As with previous reviews, industry participants are calling for further consultation, with one industry participant pinpointing the need for greater clarity on the review’s MySuper recommendation.
AMP Financial Services managing director Craig Meller said MySuper, in particular advice, needed to be properly defined under the Cooper review’s proposals.
“Advice in financial services is always bandied around but not well understood,” Meller told an Association of Superannuation Funds of Australia lunch last week in Sydney.
“The Cooper review has segmented MySuper into intra-fund advice and broader advice. However, it has defined the former and not the latter.”
He said infra-fund advice did not need to meet the “know the customer obligations” inherent in a fully advice regime.
“So if a member contacts a call centre wanting to know whether to put $10,000 into super or pay off their mortgage, the fund cannot provide them with advice as the scope [for providing such advice] goes beyond intra-fund advice,” he said.
The potential for the wrong decision to be made was larger when a person’s investable assets were greater, he said.
The Cooper recommendations for insurance in superannuation would also have to be carefully considered so that underinsurance was not exacerbated, he said.
He called for a review into superannuation in the award system ahead of the implementation of MySuper.
The role of MySuper needed to be considered in the industrial award system as the current monopoly by some funds that were entrenched in the awards had little incentive to lower costs, he said.
“The issue needs to be resolved before MySuper is implemented. Otherwise MySuper won’t live up to its promises for many Australians,” he said.
The Cooper review’s MySuper recommendation has created quite a stir within the industry.
Association of Financial Advisers chief executive Richard Klipin said MySuper assumed people were disinterested in their super and always would be.
“But worse than that, the recommendation presumes that someone else, in this case the government, knows what is best for them. This is not only untrue, it is patronising and paternalistic,” Klipin said.
He said the recommendation failed to address the underlying problem of poor retirement savings.
“We are concerned that MySuper limits consumer choice, dumbs down superannuation and encourages a one-size-fits-all mentality,” he said.
“A cookie-cutter approach to superannuation will never fix Australia’s poor levels of retirement savings.”
Earlier this month, the government announced its intention to fast-track MySuper and SuperStream as it said both recommendations made good commonsense.
However, as the election looms, it will no doubt be a case of watch this space.
