Greater evidence-gathering powers and a focus on misconduct makes the Royal Commission different to reviews of the super industry by other governmental or public bodies, and superannuation funds need to ensure they take it seriously, QMV Super has warned.
Principal consultant, legal and risk, at the consultancy firm, Jonathan Steffanoni, implored funds not to lie to the Commission at a media briefing in Sydney this week, reminding those in attendance that Commissions have strong evidence collecting powers.
This was a key differentiating factor between the Royal Commission and other investigations into the industry, such as that of the Productivity Commission.
Steffanoni also said that the Royal Commission would focus on past misconduct in a way that policy reviews did not, looking at both if anything illegal had occurred and if community expectations had been met.
“It’s not just a policy review but something much broader. That shouldn’t be taken lightly – Royal Commissions don’t happen often,” he said.
Indeed, even in light of the many investigations into the super industry enabled by parliament in recent years, Steffanoni said that “the Royal Commission is setting a tone of heightened regulatory focus”.
The legal expert also outlined what he saw as the major focuses of the Commission for the two weeks of hearings starting on Monday. He believed that the most obvious focus is expenditure and ensuring it’s for a proper purpose. There would also be an emphasis on ensuring that assets are used for a proper purpose, meaning for needs tied to retirement savings.
Another key issue would be prudence, with funds needing to ensure how affairs are managed is to an appropriate level of care both in line with the recently-imposed standard of the “prudent superannuation trustee” and community expectations.
Steffanoni expected to see attention paid by the Commission to lateral party contracts, particularly those with banks.
“The Commission will look at whether these are at arm’s length and for members’ best interests,” he said. This could lead to discussion of the need for competition in the superannuation supply chain.
Steffanoni also pointed to administrative errors as a likely topic to be covered by the Commission, saying that while not all errors could be avoided, funds needed processes in place to respond to them when they did occur.
Pertinent to recent Federal Government announcements regarding fund consolidation, Steffanoni told the briefing that there could perhaps be attention on successive fund transfers that mightn’t have gone ahead “for trivial reasons”.
Consolidation of the super funds themselves could also come under the spotlight, with Steffanoni cautioning that approaches to mergers and whether options to merge were given due consideration could come up.
Perhaps of the most interest to consumers, Steffanoni also flagged claims and complaint handling as a potential focus of the Commission.
