could be taken to mean, which we saw in many cases across
financial services, to do the minimum. But actually, obey the law
Superfunds April 2019
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