This article follows a session on this topic held at the ASIC Annual Forum (AAF), 3-4 November 2022. Catch up on session highlights from the Forum.

The session was moderated by Ticky Fullerton, Business Editor at Large, The Australian Business Review.

Panel:

• Jane Eccleston, Senior Executive Leader, Superannuation, ASIC
• Margaret Cole, Deputy Chair, Australian Prudential Regulation Authority
• Xavier O’Halloran, Director, Super Consumers Australia
• Paul Schroder, Chief Executive, AustralianSuper

Key points

• The AAF session explored developments in superannuation with a focus on changes in the competitive landscape, conduct and consumer needs.
• Law reform, structural changes and the evolving needs and expectations of consumers in engaging with their super is opening a new chapter for Australia’s super system.
• As the conduct regulator for the super sector, ASIC remains focused on the behaviour of super trustees to improve consumer outcomes and ensure the benefits of recent law reforms are realised.

Increasing complexity driven by rapid technological developments, economic, cyber resilience and environmental sustainability risks along with evolving consumer needs and expectations are driving change across the financial system. The panel explored how regulators, trustees and consumer voices are charting new directions for super.

Challenges and opportunities for the super industry

Along with these dynamic changes, the superannuation industry is dealing with a raft of recent law reform developments, such as the design and distribution obligations, the performance test, best financial interests duty, and the introduction of the retirement income covenant. Data and cyber-resilience also continue to be key challenges.

‘Within super, consolidation across the industry is a significant change. Five years ago, there were 109 MySuper products, now there are 69 products,’ ASIC Senior Executive Leader, Jane Eccleston said. ‘And with Australia’s aging population and more people living longer, the retirement phase is becoming increasingly important.’

Consumers preparing for retirement are likely to be more engaged than those in the accumulation phase. As the size of this cohort grows, the capacity of trustees to respond and meet their needs may be tested. Improving member outcomes means trustees need to have the right systems and processes, technologies, data analytics, and governance arrangements to deliver on promises effectively and efficiently.

Ms Eccleston said consumers value investment performance, but it goes beyond that. ‘Members have the right to expect that their super trustee behaves efficiently, honestly and fairly with a real focus on members’ interests,’ Ms Eccleston said.

ASIC’s focus as superannuation conduct regulator

ASIC remains focused on the behaviour of super trustees to improve consumer outcomes. Is the way trustees are dealing with consumers fair? Does it meet the needs of members? Does it promote confidence in the super system?

Trustees must implement systems to manage the risk of poor conduct or sub-optimal outcomes. Committing to continuous improvement and including learnings from other industries will ensure trustees better serve the needs of members. Trustees need to be sophisticated and mature in how they develop, govern, monitor, and market super products and keep members at the heart of their decision making. They must be able to demonstrate that their decisions are consistent with the best financial interests of their members. 

‘Where trustees are not doing the right thing, nothing is off the table in terms of the regulatory tools we will use. Where misconduct causes serious consumer harm, that is where ASIC will take enforcement action,’ Ms Eccleston said.

ASIC is Australia’s corporate, markets and financial services regulator.