A number of superannuation funds are considering the implications of not signing up to the code of conduct attaching to insurance inside superannuation because of its administrative complexity and uncertainty of outcomes.
The code, developed by the Insurance inside Superannuation Working Group (ISWG), comes into effect from 1 July, 2018, but is voluntary and one of the key parties to its development, the Association of Superannuation Funds of Australia (ASFA), has acknowledged that there is no penalty for funds that do not sign up.
However, it was suggested that those funds that did not voluntarily sign up to the code may be asked questions by the regulator, the Australian Prudential Regulation Authority (APRA).
At the heart of super fund misgivings about the code of conduct is the perceived open-ended nature of some the obligations it imposes on superannuation funds, not least the level of an event which requires to them to contact all members.
The misgivings of the superannuation funds appear to confirm the concerns of critics of the voluntary nature of the code when it was made public on 18 December.
Commenting on the voluntary nature of the code late last year, the Minister for Revenue and Financial Services, Kelly O’Dwyer said warned that the government might be prompted to consider “an appropriate regulatory response.”
“The Government is concerned that the superannuation industry has walked away from a commitment to a more robust, mandatory code of practice that had been the subject of earlier consultation,” O’Dwyer said in an ABC radio interview.
