Now is a good time to check your super account

Now is a good time to check your super account

Alex Burke

Following on from their initial response to the Royal Commission, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission have issued a joint letter identifying a “range of industry practices” in relation to fees being charged to super member accounts without an accompanying service being provided.

The letter explains that 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 these reviews, which are to be completed by June 30, uncover any “significant issues or deficiencies in the risk management systems and processes of trustees,” the regulators expected “urgent consideration” as to any breaches and whether remediation should take place.

What does this mean for your super?

The letter is asking super fund trustees to consider four questions. First, they should examine whether deductions made from your super account are “explicitly authorised” by you and consistent with the disclosures you’ve been given.

Next, trustees should consider whether services have been provided – examples of where this might not be the case include when the adviser ceases practice, members have no access to advice services or in the event of a member’s passing.

After that, trustees should identify whether deductions pass the sole purpose test, where costs associated with advice relate only to super and insurance obtained through super. And finally, trustees must consider whether the deductions were in the member’s best interest.

What’s being asked of trustees?

ASIC and APRA want to see trustees implementing preventative measures “such as ensuring appropriate authorisation processes for deductions are in place and promoting understanding by financial advisers and members.”

The regulators also want measures that are “interrogative” – that is, regularly checking that services are being provided in accordance with costs being deducted – and “remedial,” so that members are adequately compensated in the event of an erroneous charge to their accounts.

What the regulators plan to do

After trustees have conducted their reviews, the regulators “will continue to engage with trustees in relation to the robustness of their policies and practices for management and oversight of such fees charged to members’ superannuation accounts and reserve the right to exercise our powers in relation to any subsequent enforcement action required.”

Given the significant issues uncovered by both regulators, now is a good time to check your super and ensure any costs being deducted are in accordance with what services you’ve authorised – and received.

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