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Both ASIC and APRA have signalled a much tougher and uncompromising approach to the regulation and supervision of insurance in superannuation at an industry stakeholder meeting in Sydney this week.
The meeting with the industry bodies that own the Code – including AIST - was held to discuss the implementation of the Super in Insurance Voluntary Code.
It heard that ASIC was undertaking major projects to improve consumer benefits and minimize consumer harm from insurance in super.
This includes releasing a report on the handling of TPD claims that is expected to be highly critical of some funds and insurers and include a league table of decline rates and timeframes.
Key areas covered include:
Similarly, a report on Code implementation set to be released in November will focus on Code “laggers and leaders”. The report will comment on the practices (good and bad) of early adopters of the Code. Funds that have not subscribed to the Code will also be scrutinised.
Other reports on insurance in the pipeline include:
ASIC Commissioner Danielle Press has stressed that it is not the role of ASIC to set the standards of ethical behaviour, putting the responsibility squarely on the boards, management and employees of financial services entities.
In a speech at AIST’s ASI investment conference in Hobart last week, Ms Press discussed ASIC’s post-Royal Commission strategy, saying that a change in ethical culture was incumbent upon the industry itself.
Ms Press also reiterated that ASIC’s role was more than just enforcement, stressing that ASIC uses “all the tools in the shed” in its regulatory role, including “naming more names”.
Commenting on consumer protection measures, Ms Press noted that while disclosure was important and still critical, it “hadn’t worked well” in protecting consumers. The regulator will shift away from an over-reliance on disclosure to using targeted powers like the product intervention power more often, she said.
On governance, Ms Press said ASIC would be conducting supervision of key firms, including via the Close and Continuous Monitoring (CCM) program and the Corporate Governance Taskforce.
Ms Press also flagged ASIC’s support and implementation of the proposed conduct accountability regime.
National Seniors Australia has called on the Government to make the current age pension taper rate more equitable, describing it as a ‘ludicrous trap’ that acts as a disincentive for people saving for their retirement.
In a media release, National Seniors Australia noted that actuarial groups and think tanks such as Rice Warner, The Grattan Institute and the Alliance for a Fairer Retirement System also support reducing the taper rate.
“Someone who has saved twice as much as a retiree on a full pension, can be $1,000 a month worse off because of the taper rate. How is that fair?” said National Seniors Chief Advocate, Ian Henschke.
“It’s ludicrous and forces people who have put away money to spend it, so they stay under the threshold. “We know of situations where people will spend money renovating their home or going on overseas trips so they can still get a decent retirement income.” Mr Henschke said.
The statements from National Seniors Australia come at the same time as a private motion by Mayo MP Rebekha Sharkie that calls on the government to assess the base rate of the pension and assess the deeming rate.
AIST supports changes to the taper rate and has advocated in previous submissions to Treasury for a reduction, arguing that the current taper rate is unfair and needs to be addressed to restore integrity to the super system.
A Treasury taskforce aimed at carrying out the government's regulatory reform and deregulation agenda has put national infrastructure investing at the top of its priority areas.
The Deregulation Taskforce will work with state and territory governments, and businesses themselves, to identify and address the most significant regulatory barriers to investment for selected industries.
A priority for the Taskforce is in getting major infrastructure projects up and running sooner.
In announcing the priority areas for the Taskforce, Treasury said that better regulatory environment will help businesses lower their costs, save time and improve their competitiveness.
The Taskforce will develop and recommend solutions to lower the costs of regulation while retaining the benefits, making it easier for businesses to invest, create jobs and grow the economy.
Treasury has released its strategic plan for the next four years of operation covering its policy and economic priorities through to 2022-23.
A key priority of the Corporate Plan is to deliver the government’s reform commitments made in response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
See also the recently released corporate plans of regulators:
Australian Securities and Investments Commission (ASIC)
Australian Prudential and Regulatory Authority (APRA)
13 September 2019