The proportion of public complaints received by the banking royal commission that relate to superannuation justifies the inclusion of the $2.5 trillion retirement savings sector in the inquiry, the Financial Services Council says.
Commissioner Kenneth Hayne said on Monday that of the public submissions received to date, 17 per cent were super-related, almost double the proportion that dealt with financial planning. Personal finance accounted for 31 per cent of dealings.
“It isn’t clear which segments of the industry these complaints relate to but the proportion vindicates the inclusion of superannuation in the royal commission. In a compulsory system all funds must expect to be able to stand up to Commissioner Hayne’s scrutiny,” said FSC chief Sally Loane.
Super was included in the scope of the inquiry primarily because the Coalition government was keen to ensure that the way in which members’ money was being spent was in keeping with public expectations.
The Association of Superannuation Funds of Australia said the industry took all complaints made against it seriously, but said the number of submissions was small in relation to the size of the industry.
Single biggest source
“This needs to be considered in context. There are around 15 million Australians with superannuation and the royal commission received 70 submissions from the public about superannuation. Based on the information provided by the commissioner, it appears the bulk of submissions received relate to matters other than super,” said an ASFA spokeswoman.
“Given the inclusion of superannuation in the royal commission, it is reasonable to expect that some submissions would relate to superannuation.”
The 2016-17 annual report of the Superannuation Complaints Commission showed that of the 1376 complaints received by the body, disputes over death benefit distributions were the single biggest source, with 409 complaints. The next biggest source of complaints was deductions of life insurance premiums. Other common complaints made to the SCT include disputes over the size of permanent disability claims, failure to pay claims, account balances, fees and charges and the length of time taken for disability insurance claims to be paid out.
An initial letter from the commission asked retirement schemes to identify any misconduct dating to January 1, 2008, and describe the nature, extent and impact of any wrongdoing. In addition, funds were asked to identify any conduct that may have fallen below community standards and expectations over the same period, and whether any of this was attributable to culture or governance practices.
Sources said funds were also asked to detail any expenditure apart from administration and investment costs and member benefits.