Extend intra-fund advice to cover spouse super: AIST
AIST has recommended that provision of intra-fund advice be extended to allow the consideration of a spouse’s super.
Our submission to ASIC on affordable advice to consumers, notes that one of the main advice strategies for members in the accumulation phase leading up to retirement is increasing contributions and managing contributions for a couple’s best interests.
Our submission also calls on ASIC to be more active in promoting the benefits of intra-fund advice, noting that the value of this service has not been fully or consistently realised. Increasing consumer awareness and understanding about advice through factual pre-retirement information would also provide additional consumer protections.
Other recommendations include that:
- ASIC should issue guidance on the provision of both pre- and post-retirement information as increasing consumer awareness and understanding about advice through factual pre-retirement information would also provide additional consumer protections.
- ASIC needs to explore ways to bring the cost down of comprehensive personal advice which is an obstacle for many consumers.
- ASIC should require advisers to provide and explain disclosure and comparison tools they use to their clients
- With APRA, ASIC should review the methodology of product dashboards • ASIC should support the extension of dashboards and heatmaps to all products
On the topic of digital advice, our submission acknowledges the potential of this form of advice but warns ASIC to be vigilant in ensuring consumer interests are adequately protected amid a surge of opportunistic marketing in this area.
Round 2 of industry consultations on insurance standard
APRA has commenced a second round of consultation on revisions to Prudential Standard SPS 250 Insurance in Superannuation.
APRA sent a letter to trustees and has released a new draft prudential standard for further consultation, incorporating revised wording aimed at clarifying some of the revised requirements of SPS250. Submissions are due by 5 March 2021.
The new draft standard contains the following amendments since November 2019:
- a revised commencement date of 1 January 2022;
- separating the independent certification requirements into two separate paragraphs – one for connected entities (related party insurers) and the other for ‘priority and privilege’ arrangements with non-related parties;
- recasting some of the independent certification requirements including ‘the best interests of beneficiaries’, the signoff of legal and regulatory requirements, and narrowing the requirements for ‘priority and privilege’ arrangements;
- clarifying the timing requirements for obtaining an independent certification and for providing it to APRA, and amending the requirement for the independent review cycle from a biennial requirement to a triennial requirement; and
- that related party arrangements already in force on the effective date of the revised SPS 250 must seek an independent certification within 12 months of the effective date.
APRA has also released for consultation an updated version of Prudential Practice Guide SPG 250 Insurance in Superannuation (SPG 250), which contains further guidance on the new proposed requirements.
The proposed changes to SPS 250 – first released in November 2019 - are aimed at improving superannuation member outcomes by helping trustees select the most appropriate insurance policies for their members, and monitor their ongoing relationships with insurers.
The key changes to the standard address two recommendations from the financial services Royal Commission and reflect Government recommendations that trustees make it easier for members to opt-out of insurance and ensure that premiums don’t inappropriately erode members’ retirement income.
Draft SPG 250 includes the following key amendments (compared to the July 2013 published version):
- guidance related to the ease of opt-out of insurance, including communication regarding the benefits and cost of the insurance;
- guidance on expectations for maintenance of data including data to support member outcomes assessments;
- guidance on expectations for complying with the covenant ‘to only offer or acquire insurance of a particular kind, or at a particular level, if the cost of the insurance does not inappropriately erode the retirement income of beneficiaries’, particularly from the view of default members;
- guidance on expectations for the independent certification requirements for related party insurers and priority and privilege arrangements, including examples of contractual terms that may constitute a priority or privilege; and
- guidance on expectations for the rules for attributing a particular status to a member, and that these rules must be fair and reasonable.
Next steps for managing member outcome assessments: AIST roundtable
AIST is holding a roundtable webinar discussion next week to provide operational staff across our member funds with the opportunity to share and discuss their experiences and insights in finalizing key aspects of the new ‘member outcome’ requirements.
This free member-only session will focus on the first Member Outcomes Assessment (MOA) – to be completed by 28 February and published within 28 days after that - and the first Business Performance Review (BPR) required under SPS515.
The session will discuss:
- Experiences and observations about the BPR process
- Readiness and roadblocks in relation to completing MOAs
- Approach to publication of MOAs
- Possible AIST approach to APRA on specific BPR and MOA issues
To attend this session - be held 10.30 to 12 pm on Thursday 28 January
– AIST members can register via our online portal. You will receive confirmation of your registration and your login details on the day of the event.
AIST’s weekly update on the status of legislation
The current status of superannuation Bills currently before Parliament can be found here.