The superannuation industry must show leadership and make the necessary changes to better manage conflicts of interest according to The Association of Superannuation Funds of Australia.
In its submission to the Hayne royal commission, ASFA recognised the role the commission had played in bringing to light areas of industry conduct and regulation which needed improvement.
ASFA chief executive Martin Fahy said that the industry shouldn’t wait for the final recommendations to begin work on rebuilding trust and faith in the system.
“Addressing community standards and expectations is at the heart of engendering confidence in the system. Perceived and actual conflicts of interest, if not managed appropriately, do the opposite,” he said.
Dr Fahy said, given the nature of super, people expected integrity in the institutions to which they entrusted their money.
“Given the fiduciary nature of superannuation it is reasonable to expect that, at a minimum, savings are managed with a high degree of prudence and integrity by trusted institutions,” said Dr Fahy.
In ASFA’s submission, it recommended stronger regulatory frameworks, the ending of grandfathered trailing commissions, sanctions for failure to act in best interests of members and clearer demarcations in governance structures.
Dr Fahy said there is a need for stronger frameworks, but he did not believe there was the evidence to support a prohibition on particular structures.
“It is important to acknowledge that the superannuation system is already delivering significant improvement in retirement living standards for all Australians,” he said.
Dr Fahy said that superannuation made a substantial difference to retirees and the government, which needed to be the basis for any changes.
“This national beneficial outcome is the backdrop against which changes to the regulation of superannuation ought to be considered,” he said.
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