The Labor government’s approach to regulatory reform affecting financial services has left outstanding “threats” to the industry, an opposition Member of Parliament said yesterday.
Member for Bradfield, Paul Fletcher told delegates at yesterday’s 12th Annual Wraps, Platforms and Masterfunds conference that the coalition might approach outstanding industry threats should it be elected to government.
“The coalition considers that there needs to be a more appropriate provision for independent directors on superannuation fund boards, that directors on multiple superannuation boards must demonstrate to APRA [Australian Prudential Regulation Authority] that they don’t have any foreseeable conflicts of interest, that disclosure of conflicts of interest to be mandatory and directors of superannuation funds required to disclose their remuneration in line with the provisions that apply to publicly listed companies,” Fletcher said.
In addition, Fletcher questioned the engagement of the regulatory authorities on fraud and criminality in the superannuation system, citing the Trio Capital collapse as a significant example where implicated investors were not compensated.
“The current government’s policy agenda doesn’t come to grips with some of the serious deficiencies in corporate governance and leaves some significant recommendations from the Cooper Review unimplemented,” Fletcher, who is also a member of the Parliamentary Joint Committee on Corporations and Financial Services, said.
“By contrast, the coalition has a clear reform direction for superannuation, which we will pursue should we come into government next election.”
Fletcher said the coalition is also planning changes to the current anticompetitive modern award system for choosing default superannuation funds by introducing new legislation.
Other elements on its reform agenda includes improving superannuation governance by implementing the Cooper Review recommendations and making it easier for consumers to compare super funds by working with the industry and APRA to develop a series of industry standards, definitions and performance benchmarks, he said.
“If and when the Budget is back in surplus and government debt is under control, we will revisit concessional superannuation contribution caps and review the barriers restricting the availability of income stream products for retirees,” he said.
“With the retirement income sector being so large, it is vital that Australians maintain trust and confidence in the sector.”
If the coalition comes into government, its first action will be to amend the Future of Financial Advice legislation by implementing 16 recommendations it made in a minority report, Fletcher said.
“[It includes] the complete removal of the opt-in arrangements, the simplification and streamlining of the additional annual fee disclosure requirements, improving the best interest duty and providing certainty around the provision and availability of scaled advice, and refining the ban of commissions on risk insurance inside superannuation,” he said.
“We also hope to deliver some benefits to the financial services sector through our focus on reducing red tape.”
