How closely have you managed the administration of your super fund over the past decade or so? Could you have been charged fees for services you didn’t request?
Regulators have given the $2.7 trillion industry until 30 June to clean up the damaging and widespread practice revealed last year by the financial services royal commission – fees for no service.
The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) sent a letter to every superannuation trustee company in Australia this week, warning that the issues of compensation and governance needed to be resolved.
The letter, signed by APRA deputy chair Helen Rowell and ASIC commissioner Danielle Press, said the watchdogs had already “identified a range of industry practices in relation to trustee oversight, many of which fall below the standard we expect”, some of which were “the subject of enforcement investigations or actions”.
The letter continued: “This raises concerns about some trustees’ risk governance, capabilities and culture, as well as their ability to appropriately manage conflicts of interest.”
The regulators said they “reserve the right to exercise our powers in relation to any subsequent enforcement action required” and expected super trustees to pursue financial advisers who had inappropriately charged fund members.
The royal commission hearings exposed the likes of NAB, AMP and CBA, which had continued to charge dead people advice fees and clients for financial advice they never received.
Ms Rowell and Ms Press told trustees they “must have in place strong governance, risk management and oversight processes to ensure that only authorised and appropriate fees and other charges are deducted from members’ superannuation accounts”.
“Accordingly, APRA and ASIC expect all trustees to be reviewing the robustness of their existing governance and assurance arrangements for fees charged to members’ superannuation accounts, and to address any identified areas for improvement in a timely manner.
“Should such reviews uncover any significant issues or deficiencies in the risk management systems and processes of trustees, our strong expectation is that trustees give urgent consideration as to whether a reportable breach has occurred and, if so, whether it has been escalated in a manner that will ensure appropriate remediation takes place.”
The letter said that reviews should consider:
- whether fees had been “explicitly authorised by members”
- whether services had actually been provided
- whether the deductions were in the best interest of members
- whether deductions were consistent with the “sole purpose test” contained in super law.
Earlier in the week, it was reported that CBA had repaid an additional $2.3 million to 232 clients of its worst financial advisers. The disclosures were made in the fifth and final instalment of a KordaMentha review of the CBA’s compensation processes as part of licence conditions imposed by the ASIC.
Would you know if you had been charged for services not delivered? Do you monitor the administration of your super account closely?