The Association of Superannuation Funds of Australia (ASFA) today welcomed the interim report from the review of the financial system’s external dispute resolution (EDR) and complaints framework.
The review is chaired by Professor Ian Ramsay, with panel members Julie Abramson and Alan Kirkland.
ASFA CEO Dr Martin Fahy said the report is extensive and its recommendations have the potential to reshape the way the industry manages complaints and disputes.
The report has expressed a clear recommendation that it would not be appropriate, at this time, to replace the three existing schemes—the Superannuation Complaints Tribunal (SCT), Financial Ombudsman Service and Credit and Investments Ombudsman—with a single scheme covering all types of financial services and products.
“ASFA strongly agrees with the recommendation that a separate superannuation EDR body should be retained,” Dr Fahy said.
“Superannuation is a highly complex area that warrants specialised complaints handling arrangements.
“Super is a $2 trillion industry and as the system grows larger and evolves, particularly into the post-retirement phase, confidence in the system must be maintained through an EDR body that provides an appropriate level of consumer protection.
“It should also be adequately funded and resourced to provide timely resolution of disputes.”
Dr Fahy said ASFA would make a formal submission addressing the interim report, including the recommended change from the current statutory nature of the SCT towards an industry-based ombudsman scheme.
“ASFA will work through the implications for industry and consumers in the context of this proposed change to ensure the many benefits and protections of the current SCT model are not lost,” he said.
“Also of note is the recommendation that the industry develop a Code of Practice for superannuation, augmenting the code of practice being developed for group insurance in superannuation.
“Further, while the review supports a last resort compensation scheme, it is worth acknowledging the APRA-regulated superannuation sector is subject to prudential supervision and already has a statutory compensation scheme in place.
“This scheme, under Part 23 of the Superannuation Industry (Supervision) Act 1993, can be invoked where a fund faces difficulty paying benefits because of a loss suffered due to fraud or theft.”
Dr Fahy said the implications of a broader compensation scheme would require careful consideration, with a need to ensure APRA-regulated superannuation funds and their members are not exposed to losses incurred within sectors of the industry not subject to prudential regulation and supervision.
“ASFA will continue to work closely with the review as it undertakes deliberations for its final report, which is due to be given to the Government by the end of March 2017,” he concluded.
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, which aims to advance effective retirement outcomes for members of funds through research, advocacy and the development of policy and industry best practice.