The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was established by the Government in December 2017. It followed revelations in the media about a culture of greed within Australian financial institutions and a lack of regulatory intervention by government authorities. During this time the Commission received more than 10,000 submissions from members of the public, the majority of them relating to past experiences with banks.
Key recommendations concerning super and financial advice:
- Banning the hawking (peddling )of superannuation and insurance products
- People should only have one super fund (default)
- Financial advisers who are not independent must disclose this to clients in a prescribed format.
- Improved reference checking of financial advisers and tightening the requirements for charging ongoing advice fees. Grandfathered commissions – attached to some bank and insurance-owned super funds – to be banned.
- Overhaul bosses remuneration so that incentives are more aligned to non-financial risk.
- Overhaul the culture of the regulators.
After almost a year of hearings and deliberations, the final report, handed down by The Honourable Justice Kenneth Hayne, has now been released.
The report particularly takes aim on the misdemeanour of the banks and their super funds, financial advisers, insurance companies and mortgage brokers. It contains 76 recommendations in total, 9 of which directly concern superannuation. 24 cases involving misconduct by the banks and other for-profit entities have been referred to the regulators for possible criminal or civil charges.
Commissioner Hayne observed that, in almost every case, misconduct was driven by businesses pursuing profit and individual greed where service to customers came second. A strong theme of the report is that regulators should do much more to enforce existing laws and take stronger action against profit-driven entities that put the interests of shareholders ahead of their members.
While both major political parties have agreed to take action on the majority the Commission’s recommendations, these recommendations must be legislated to be implemented. Any impact of the Royal Commission recommendations on super fund members is some way off and most of the recommendations covered in the report will have minimal impact on our members.
NGS supports Industry Super Australia’s (ISA) sentiment that the Banking Royal Commission has shone a welcome light on serious conflicts within the financial services system and validated the important role industry and other profit-to-member super funds play in safeguarding Australians’ retirement savings As an industry super fund, NGS Super has never paid commissions to financial advisers or used hawking or other such means to sell superannuation products.
If you have any questions about the recommendations of this report relating to superannuation, please contact us on 1300 133 177, Monday to Friday between 8am - 8pm AEST/AEDT.