Regulators hamstrung on choice products, says AIST

The Government’s design and distribution obligations legislation may be ineffective in dealing with choice superannuation products because of the sheer scale of the exercise, according to the Australian Institute of Superannuation Trustees (AIST).

Providing an answer to questions on notice from the Senate Economic Legislation Committee, the AIST said it believed the legislation was deficient because the regulators would be hamstrung by not having access to reports or disclosures.

The AIST told the committee it was concerned that the Bill would not be effective, given the practical impossibility of the regulator being able to identify which of the 40,000 choices should be subject to the product intervention power.

“Additionally, the regulators are placed in a difficult situation given that there is a lack of a level playing field regarding both disclosure and reporting to the regulators,” the AIST answer said.

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It outlined the AIST’s key concerns as being:

• A lack of dashboards for Choice products.

• APRA does not collect or publish statistics for Choice products. This – and the lack of Choice dashboards – will also render a regulator assessment of member outcomes ineffective.

• Regulatory Guide 97 fee and cost disclosure has numerous carveouts which mean fees and costs cannot be compared.

The AIST submission argued that the carveouts to both disclosure and reporting requirements were systemic and provided the Senate committee with an analysis citing the inequity of not including choice products within the member outcomes regime.