Significant question marks hang over the legal implications of seeking to impose an insurance code of conduct of superannuation fund trustees which will ultimately need to be clarified and resolved, according to the Association of Superannuation Funds of Australia (ASFA).
The ASFA has used its submission responding to the recommendations of the Insurance within Superannuation Working Group (ISWG) to point out the legal/legislative problems it foresees will need to be addressed before the code can become fully applicable.
The submission said ASFA believed getting the governance arrangements around the code was vital in complex environments which surrounds the superannuation industry.
In doing so, it said there were a number of areas of concern, not least the proposed establishment of the Australian Financial Complaints Authority (AFCA) and the evolving nature of the new external dispute resolution (EDR) regime.
“Much greater certainty will be required before we can contemplate their potential role in Code governance,” the ASFA submission said with respect to suggestions that AFCA should monitor the code.
The submission said questions had also been raised about whether trustees could be legally bound by the code given their statutory and fiduciary obligations and suggested that this was something which needed to be resolved before various governance options could be assessed.
However it suggested that one option might be for the industry associations to enter into a memorandum of understanding to determine who would take responsibility for the various activities associated with the code.
“Another option is for one industry association to own the code and attempt to bind superannuation to it,” the submission said.
However it warned that it did not believe this would be an effective approach at this time.