30 January 2017
Consumer protections at risk if Super Complaints Tribunal replaced
Consumer protections may be at risk if a proposal to scrap the Superannuation Complaints Tribunal (SCT) goes ahead, according to the Association of Superannuation Funds of Australia (ASFA).
ASFA CEO Dr Martin Fahy today said the government should increase funding for the SCT rather than replace it with a Superannuation Ombudsman.
“The SCT is in urgent need of increased funding and resourcing that reflects its growing caseload,” he said.
“We don’t want to see an outcome where consumers end up with an inferior arrangement for dispute resolution when it comes to their super.”
A government-appointed panel has been reviewing the complaints handling framework for financial services since last May.
In December the panel issued an interim report, Review of the financial system external dispute resolution and complaints framework, which recommends replacing the SCT with a Superannuation Ombudsman and potentially introducing a compensation scheme of last resort for the financial services industry.
Dr Fahy said the SCT has a number of important strengths and protections for consumers and trustees that would be reduced or even jeopardised in a move to a membership-based ombudsman scheme.
“With the SCT, there is no monetary limit on access or redress and there is enforceability of determinations and rights of appeal,” he said. “That protects the consumer.
“A membership-based industry ombudsman scheme would provide scope for limits to be imposed on the type or value of claims that may be pursued, there would be no direct right of appeal and the possibility the individual would need to pursue contractual remedies against a provider to enforce a decision.
“That is why the industry is worried about this proposal.”
Dr Fahy said the industry sees an opportunity to effect meaningful improvement to the SCT through changes to the existing model, without the need to move to an entirely new type of dispute resolution body.
“There is significant scope to modernise the operation of the SCT through important changes to its governance, accountability and service model and this should be the priority for government,” he said.
“The current model has many aspects that are appropriate given the unique nature of compulsory superannuation as a financial product and the fiduciary duties owed by trustees to the fund members/beneficiaries.
“Superannuation also has other features that set it apart from other products. There is often great complexity in disputes and many parties that may be involved, so it is crucial to have deep specialist knowledge and expertise in any dispute resolution body.”
“The panel observed there is considerable merit in a compensation scheme of last resort,” Dr Fahy said.
“ASFA does not support any industry-wide compensation scheme that has the potential to involve cross-subsidisation by the APRA-regulated superannuation sector of losses incurred within other sectors.”
Dr Fahy noted arrangements already exist that effectively provide a compensation scheme of last resort for the APRA-regulated superannuation sector, in the form of Part 23 of the Superannuation Industry (Supervision) Act 1993.
For further information, please contact:
Teresa Mullan, Media Manager, 0451 949 300.
ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry. It is a not-for-profit, sector-neutral and non-party political, national organisation. ASFA’s mission is to continuously improve the superannuation system so people can live in retirement with increasing prosperity. We focus on the issues that affect the entire superannuation system and represent more than 90 per cent of the 14.8 million Australians with superannuation.