The super fund industry needs to lift the service standards to members which is vital to the sustainability of the industry, according to financial services minister Stephen Jones.
“The customer experience needs to improve across the board… the sector is on notice,” he said at the Conexus Financial Political Series lunch on Thursday in Sydney, sponsored by BT. “I want to stress the importance of the member experience to the overall sustainability of superannuation as an institution.”
Jones said an ASIC report on the internal dispute resolution arrangement of fund trustees scheduled to be released on Friday will show almost 20 per cent of funds failed to consistently respond to complaints within the mandatory 45-day deadline and 80 per cent of funds had poor management of systemic issues.
“Government and the regulators will take steps to lift standards but in a competitive marketplace, funds should be leading the way.”
Competition will lift standards
Maintaining a competitive super fund industry is key to lifting product and service standards as well as improving investment returns. “We need to see strong competition between all of the funds, the retail funds, the industry funds, the public sector funds,” he said.
“They each have a role to play to driving competition, driving better reforms, innovation in product delivery, but also improving a member experience,” he said, welcoming the entry of Vanguard Super.
While he acknowledged having a diverse pool of 130 super funds was a strength of the system, he challenged funds to differentiate themselves with innovative products and better member engagement. “With 130 funds in the system, 130 shades of beige would make for both a very boring colour scheme and also a weaker superannuation,” he said.
While the industry has been successful in the accumulation phase, more was needed to help Australians navigate retirement said Jones. A majority of Australians are only drawing down on the minimum sum, leaving significant sums in their super account balances.
“The government wants to see competition drive better retirement income products and we are a long way from there at the moment,” he said.