With regulators poised to gain sweeping new powers in the wake of the banking royal commission, superannuation industry executives and trustees expect to come under more intense scrutiny.
With this in mind, delegates at the Conference of Major Superannuation Funds (CMSF) 2019 will be keenly focussed on the impact of these regulatory and legislative changes.
The timing of this year’s CMSF is propitious since the industry has had time to digest findings from the royal commission, says Eva Scheerlinck, chief executive of the Australian Institute of Superannuation Trustees (AIST).
“It’s a really important time for the industry to get together and talk about reform so that we can play our part in framing the future,” she adds, ahead of the conference which starts today on Queensland’s Gold Coast.
The AIST chief expects the tone among delegates to be positive, but uncertain, as the royal commission hearings shone such a sharp and public light on the financial services sector.
While the royal commission identified widespread misconduct by wealth managers, the profit-to-member funds emerged largely untainted.
“But that doesn’t mean there aren’t lessons to learn, “conceded Scheerlinck.
Scheerlinck calls it a bittersweet time for delegates, adding that if the industry doesn’t step up and tackle issues like multiple accounts and underperforming funds “someone will do it for us”.
The conference will open with AustralianSuper chief executive, Ian Silk, speaking about the future of the $1.4 trillion profit-to-member super sector.
This will be followed by a panel discussion which will examine the key findings of the royal commission and discuss the potential impact on the industry super funds and the wider financial services sector more broadly.
During that session, Scheerlinck will argue that the need for better and stronger regulation will be key to whether the royal commission leads to significant change.
She will also back the commission’s finding that there is no need for new laws to fight misconduct.
“Australia needs regulators which are prepared to enforce existing laws and send a strong message that breaking the law is not okay.”
For example, the royal commission hearings exposed how best interest was routinely ignored by trustee directors of retail superannuation funds.
“There needs to be a complete overhaul of the culture and behaviours of boards and executives of retail funds to ensure that members’ interests are prioritised above shareholders,” Sheerlinck says.
In her view, this will require a change of culture within the regulators. She also thinks it’s imperative that they are adequately resourced in order to enforce their powers.
Issues raised by the royal commission underlined the difference between profit-to-member superannuation funds and for-profit retail funds and this will be the topic of a session run by Jane Caro, the social commentator and advertising guru.
“AIST member funds are now in a prime position to leverage the public’s trusts in the profit-to-member brand, so Caro’s session will focus on how funds can maintain and even grow this trust,” noted Scheerlinck.
As the royal commission hearings progressed, media coverage of the sector became increasingly positive which sparked an exodus of members from retail funds into profit-to-member funds.
Australian Prudential Regulation Authority figures show $10.9 billion shifted out of retail funds in 2018 – triple that of the previous year.
With regards to the royal commission recommendations that require legislation, Scheerlinck believes little will happen in Parliament until after the federal election in May.
However, given the level of bi-partisan support on the key recommendations, she expects to see a flurry of draft legislation introduced to parliament after May.