“Having said that, the Government did commit to go to the productivity commission to have a look at how we can address this question; and I do accept that there’s principles of competition and not having monopoly access.”
The chief investment officer of the Retail Employees Superannuation Trust (REST), Mark Delaney, says what the industry does is pretty simple but incredibly important, and it should never be forgotten that it exists in its current form because of government initiatives.
“The simple task is just gathering people’s savings today and [paying] them out tomorrow; it’s just a massive thing,” he says.
“Given the industry exists because of government regulation and government incentive, we [must not] lose sight of what is our public duty, what we’re trying to achieve.
“But if we’re going to do a better job of it, we’ve got to get more money going in, we’ve got to get better returns, we have to take less money out in costs…and we’ve got to protect consumers.
“The task isn’t all that hard; it’s just focusing on the bigger picture and not what’s our own self-interest.”
Liz Gray, a partner in law firm Henry Davis York, says a touchstone of any reform must be simplicity – brave words, she admits, coming from the mouth of a lawyer.
“I don’t think anyone around this room would like to see some of the complexity that we’ve got in the FSR laws at the moment. What we’re talking about here is a lot of law reform over the next couple of years, and I think simplicity is the key,” Gray says.
“Complexity is cost, and that will cost, at the end of the day, members and super fund investors.”
Don Russell, chair of State Super, says the Government is on the right track, certainly compared to where things stood 18 months ago.
“I mean the industry’s taken a lot of chops in the last little while, but a lot of that came from that debate 18 months ago, where we were talking about…lifting the preservation age to 67, we were talking about whether we’d cut the [contributions] caps, we got rid of the age-based [caps],” Russell says.
“I think at that stage, a lot of people started to wonder if it was government policy to actually support the SG…and I think, at that stage, people started to have second thoughts about super. But in the last 18 months, I think we’ve gone a long way to redressing that. I think the Minister’s on the right track.”
An issue yet to receive a formal decision from the Government is whether commission on risk business will be abolished along with commissions on investment-based products.
“I’m not anti-insurance, but by the same token, the whole thrust – the legitimate thrust of FoFA and the Ripoll Report – is that people shouldn’t be getting remuneration through conflicted structures,” Shorten says.
“But I guess, to console your concern, I’m not an idiot; I get the TPD and the life insurance stuff; and again, you’ve heard my general philosophy about underinsurance is an issue, which perhaps I was less aware of, until I got involved – especially in the reconstruction after the bushfires. It is important, more than I’d realised previously.
“In terms of some of the other issues [such as] tax deductibility [of financial planning fees] – you know, at some point, we’ve got to protect the integrity of our tax system.
“I said that I liked planners; it’s okay, you know?
“There are many ways of proving it, though. I’m an imaginative person.”
Shorten says that on the issue of fiduciary duty, the Government is “committed to the statutory test”.
“At the very professional end, and the committed end of this industry, people get that,” he says.
“We’ll just work it through, try and have a common sense test which doesn’t [for example] make people reluctant to make any decision other than invest in cash or, you know, blue-chip equities.
“But you know, beyond that, I think we can get that one right.”
