The Australian Institute of Superannuation Trustees (AIST) has today warned that delays to consumer disclosure requirements will negatively impact on the retirement outcomes of millions of unsuspecting Australians.
The warning follows this week’s announcement that the Australian Securities and Investments Commission (ASIC) is deferring key consumer disclosure requirements for non-default (Choice) super products for up to four years.
This represents a further setback for these requirements which have been subjected to ongoing delays since 2015 after being introduced with the Stronger Super reforms.
The requirements would have made it mandatory for super funds to provide a standardised disclosure of fees and performance, called product dashboards, for all their super products.
Currently, funds only must provide this disclosure for their default (MySuper) products.
Without this disclosure it is extremely difficult for members who aren’t in default funds to compare their fund’s performance with other funds.
AIST CEO Eva Scheerlinck described the move as a significant blow for members in underperforming non-default funds who would remain in the dark about their fund’s performance.
“This delay is disgraceful. In a post-Royal Commission environment, we should be prioritising action to help consumers get out of underperforming funds. Kicking the can down the road another four years is unacceptable,” said Ms Scheerlinck.
“Currently, members of many underperforming ‘Choice’ super products have no way of knowing how their fund compares to industry benchmarks.”
In a report released in January, the Productivity Commission estimated that more than one third of products in the Choice (non-default) sector, were underperforming.
Almost all funds found to be underperforming in the Commission’s sample survey of Choice products were retail bank or insurance-owned super funds.
The Commission recommended introducing Choice product dashboards as soon as possible. There is significantly more super invested in the Choice sector than in the more highly regulated default sector.
Ms Scheerlinck said improving disclosure in superannuation was a vital step in addressing underperformance and should be a high priority for ASIC in the light of Productivity Commission findings.
“Waiting another four years to get disclosure right could mean another four years of dud returns for the members affected,” Ms Scheerlinck said. “In the 21st century we should be able to shine a light on underperformance.”
In a separate but equally disappointing move relating to consumer disclosure requirements, ASIC has extended the carve out for superannuation retail platform providers to disclosure their fees and costs.
At January 2018, the amount of funds held on platforms topped $821 billion.