Banking Royal Commission Final Report: Ban On Super Product Promotions In Banks

The "hawking" of superannuation products through bank branches will be banned, as will the use of members' money to host lavish corporate functions.

The consumer protection measures are among a series of recommendationsfor super by Commissioner Kenneth Hayne, who proposes a strengthening of existing laws and more action from regulators rather than radical structural change.

"Trustees are not always discharging [their] obligations, often causing financial detriment to members," he said.

Like the Productivity Commission, the banking inquiry wants to stop the proliferation of accounts by ensuring people are only ever assigned one default fund.

While Commissioner Hayne is silent on the contentious issue of how to select default funds, he says workers should only ever have one default account. "To that end, machinery should be developed for stapling a person to a single default account."

Commissioner Hayne recommends that trustees who fail members should face civil penalties – a proposition the Coalition immediately accepted.

"The government currently has legislation before the Parliament extending for the first time these penalties to directors, and we'll now amend the legislation to include trustees," Treasurer Josh Frydenberg said.

Also among Commissioner Hayne's recommendations are a ban on the deduction of any advice fees from MySuper accounts and limits on such fee deductions for choice products.

He considers using super money for broad financial advice to be inconsistent with the sole-purpose test.

No cold calls or unsolicited sales

The unsolicited sale of super products through bank branches or by cold calling ought to be prohibited by law, the banking commission's final report says, adding that attempts by ANZ and CBA to sell super in branches may have contravened the law.

Commissioner Hayne also wants the law to be changed to prohibit funds from offering employers inducements to become their nominated default. The commission heard details of corporate entertainment by Hostplus at the Australian Open.

"The evidence given in the commission showed that some large funds spend not insignificant amounts to maintain or establish good relationships with those who will be responsible for nominating the default fund for their employees. Money is spent on entertainment and sporting events at which the relevant relationships can be made and enhanced."

Commissioner Hayne is concerned about conflicts of interest and recommends a ban on dual-regulated entities. These are entities where the trustee of a super fund is also responsible for a managed investment scheme, as was the case of evidence before the commission about IOOF.


By Joanna Mather

Financial Review

4 February 2019

#RoyalCommission #SMSF #SelfManagedSuperFund #banks

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