The Insurance within Superannuation Working Group (ISWG), with the knowledge of the Australian Securities and Investments Commission (ASIC) has been working on the development of an industry standard for so-called profit-sharing arrangement between insurers and superannuation funds.
The ISWG’s consideration of the controversial practice was revealed to a Parliamentary Joint Committee by ASIC deputy chair, Peter Kell at the same time as the regulator confirmed the extent to which had been investigating such practices.
ASIC executive, Ged Fitzpatrick told the committee that as part of its review of industry within superannuation, ASIC had issued notices to around 47 trustees of which seven or eight had indicated they might be involved in such arrangements.
Fitzpatrick said such arrangements were called different things such as “profit sharing” and “premium sharing”.
Asked whether ASIC was aware of the existence of any mechanism to ensure consumers actually benefited from such arrangements, Kell said the ISWG was “currently looking at developing a standard on that very issue so that there is a very narrowly defined purpose to which any of those funds can be applied so that it ultimately does benefit the members”.
“There’s clearly a recognition by that group that the arrangements haven’t been as clear and tight as would be desirable and that it would be much better to come up with a cross-industry standard that says they ought to be applied only in a way that ultimately benefits members,” the ASIC deputy chair said.
