The superannuation sector is suffering from reform-induced change fatigue, an implementation expert has warned.
Sequential Project Services senior consultant Lata McNulty said the pace of financial services reform was inducing “change fatigue”.
“We’ve only just started and I can see change saturation. It’s not just a matter of rolling out the technology – it’s also sustaining it,” she said.
McNulty saw no change in the pace.
“Superannuation regulations will always be changed. There will always be tinkering with the sector because it’s so important for the economy and for people,” she said.
She singled out service providers, such as custodians and administrators, as being of particular concern.
“Some of them need to clean up their act – but APRA [Australian Prudential Regulation Authority] is limited in how much it can do,” she said.
“The service providers need to be in advance of the superannuation funds – but they (the providers) are not in front by much.
“A good service provider would go to the super fund and ask ‘how can we help you’, and then come up with real solutions.”
McNulty acknowledged that service providers had very small margins and said that the problem of lack of capital for investment could be addressed by tax relief for service providers.
“The providers have to do things differently – not just do the same things differently. There’s no point in just tweaking the same process – that’s not revolutionary, it’s just evolutionary.”
“There needs to be a 10-year blueprint to make sure of the ‘concrete you want to lay’, and not just change the doorknobs.”
The outcome of the various reforms would be, in the long run, “better informed trustees, increased governance, better structures, and more rigour”.
However, McNulty said Super Stream should have been the first reform.
“There are immediate, real money benefits from implementing Super Stream,” she said.
“Then, prudential standards should have been next, followed by MySuper. Super Stream should have been pushed through first because of its efficiencies.”
