Long delay for tighter super fund regulations
LONG-MOOTED moves by the corporate watchdog to close a loophole allowing retail superannuation funds to avoid disclosing their fees have again been pushed back indefinitely.
The Australian Securities and Investments Commission yesterday confirmed any changes to the loophole would likely be delayed many months and potentially years. The reforms have already been delayed by well over a decade.
Existing guidelines surrounding fee disclosure by super funds were put in place in 2006 but do not require funds to disclose all the fees and charges they extract from our retirement savings. The guidelines are called RG97, for Regulatory Guide 97.
Because of legally mandated super contributions, the sector has now grown to a massive $2.6 trillion, representing the fourth-biggest pool of pension funds on the planet.
But ongoing failures by reg- ulators including ASIC have left much of that money open to widespread fee-gouging.
A legal loophole has meant that while there are strict rules governing how trustees deal with super money they manage, the actual penalties around those laws have been carved out of the relevant act.
That means fund management giants cannot even be forced to pay, for example, a $10 fine for gouging billions of dollars of the public’s super over many years.
The loophole was little known outside select groups of super fund managers. In March, ASIC deputy chairman Peter Kell told a Senate committee that the regulator had felt pressured to place RG97 changes on hold by super industry lobby groups.
“Participants right across the superannuation sector had raised a series of concerns around the requirements that were being developed around disclosure under regulatory guide 97,” he said at the time.
“There were ongoing and significant issues around whether the regime was workable, whether the particular requirements were being interpreted correctly, or whether there were practical ways that it could be improved.”
The corporate regulator yesterday released an “external report” on RG97. Commissioned last November, the report said “changes to the disclosure regime would be advantageous”.
ASIC said it would release a “consultation paper” setting out its “proposed response to the issues raised” in the report in the “first half of the 2018-19 financial year”.
The industry would then be called on for yet more responses, formally, aside from any behind-the-scenes lobbying.
Governance Institute of Australia chief Steven Burrell said poor transparency in the super sector was a longstanding issue and resulted in a lack of competition, a contributor to gouging in the industry.