Superannuation funds should not be required to cross-subsidise entities under the new Australian Financial Complaints Authority (AFCA) regime, even under the interim industry funding model.
That is the bottom line of a submission filed with the AFCA by the Association of Superannuation Funds of Australia (ASFA) which has noted the likelihood of cross-subsidisation occurring with respect to both Retirement Savings Accounts (RSAs) and Small APRA Funds (SAFs).
The ASFA submission pointed out that Retirement Savings Account providers, general banks, would not be subject to the same levy arrangements as superannuation funds but would be covered by the levies paid by the banks.
“The exclusion of RSA providers from contributing to levies for superannuation trustee members provides the potential for cross‐subsidisation (in particular, where there is a complaint in respect of a RSA product),” it said. “In this regard, AFCA could consider incorporating RSA providers into the interim levy regime for superannuation trustee members.”
The submission made a similar point with respect to SAFs noting that there were 2,085 SAFs with total assets of $2.2 billion.
“ASFA understands that under the interim funding model SAFs will not pay levies as superannuation trustee members,” it said. “Instead, SAFs will pay a general minimum membership levy. This arrangement is similar to arrangements under the APRA levy regime – where all SAFs pay the same flat fee ($590 in 2018‐19). As is the case for RSA providers, the exclusion of SAFs from contributing to levies for superannuation trustee members provides the potential for cross‐subsidisation.”
